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Creating a Winning Talent Pipeline for your Startup

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Your company has three basic choices when it comes to creating a winning Talent pipeline: your own in-house recruiter, an embedded 3rd party recruiter or an external headhunter. This masterclass brought together exponents from all three to talk about the pros and cons of each approach.

By way of introduction, John Hamm, Octopus Venture Partner, hammered home the importance of hiring. “The sober reality is, people are central.” John has coached over 100 of the world’s top tech CEOs in the past decade and revealed, “almost every problem I talk to CEOs about has its roots in the quality of the team”.

If You Remember Only One Thing

I followed this up by offering the key takeaway upfront. It was starkly simple: when it comes to hiring, “be f*****g brave, now”. You’re hiring someone to help grow your company so think about the role they will do in the future not just today, then think about the calibre of person you really need.

I hear far too often, “I need a junior operations person, a junior HR person, a junior finance person…” I also hear, shortly afterwards, “that junior hire we made didn’t work out.” Go big, was my message. Hire better and smarter than you. That person will pull you, and the company, up. The opposite is also the case, so it’s doubly important to hire up, not down, every time.

Some Other Quick Rules of the Road:

  • Diversity and inclusion: LinkedIn’s great, but the more diverse and varied your talent sources, the more diverse and varied your hires. Aim to create a diverse talent pipeline that reflects how you want the company to be and a culture that is inclusive enough that will retain diverse talent.
  • Culture additive, not culture fit: stay in tune with your values but look to enrich your culture with each hire, not replicate it and definitely don’t dilute it!.
  • Smart tools: there are lots of good ones out there: Textio for making job ads far more appealing to women – sadly many job ads are worded to look very male biased – and Beamery for applying smart CRM to your talent pipeline. There are many more you can use of course.
  • Sell your purpose: any candidate, successful or not, should come away knowing, “this is why they do what they do”. If you don’t communicate that, why would they ever join?
  • Soft referencing: following up with many of the people mentioned in an interview (avoiding the current company of course) will vastly extend your knowledge of a candidate, well beyond the ‘safer-bet’ official referees.

In-House Recruiting

First up, to talk about the in-house option, was Kaija Barnes, from MOO.

Kaija has been part of the internal team scaling it from 300 to 500 in the last 3 years, as well as building her own talent team from 3 to 7. She mapped out the case for having in-house recruitment, alongside an HR team.

From the Inside Out

Internal recruiters will know your business inside out. They’ll be more visible and available to you, placing you closer to each search. Recruiters imbued with your culture (because they helped create it) are more likely to bring in hires that fit and enrich it. Candidate experience, from the first interaction, is paramount these days, and internal recruiters are better placed to give each one an experience that will make them advocates of your company, whether you hire them or not. Lastly, cost is more efficient and controllable with an internal team.

Part of the Mix

Kaija was open about the limits of internal recruiting too. A small team handling a high volume of hires will be forced to prioritise, so not every part of the business may be served equally. The answer is to complement in-house teams with other sources. In fact, internal recruiting works best as part of a mix. For specialist roles, agencies can add value (and cost) as they will have networks and sector specialism. In-house teams function at their best only if the company invests with a budget that takes into account the cost per hire, which should include tools (like Applicant Tracking Systems (ATS), LinkedIn and job boards), events, referrals, and global mobility.

Kaija shared that at MOO, 80% of hires are direct, 20% are a mix of agency and embedded (more on them later). A clear process is in place from sign off to sourcing, screening, interview, decision, offer and onboarding. She shared some details including a friendly, colourful email, in tune with MOO’s culture, sent to candidates before their interview addressing the simple question, “should I dress up?” This is the kind of engagement that enriches the experience so central to the company/candidate relationship.

Kaija had introduced an apprenticeship scheme into MOO. Championing internal talent is something only an in-house recruiter can do and it helps ensure the whole business is consistent with the hiring process. Reporting and analysis – for example, conducting candidate surveys or analysing time and cost per hire – are uniquely suited to the in-house point of view.

The Employer Brand is the outward facing edge of the candidate experience. This can be handled by marketing, but in-house recruiters will be better placed to nurture the customer brand, making use of internal brand, communications and marketing specialists. A consistent Employee Value Proposition (EVP) sets the narrative for all employer related content. Kajia advised ensuring its consistency across all platforms, such as LinkedIn, job boards, Glassdoor and Instagram amongst many others. Feedback and surveys are invaluable for continuous improvement and maintenance of EVP and candidate experience.

Kaija pointed out a salient reality:

“Glassdoor is widely used and if a hiring manager is not singing from the same sheet as a recruiter, the candidate can make sure the world knows on Glassdoor.”

Finally, she ended with some key tips on how to get the best out of an internal recruitment team:

Invest

Provide an internal team with the budget and the time that enables them to succeed in both hiring and building a strong employer brand. Complement them with agency use for senior or specialist roles.

Empower

A recruitment team needs to own hiring AND employer branding. They may not be marketers, but they are specialists in hiring and candidate experience.

Trust

Hiring managers need to trust that the recruitment team are experts and let them own the process.

Communicate

Evaluate the process along the way so tweaks and changes can be made. Make sure all candidates receive feedback. Every person who engages with your hiring process is a customer.

Train

Hiring managers should have interview and values training to ensure the candidate experience is consistent.

