In a recent NY Times article, (www.nytimes.www.nytimes.com,“At Startups, Pink Slips Come Early and Often”, December 13th, 2013, p. B6, the author describes various instances that come into play where certain team members just don’t cut it. Yet, it seems that everyone believes that the problem is endemic with start-ups and their infrastructure. While that might be true to some degree, I feel that there are “best practices” that reduce this headache. Firing someone is not an attractive option even for a startup, and it reflects on the hiring skill set of the senior managers. Firing someone slows down the growth of a company – first, during a period of time, the company loses a productive player, and, second, the management team now has to carve time to interview and hire a replacement. Not an efficient way to run a fast, growing startup company. I have discovered various red flags to avoid that firing option way before the hiring stage, and how to set up personnel efficiencies.
First, even though a founder has every right to hire his or her acquaintances, friends or family, he/she has to determine in terms of “absolute analysis” whether that hiree will work out. For example, I was intimately involved with a tech startup whose CEO decided to hire his buddies, his buddies’ friends, or acquaintances. His CMO was also his golfing buddy. Now, this company was developing a digital website portal. His CMO’s prior experience was in clothing design and apparel. At times, I saw him designing shoes, which work had no correlation to the predominant strategy of the company. He added a staff member who had been employed to “twitter” the product, which did not exist at the time — hiring too early. Others were hired for their Hollywood-like personalities for business development — previous experience, secretary. With a startup company, each dollar is dear. Each new employee must bring with him or her some return for that dollar. If that person cannot deliver, the return will be negative. Of course, that company failed.
Now I briefly mentioned the terms, “absolute analysis”. This phrase means that, in the case of the CMO job position, that person needed direct experience in digital marketing and development, specifically, knowledge and experience in digital marketing tools such as SEO. And any senior marketing position should require strategic development skills. In other words, even if that person is a friend, by using absolute analysis, the founder should have bitten the bullet and expose his friend to the harshest evaluation light against the very important requirements of the position – whether that person is a best friend or relative. In other words, there is no problem hiring your friend as long as that person would fit the job perfectly if he/she were not related to you.
Second, startups have unique working environments. Generally, the teams tend to work in an open space where every little quirk is being observed. It is not the best work space for individuals who are better off working in closed offices. I once worked with a lawyer in a startup who kept his own refrigerator in his office and kept to himself.. He did not participate in the lunch meetings. He did not last long there, since his unique work and eating habits rubbed across the grain from the rest of the company.
Third, a bad potential hiree is the “corporate” guy. Startups are, by nature, small. Each member of a startup is expected to do everything, including “washing the windows.” Large companies are comprised of specialists. I once chatted with a management consultant who told me that the more established employees were reluctant to change their work procedures. The longer they worked there, the least likely they would change the business process. Now one can find a flexible corporate guy who can fit the entrepreneurial environment. But I always recommend interviewers to raise this same issue to interviewees who have considerable corporate legacy. Some senior guys have had secretaries to pick up their coffee in the morning – and in the startup world, they need to make it themselves.
And what if you do have a bad apple? I always recommend to act as quickly as possible. Prior to hiring, I inform the candidate about the HR policy of a 90 day test period in order to avoid any potential litigation. That provides the senior managers ninety intense days to evaluate the hiree. Startups need to move fast and furious. A bad apple interferes with that speed. In contrast, I worked in a large companies with tens of thousands of employees where one bad apple can survive with politically savvy skills. Office politics cannot function in a startup environment. Every member of the team has to contribute to the business plan, or the company will fail.
About HR policy. Every company needs one — even for a startup. Always prepare an employee manual, since a company needs specific guidelines that describe the holidays, employee expectations, regulatory policies, and the perks. I remember in one startup being asked by a new employee if the company had certain holidays. Part of my equation for accelerating growth is to develop employment guidelines so there are no hesitations or doubts about a corporate process within the team.
Finally, since startups need to operate at warp speed, I do believe that the team has to work in unison. In an earlier blog, I have used football as a metaphor for business. One prevalent high school football team tradition is the pre-season training season where the teams eat and bunk together in order to build a “team” like atmosphere for a week. Football players timing is measured in seconds and each team member contributes to the speed and executions of each play measured in those seconds. One mistake by one team member and the play fails. Startups need to build similar camaraderie. And with this process, one can begin to weed out those who don’t belong. In startups, I always allocate a budget for in-office Friday lunches for that reason to create a team environment.
As I related earlier, one can identify the right team member effectively, without going through a whole process of hiring and then firing. Part of this transparency is set by being up front with regard to startup working environment. Another is to interview the people based on their skills, not just because he/she is a friend or referred by a friend. Each new member in a startup is a critical cog for the company to move quickly. Bad hires are monkey wrenches that lock up that cog.