Human Resources and Recruitment in Startups - Entrepreneurship 101

Business Sherpa Group


Entrepreneurship 101 Human Resources & Recruitment in Start-Ups


HR Strength. Guidance. Support.


Background

Margo Crawford Ø  25+ years of HR experience (12+ years in start-ups as a

founder and business sherpa) Ø  HR Professional of the Year Ø  Co-founder of Meriton Networks (optical networking

start-up) from formation to sale 8 years later

Business Sherpa Group Ø  Business Sherpa Group is a full service HR team - from

executive level to new grad HR professional – providing full HR functionality for small enterprises

Ø  Supporting over 20 companies in Ottawa and Toronto


Introduction

Themes

•  HR in start-ups today – best practices •  Planning your organization •  Recruitment vs. Strategic Talent Sourcing •  Effective recruitment in 2012


What has changed…

Start-up realities in 2012 •  Start-ups today know cash is king, so:

•  They will not grow larger than they absolutely must

•  Each new hire must = best decision for the next dime spent

•  Marketing efforts focused on reach to customers, partners & investors - not on creating local presence

•  May have to last longer before realizing an exit

•  These are all significant hurdles for effective HR and recruitment


What has changed…

Some additional pressures: •  Finding people has never been easier; finding talent

has never been harder •  Social media for professional use has been fully embraced

and now is being exploited – creating a lot of noise

•  Supply and demand – lingering tech bubble in Silicon Valley could become a threat locally

•  Time and bandwidth pressures have not lessened!!


HR in start-ups – getting it right

Small companies can be ‘best-employers’ through:

1.  Effective planning

2.  Discipline with best practices will save $$,

time and build the best team and culture

3.  Strategic talent sourcing vs. recruitment


FINANCIAL •  Business case •  Pricing, costs, margin •  Resources needed •  Investments required •  Budget

HUMAN RESOURCES •  More of a budgeCng

exercise than organizaCon plan

•  Headcount •  Maybe a Ctle •  Maybe a level

TECHNOLOGY •  Features & specs •  Technical milestones •  Schedule & road map •  What it will look like •  What it will do

MARKET •  Customers •  CompeCtors •  Partners •  Influencers •  posiConing

Business Plans & HR Plans – usual approach

Product SoluCon Service


Organization Design Life Cycle

Strategic “DEFINE”

Tactical “DO”

Operational “PLAN”

Formation •  Proof points •  Get resources •  Achieve milestones •  Early customer engagement

•  Founders and early staff take on mulCple roles •  Usually a build up of technical resources (sr. level) •  Selling is performed by CEO, CTO, founders •  Board – focus on direcCon and advice, supporCng team

to achieve early proof points



Tactical “DO”



Pre-revenue •  Product ready •  Customer engagement wins •  Clarity on forecast & results •  Internal operations forming

•  ExpectaCons focus on customer engagement

•  Technical team may be pulled into more customer based acCviCes

•  Timelines Cght for product and technical deliveries

•  AddiConal financing requirements arise

•  Board – expectaCons increase around customer acCvity and accurate reporCng and forecasCng

•  More business operaConal needs to manage more staff, transacCons and reporCng




Tactical “DO”




In revenue •  Tight execution: design, build & delivery •  Internal operations smooth and robust •  Strong performance/reporting •  Established customer base

ExpectaCons in all areas increase and intensify



So what!!!


Tactical “DO”





May have Individuals who covers a lot of territory in early days


So what!!!


Tactical “DO”





In Cme will only be able to cover porCons of requirements


So what!!!


Tactical “DO”





CapabiliCes may be limited in the face of greater expectaCons

Leaving significant criCcal gaps


Impact on the company. Ø  Leaders drawn into day to day operational activities….not out in front of

customers enough

Ø  Leaders with a huge number of direct reports

Ø  As scaling pressures increase – response is to add more bodies

Ø  Start seeing major bottlenecks in some roles (doing too much and too many decisions flowing through one individual)

Ø  Titles for early stage leaders – blocking senior leader hires at a latter stage

Ø  Mix of titles (reflecting what was offered vs. organization plan) – confusion over reporting, responsibilities, career path

Ø  Board expectations not being met (reporting, performance)

Ø  Challenges in hiring sales – sometimes too early, sometimes wrong DNA

Ø  Lack of separation of roles leading to weaker strategic decisions e.g. product management - development -sales


Plan the organization - not the headcount

So in planning the organization:

Ø  Consider the potential future critical gaps – feature these into your plan

Ø  Also as you bring people in at different stages, consider if these hires will also leave gaps later on

Ø  Consider that the requirements for planning, reporting, coordinating will increase – these will be important resources

Ø  Individuals performing multiple roles will need to eventually gravitate to fewer or one…… plan to build in for separation of role

Ø  There will always be the need to be looking forward from a market and technology perspective and at the same time address the market and technology now


market

Features of strong organization planning Run the business

Define ‘What’ technology

Design Build & Test

Reach & Sell

Key FuncCons

Deliver & Support

Generally External Facing & Sr.

