Over hiring is the startup kiss of death. Here’s how to avoid it.
Growing a business can often create a complicated conundrum for entrepreneurs:
How do we get the people who have what it takes to help us believe in our mission enough to take a risk and join the cause?
This situation can often lead us to do some questionable stuff — like biting off more than we can chew to get them on board:
- Bigger titles than they’re ready for or we can support
- Comp plans that hurt both of you down the line
- Making promises you won’t really be able to keep
I’ve seen many founders make these mistakes… and I’ve even made them myself. We don’t have to do these things (and we shouldn’t). Here are ways to hire the best salespeople for your role without having to throw everything but the kitchen sink at them.
First, here’s why over hiring is so deadly.
Why over hiring is bad (an example)
Before I was engaged with a former client, they had made a hire that ended up costing them big. They were at 50 employees and ready for the next ‘level.’ So they started looking for a sales leader to build and grow a true enterprise sales team. One particular Senior Director of Sales they interviewed had the experience they were looking for with industry experience to boot.
But he was title-hungry, so they offered him:
- A fancy CRO title
- A mega sign-on bonus
- A bonus structure that paid him up front
I’ll spare you the gory details, but he didn’t make his numbers once in the 2 years he worked there. The truth was, his “success” they liked from his previous company wasn’t actually his doing… he had inherited it as a middle-manager for a big company.
And since my client needed him to build everything out from scratch, they were stuck in a tough spot where both parties were in over their heads. Ultimately, they had to part ways because they couldn’t hire a leader over him who could do what they needed.
Something that cost them seven figures just on what they paid him, not inclusive of mishires, missing goals, etc.
Here’s how to make sure something like this doesn’t happen to you.
1. Hire who you need for the business today
Most startups know they need to hire to scale. But one of the biggest reasons I see startups get themselves in a tough situation with an overhire is because they haven’t figured out who they need to hire.
That seems simple enough to say, but there is a lot to consider when you dig in:
- Who do I need now and why?
- What is our 3–5 year plan?
- Expansion strategy
- New markets
- Going up/down market
- What’s not getting done today/next 24 months without this hire?
- Is our organization ready to support this hire?
Here’s the hard truth — who you need now is most likely NOT going to be who you need in 5 years from now.
And you need to plan for that.
That means taking a hard, honest look at the skills and traits to help you get to that next level right now and leaving room above and below them in the org chart to grow later. It’s a heck of a lot easier to have a conversation about what they need to do to get ‘there’ versus why they aren’t the right fit and there isn’t a place for them to go.
How to evaluate your needs
My very favorite tried and true tool for this is a scorecard. Doing the work to write down each and everything you need this person to do is critical to ensure you get it right from hiring concept through onboarding.
Not to mention the power of an intentional, consistent process to evaluate each candidate you interview helps you make a fair comparison.
Here are some questions to get you thinking:
- If you’re looking 6–12 months ahead, and they’re doing well, how would you define that and what would it look like? Why?
- Even more importantly, if they were struggling, how would you define that and what would it look like? Why?
- What specific tasks does this person need to do to be successful? For example:
- Sales chops/ability to demo
- Cross-functional collaboration
The key here is making sure you can tangibly cross reference the things your ideal hire needs to have with the experience of the person you’re interviewing.
2. Have a transparent conversation about the future up front
I know this is easier said than done when you really want someone to join the team (or reward them for even taking the risk).
It often feels like you’ll turn them off if you don’t. But take it from someone who has failed at this herself — the pain is much greater if you don’t and then have to deal with it later. Discuss the potential career path with any potential hire up front without promising something they don’t have the abilities for or you can’t fulfill.
Talk about your expectations (i.e. what success looks like for the role) and what their potential for promotion is if they reach that success. Then stop and truly listen to how they respond, what’s important to them, and talk about potential pitfalls. Then lay out a plan to get there together.
This gives them the right incentive to work hard but also protects you from not being able to hire over them when their skillset isn’t what you need later.
3. A “jack of all trades” is a myth — hire a specialist.
It is very enticing to hire a jack of all trades early on when you’re short-handed and have a lot to get done.
After all, isn’t this what we all say in the startup world:
“You always do more than what you signed up for.”
But as inspiring as it is to have people who want to roll up their sleeves and tackle what needs to be done, the reality is when you grow, you’ll need specialists, not generalists. And hiring someone who appears to be good at a lot of things is rarely excellent at one particular thing. For example — someone who can help with finance now (in addition to 3 other things) because they took a class in business school and are a wizard with a spreadsheet isn’t going to be the person you’ll want running things when you’re a $20 million company. They simply don’t have the skillset or experience.
So it’s mission-critical that even at this stage, you hire a specialist in the thing you need most (from #1 above) first and foremost.
This will keep you from having to make a hard decision later when they’re not excellent at any one thing you need them for and bogging your business down.
I’m not saying don’t look for a diverse skill set… just that it’s more important that the person is strong in the main area you’re hiring for.
4. Don’t believe the FOMO… they’re not the only one.
Finally, if any of these things do turn them off…let them go. I know that’s easy to say, but take it from my CRO story above (and my own personal experience of being scared senseless to lose the ‘one’) — it is much easier to lose them now than it is later. And though that FOMO is strong, I promise you — there is someone else out there that could do a great job.
Look for someone who believes in what you’re doing and wants to help you evangelize first and foremost. This is a key hire and it sets the stage for an important part of your business that drives revenue.
As Simon Sinek would say, “Customers will never love a company until the employees love it first.”
So it really pays to get that part right early on. They won’t be deterred as much by things like not getting a big title… they’ll be more interested in what you’re trying to do as a company and that trickle-down effect will happen.
Marshall Goldsmith’s book, What Got You Here Won’t Get You There, taught me an important lesson — things change fast and we have to learn how to adapt when the alignment we need isn’t there. That’s why it’s so critical that you plan for the future without handcuffing yourself or creating a mess that hurts your brand in the talent marketplace. You do that through something I say often — “fueling everything you do with honest communication and the Golden Rule!”
Originally published via OpenView Labs.