Analyse

Assess, analyse and report on hiring. Reveal the trends that will power continuous improvement.

The Embedded Recruiter

Next, representing the embedded recruitment option, was James Peters. James is a Partner at Scede, a six-year-old company of over 25+ recruiters that helps high growth technology start-ups and SMEs to scale by building primarily product, engineering and design teams. Scede have helped more than 10 different Billion-dollar startups to scale so far. James is currently consulting with Seatfrog, an Octopus Ventures portfolio company and ran through examples from other VC clients including HailO, Supercell and Klarna.

Embedded recruitment is a resource that builds and implements a company’s recruitment process within a hybrid delivery model. An embedded service like Scede’s will take full ownership of the process from talent identification to outreach, screening, coordination and offer management. Candidates are not shared with other Scede recruiters so there is a strong focus on building your own talent pipeline.

Clearing Bottle-Necks

A good embedded recruiter can step in when hiring is ‘bulging’ and starting to restrict a company’s growth. It’s essential the recruiter quickly gains a clear view of the ‘who’ and the ‘what’ of the client company, as well as assimilating its culture. The key benefit here is freeing-up management to get on with the business of building out product. An embedded team will be scalable as well as diverse – an important factor when multiple locations, or re-locations are involved. If an internal team is already in place, an embedded service should work seamlessly alongside them, with a clearly delineated focus.

James described the kind of scalable recruitment model he would create for a client company, based around a simple Attraction, Activation and Coordination model. Business time required to make a hire is brought down – in one example, from 25 to 15 hours – and hiring timescales are also reduced, down from months to weeks.

Going External

Lastly, Peter Franks of Neon River made the case for using external head hunters, A.K.A. executive search. The raison d’être of executive search, Peter said, is to convert passive candidates. This is a clue as to the role external search recruiters might play in your business. External head hunters are for the 20%: the roles that are pivotal to the success of your company, rather than the heavy-lifting job of building out the team.

As Peter pointed out, the best candidates are happy where they are and they don’t respond to standard job adverts. The skill of the external search recruiter is to persuade them that there’s something better out there for them that they hadn’t considered. This is only done by telling the story of your company in the most compelling way possible. It’s more like pitching to investors than inviting an interview.

The Process

The process is two stage: first, like a marketer, it’s about segmenting the audience to zoom in on the sources. Bottom-up market research might identify 100 or more candidates, very possibly from a range of sectors and geographies. This stage is time – and therefore cost – intensive. Subsequently, there will probably be a fee up front as external recruiters at the level of Neon River tend not to work no-win-no-fee. This first stage builds your pipeline of candidates which is then distilled down to the best possible quality.

The second stage assesses the shortlist of candidates and manages the process. The skill is to keep a candidate focused on your company, as they may now be roused into looking elsewhere too.

Persuasion

Candidates may not have heard of your company. There are big search firms out there, but for smaller, VC-backed companies, boutique firms like Neon River are more suited to the nuanced, harder sell, briefs. The skill of the recruiter is to really excite them with the adventure of working for your company. As John Hamm said, “when reaching for A players, you’re often dealing with the illogicality of a hire. You’ll say, ‘it’s nuts for you to join me, but I want you to. Let me tell you why.’” The right external recruiter will turn illogicality into irresistibility.

Peter Passed on these Powerful Insights:

Calibre

Focus on calibre, not qualifications. A Players, X Factor, the magic ingredient – whatever you call it, as founders, you’ll know that it takes more than industry requirements to really shift the needle on a business. The person you’re looking for might not – perhaps should not – fit the cookie cutter.

Stakeholders

Avoid too many stakeholders. Multiple opinions can spoil a clear process and lead to analysis paralysis.

No Surprises

Having said that, don’t surprise stakeholders either. An 11th hour rejection from an excluded stakeholder isn’t uncommon. Keep them informed from the beginning, factoring in considerations from the start.

Avoid Waste

Don’t waste time on average candidates. The reality is, only a very small number of candidates are true A players. Double down on quality, then you’ll be able to invest twice as much time going after the right person.

And 5 Ways to Enhance the Process:

1. Build an emotional attachment with candidates. Invest time in getting to know them, take them out to lunch. It’s much easier for them to say no if that personal connection isn’t there.

2. Stock options: explain them clearly. The truth is, most candidates won’t understand VC-backed stock options. Helping them with clarity builds trust as well as revealing the true remuneration picture.

3. Move quickly, but don’t hustle. Like a romance, too many steps will kill the interest. Be encouraging, not pressurising.

4. Soft reference, but tread carefully. Keep the candidate informed if you’re following up backdoor references that have come up in interview.

5. Ask yourself, how entrepreneurial is this person? Growth companies have constrained resources, ambiguous strategic decisions and need scrappy, hands-on leaders. Is your candidate ready to roll up their sleeves? You might test this by asking them to present on a case study.

Finally, the importance of hiring now, the best you can possibly find and afford was stressed to the Nth degree. A players consistently hire other A players and actively enjoy working with them and the performance culture they help create. B and C players tend to hire down. It doesn’t take much to work out the trajectory of your business if anything less than A Players are hired. But how do you find them? The three models outlined above each have their strengths – and can be deployed in combination – to make sure you find the very best talent.

 

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