Leadership

“Define & Plan”

CEO

CFO

Prod. Mgmt.

Prod.

Market.

Bus. Dev.

CTO

Head of R&D

Head of R&D

Design Leaders

Head of Ops.

Head of Manufact.

Marketing & Comms

Sales

Bus. Dev.

Prod. Market.

Head of Customer Support

Sales Eng.

Generally Internal Facing

“Do”

Controller Accountant Office Mgr.

HR Purchasing

IT

Market Research

Marketing collateral

Technical planners

Research

Engineers Scientists

Techs. QA PM

PM Manuf Eng.

Supply chain Lab Tech Test Tech Research assistant assembly

Marcomms

Mark. Supp.

Sales Eng. Media

Relations

Sales Supp.

Logistics Install & Test

Product Support Trainer

Customer Support


Form

atio

n

Technical Milestones

Proo

f of

Co

ncep

t

V.1

Prod

uct

V.1

GA

Prod

uct

V.2

Prod

uct

V.2

GA

Prod

uct

Financial Milestones

Seed

Fu

ndin

g

Seri

es A

Seri

es B

Stra

tegi

c Re

venu

e

+ M

argi

n Re

venu

e

Year

ly

Reve

nue

Gro

wth

Qua

rter

ly

Reve

nue

Gro

wth

Seri

es C

IPO

/M&

A

Customer Milestones

Com

pany

La

unch

Earl

y Cu

stom

er

BD

Cust

omer

Tr

ials

Stra

tegi

c Cu

stom

er

Sale

s

Repe

at

Sale

s

Repe

at

Sale

s

Repe

at

Sale

s

New

Ac

coun

ts

New

Ac

coun

ts

New

Ac

coun

ts

V.1

Sust

aini

ng

V.2

Sust

aini

ng

Organizational Milestones

CEO

R&D Lead

CFO (P/T?)

PLM

Sr. R&D

Marcomms

Int./Jr. R&D

BD/Sales

QA

SE’s Sales

(Hunter) Sales

(Farmer)

CTO

Sales Support

Customer Support

HR (P/T?)

VP Sales

VP Marketing

Admin. Support CFO

(F/T) Accountant COO?

HR (F/T?)

Integrating Organization Plan & Business Plan


Executing on a plan – discipline & best practices

Ø  Thinking about organization – sets foundation for many HR best practices:

Ø  Job levels and compensation planning

Ø  Clearer understanding of what is required in roles

Ø  More compelling job descriptions

Ø  Effective sourcing and recruitment

Ø  Other foundational HR best practices critical for optimizing performance:

Ø  Setting out employment terms, policies and practices

Ø  Looking at total rewards; not just salary – benefits, options, career growth, incidental rewards

Ø  Performance management

Ø  Employment agreements, protecting IP and confidential information

Ø  Professional development & employee engagement

Ø  Not out of reach – many ways of achieving best practices


Finding talent: Strategic Sourcing vs. Recruitment

PASSIVE CANDIDATE NEAR-ACTIVE CANDIDATE

ACTIVE CANDIDATE

Career Sa'sfac'on Factors

Like People

Happy in Job

CompensaCon SaCsfactory

Career is growing

Learning/having new experiences

ExciCng Work

Fulfilling other needs (altruisCc)

Conventional sourcing strategies really only target active or near-active candidates.

BUT this is a very competitive market!


PASSIVE CANDIDATE NEAR-‐ACTIVE CANDIDATE

ACTIVE CANDIDATE

Perfect Candidate

This approach ignores a very large addressable market This approach is not

targeted to the perfect candidate for the company.

Most sourcing draws in those actively or thinking about a career change.


ACTIVE CANDIDATE

Near AcCve AcCve

Near Active

Near AcCve

AcCve

AcCve Near

Active Near

Active Near

Active

Near Active

Active Active

Active

Active

Active

Active

Active

Active

Active

Active Active

Active

Active Active

Strategic Sourcing vs. Recruitment



ACTIVE CANDIDATE

Strategic Sourcing & Recruitment

CRM – Candidate Relationship Management Program

Near Active

Active

Active

Effective Recruitment Campaigns


Understand your perfect candidate! Same principles as understanding your customer

SEGMENTATION

•  Research the profile of the perfect candidate for each role

•  What are the attributes, behaviours, career patterns and indicators of high potential

•  What are the relevant career satisfaction factors

Ø  This will inform key messages to these target candidates

Ø  AND channels to reach them

HOW - Strategic Sourcing & Recruitment




MESSAGING

•  Based on what you know and what you discover – develop the messages and brand that speaks to these passive candidates

