[avatar user=”Anil Kumar” size=”thumbnail” align=”left” /] Anil Ethanur |

Hiring for Self – How Founders Flounder!

Founders or Entrepreneurs are a rare breed. Their confidence or call it craziness makes them unique and inspiring. On the other hand, they can put off people due to their overbearing presence and self-consuming behaviour. One area which adds to their success is their idea. But, the larger success is attributed to their ability to hire bright talent. Still, why do some Founders struggle when it comes to hiring even with their best of abilities? Let’s do some reality check.

Over Confidence of Founders

The confidence trait of promoters can backfire while hiring. The first few hires naturally tend to come from the known circle of the Founders. Here a few assumptions need tempering from the founder’s side.

1. For Founders who held senior posts in their corporate jobs, the journey must begin from zero. Often, they assume that people see them through their previous crown. They start their hiring mindset from the previous jobs positions. As entrepreneurs, their language, intent pitch all need to hit a refresh button.

2. The employees worked with the Founders in a different setting. The new venture is an unknown beast for the joining employee. The new idea needs to be put forward as realistically as possible. The unknown needs to put on the table too. “We are the next big thing” may be a proud chest thumping statement. But it could raise more eyebrows during the bootstrapped stage.

Hiring Purpose

First few joiners want to see value for themselves. They need clarity on how they will gain professionally by joining. The best of the breed wants to see the impact they can make and also their professional growth. So, the purpose of hiring needs to be seen through their drivers. Some of the Founders take the relationship for granted and say, “let’s make a lot of money”. This scares people who are exploring and may think there is no real purpose to their hiring. Top talent knows that they can make money, so stating the obvious will demean their sense of purpose. Founders need to take cognisance of these drivers; They should articulate the purpose of the role, the importance and impact of the person on the organisation with sincerity.

Salary vs Equity

This is the most difficult one. Offering high salaries to the initial team would shorten the runway. Asking them to take a cut should be compensated by Equity or ESOPS. In the initial stages, founders would seldom know the worth of the equity. Promising huge upside financial gain on ESOPs can be counterproductive to future relationships if the value is eventually not realised. Equity is even trickier,especially with former colleagues. They end up expecting higher equity with limited understanding of the risks. This can become a non-starter leading to broken relationships. Unknown people may ask for a higher salary as they don’t know the Founders. High salary is their insurance for the risk with a start-up and they end up discounting Equity & ESOPs.

Perfection Problem

From the start, Founders expect everybody in the initial team to be passionate, enthusiastic etc. on their long list of desired virtues. They are possibly right about those qualities but it makes hiring difficult and a long drawn process. As much as you want the right startup-team you also want to attain a critical mass quickly to take off. Founders also may not know what kind of people will be able to deliver in their new setting. To arrive at a practical experience of right talent Founders need to work together with their new team. With changing situations common to start-ups founders would soon realise who fits their new venture better than they had originally envisaged. Starting off is critical than getting it right from day one.

References vs Direct Hire

Founders get excited when they hear about any available talent for their new venture. The action bias in them prompts to call their prospective employee straightaway. We all know the power of reference, we value things higher when somebody known to us recommends it to us. Hiring talent for start-ups needs to be taken in asimilar fashion. Ask your networks or reference to talk to the candidate about your firm and you before you pick up the phone. Nobody can sell the new venture like a founder can. But, the founder’s pitch can be more effective when the recommendation comes from a known person. Recruitment consultants can be helpful, but they come at a cost.

Successful founders knowingly or unknowingly have mastered the art of hiring. Most likely they have got it right by trial and error over a period of time. The ones who flounder are self-romancing or over-appreciative of their ideas.

The right balance of confidence and humility, communication of hiring purpose, compensation balance, power of referencing is key to the right hiring. But, these are things one can’t learn by reading, it comes naturally to Founders who succeed.

Published first on Entrepreneur.com