•  GOAL is to implant the idea of your company as a career choice to all passive and active ideal candidates

•  This messaging will be heard through branding, recruitment activities, marketing programs, speaking notes, and on-line activities and promotions




CHANNELS

•  Based on what you know and what you discover – develop strategic sourcing programs that address a full spectrum of channels to REACH the active, near-active and passive candidates

•  Develop plans and programs with a view to: Ø  find talent

Ø  nurture relationships

Ø  convert passive candidates to active candidates

Ø  close on perfect candidates



Understanding who you are targeting; what they care about and how to reach them will result in:

1.  Clarity on what a successful candidate looks like for your organization And avoid hiring based on what skills present themselves

2.  Creating a compelling job posting that will speak to the best candidates for your company – giving higher likelihood of good matches And avoid generic descriptions that cast a wide net and loses the interest of your highest potential hires

3.  Allows you to roll out an effective recruitment campaign that will reach the target candidates that are best for your organization

Avoid shotgun approaches that can be noisy and expensive that miss reaching your high potential hires


Tight Execution is Key

Focus in on a tight plan in the context of a bigger picture

Effective Recruitment

•  Know what you are looking for and when •  Think of a highly targeted approach •  Process from start to ‘in-seat’ will generally take no less than six weeks

WITH all stars aligning – plan for 2 months or more if highly specialize role •  Think before you act – a little preparation will make the effort much more

productive

Organizational Milestones

CEO

R&D Lead

CFO (P/T?)

PLM

Sr. R&D

Marcomms

Int./Jr. R&D

BD/Sales

QA

SE’s Sales

(Hunter) Sales

(Farmer)

CTO

Sales Support

Customer Support

HR (P/T?)

VP Sales

VP Marketing

Admin. Support

CFO (F/T)

Accountant COO? HR

(F/T?)


Sourcing – a new world.

High Credibility Sourcing

Low Credibility Sourcing

Trusted Individual Endorsement

Executive Search

Employee Word of Mouth

Employee Referral Program

Social Networking Recommendations

Recruitment Firms

Internal HR

Job Board

High Cost Process

Low Cost Process

There is a LOT of noise!!!


Sample Sourcing Strategy & Recruitment Plan


Social networking tools

Pro’s Con’s Tips Huge reach in all geographies Volume is overwhelming Filter your search in terms of

geography and use additional filters

Can reach specific individuals who seem to be a good fit

Will be contacted by many who think they are a good fit

Use In-mails to send customize messages to candidates of interest AND follow up

Can post jobs Any posting will get a huge response from candidates around the world

Compelling description that speaks to the candidate you want to reach will allow for easier filtering

Can target communities by connecting with user groups and using other social media

Some user communities shun recruitment efforts

Preferable to have outreach from someone in the company Some user groups have job boards

Can see recommendations on individuals

Some have become expert at getting referrals from everyone – more noise

Filter the recommendations – which ones do you trust Still do your own reference checks

Lots of statistics to look at about companies and individuals

You have to read into these to understand what is self-promotion vs. legitimate signs of excellence

Read with a note of skepticism – always do your own due diligence



90

?

69




Social Networking Tools – Best Practices

Ø  Post your opportunities on your corporate Linked In and personal LI

Ø  Push out to target communities

Ø  Search and contact those of interest with In-mail or call; customized

contact only

Ø  Trust your own networks – with a critical eye

Ø  Consider Ad-words to create presence in relevant communities

Ø  Post messages or tweet opportunities

Ø  Give attention to your company’s corporate profile


WRAP UP The Case for Candidate Relationship Management

Ø  Increasing competitive pressures Ø  Sourcing tools creating a lot of noise Ø  Recruiters – still the most expensive option Ø  Small teams = more accurate recruiting It is not hard – you know your perfect candidate IF you think about it in advance!

Ø  Use this knowledge to describe what you are looking for and what you offer

Ø  Use this to set a sourcing strategy – who to target, where to target and what messages to use

Ø  Use this knowledge to screen and select your perfect candidate

Ø  Manage relationships with passive candidates – let them know about you BEFORE you need them and before they think about career changes


Ø  Similar concepts to Customer Relation Management principles Ø  Once you identify high potential targets – you want to nurture the

relationship Ø  Let them know about you

Ø  Contact them periodically with your news

Ø  Network with them

Ø  Let them know about you before they are thinking about a decision on their career

Ø  This can be as sophisticated or as simplistic as you wish – the goal is the philosophy of nurturing relationships – founded on knowing your high potential candidates

WRAP UP The Case for Candidate Relationship Management

Planning the organization & knowing what you want and need will ultimately drive TALENT MANAGEMENT SUCCESS !!


THANK YOU!

QUESTIONS or COMMENTS

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