On Talent: Thoughts on Optimizing the Employee Lifecycle
When it comes to scaling a startup, it’s undeniably important to focus on the three Ps: Product, People & Product-Market-Fit. Early on, Product & People are working tirelessly to find the third P. But once that happens, it’s a matter of scaling that initial success across each of these categories. And that’s notoriously hard to do. Furthermore, once you’ve built a minimal viable product and identified product-market-fit, the downstream functions — engineering, marketing, sales — have fairly standardized frameworks and playbooks to follow. This is less the case with hiring. Why? Because things like culture and talent are hard to measure, especially in a short period of time. Comparatively, core functions like sales and marketing have tried and true KPIs, with objective, mathematical outputs.
Human Resources — the department responsible for hiring and engaging talented employees — tends to take the backseat in many startups. But this can be a significant mistake. Here are two primary reasons:
- Employers are increasingly struggling to attract and retain top talent due to heavy competition and a hot tech sector
- The best HR teams are building more sophisticated models for hiring and engaging their employees
More and more, the recruiting function serves as a lever for growth in the tech sector. Bad hiring decisions can be costly. Good hiring decisions can provide outsized returns to the business. Ultimately, there’s a lot that’s counter-intuitive in the messy, subjective world of people (as opposed to numbers). Let’s look at the three phases of the employee lifecycle and figure out how to best position yourself for success before, during and after the tenure of your future teammates.
Hiring
If you’ve spent any time on either side of the hiring process at a startup, you’re probably aware of the variance, nuance & contention it can spark.
- Do you need consensus from the whole team?
- How much does personality factor into the equation compared to skill-set?
- How do you define a “culture-fit”?
- How many interview rounds and case studies does a candidate need to pass before moving to the final round?
There’s not an exact science to this and it certainly differs across functions — developers versus sales rep, say. According to Tyler Cowen, George Mason University Economics professor and author of “Talent: How to Identify Energizers, Creatives, and Winners Around the World,” there is a framework worth following to streamline your hiring process.
#1 Reduce the Number of Interviews in Your Process
At some point, the costs outweigh the benefits. In fact, Google conducted a study that found four interviews was enough to predict a new hire’s performance with 86% accuracy. Generally speaking, it’s wise to trust Google’s math.
#2 Identify a Decision Maker (Hiring Manager)
It’s important to be explicit about who the ultimate decision-maker is. The consensus approach might feel more democratic, but for the sake of efficiency and accountability, one hiring manager should be responsible for the decision. You can grant veto powers to others, but keep it simple.
#3 Score Candidates Numerically
As stated, evaluating people can be messy. Get interviewers to submit a score on a numerical scale and ensure it’s before they get input from other interviewers. This helps bring focus to the overall quality of the candidate (i.e. that one off-putting comment won’t disqualify a perfectly good interview) and helps to avoid groupthink — an easy trap to fall into.
#4 Remove the Hardliners
Track and identify the harshest hiring managers (those who turn down the most candidates). If they aren’t extraordinarily good at picking winners, have a conversation with them and remove them from the interview team.
#5 Reward Good Picks, Don’t Punish the Occasional Bad
Incentivize good hiring choices by rewarding good picks while avoiding negative criticism of the bad ones. Positivity is key. If bad choices are punished, hiring managers will be overly cautious and avoid risks — and sometimes those risks pay off.
Retaining
Employee retention didn’t come into the popular vernacular until the past couple of decades. Just a few generations ago, it likely would have been laughed at, since the corporate norm (and professional status symbol) was centered on long-term commitment followed by a healthy pension. Now, at least in the tech sector, it isn’t uncommon to see a series of 1–2 year stints at a variety of startups and Fortune 500 companies alike, especially in the early parts of one’s career. The root causes here are myriad (although often blamed on millennial malaise): a rapidly changing technology landscape, expanding economic opportunity (globally), a decline in traditional incentives (i.e. pension schemes) and increasingly competitive benefits offered by the upper echelon of the tech sector. According to a 2021 Gallup Poll, 6 in 10 millennials are open to new job opportunities at any given point in time. Millennial open-mindedness and curiosity is a double-edged sword for employers: a large, creative talent pool with flight risk. Which brings us back to our original question. How do you retain talent in 2022?
In our world — the international, high-growth tech sector — there are several best practices we’ve come to learn. In a conversation with Sandrine Meunier, Chief People Officer at Aircall, she shared her personal experience overseeing human resources at large, global luxury brands, and previous startups like Ledger as well as her vision as CPO for Aircall. There were two principles in her philosophy that stood out:
- Talent Density
- Company Culture
Talent density is exactly as it sounds — recruiting as many highly qualified individuals as possible. This statement is intuitive, bordering on obvious, but her reasoning is extremely insightful. Sure, you want the best and brightest working in your company, but as a by-product, you get high employee engagement, because smart people like working and socializing with other smart people. Finding out a way to achieve this talent density and unlock its potential through collaboration, team-building, or cross-functional projects will develop loyalty and passion among an already performant team.
Company culture has become a staple of the tech industry: storytelling at its finest. A cohesive vision paired with a supporting value system helps attract talent and provides a guiding north star for company policy, employee autonomy and decision-making. But as you scale, particularly internationally, the “culture” becomes malleable, it has to adapt from the bottom-up. And if not, you may have a rebellion on your hands. Sandrine shared an anecdote from Aircall, where a difference of opinion on politics at the workplace pitted the New York and Paris offices against each other. In a case like this, it’s important to ask questions and find solutions that retain a harmonious macro-view but fosters individuality and the local level. Ultimately, it’s a tough needle to thread, but a critical one for safeguarding employee commitment. If this topic is of interest to you, Sandrine recommends a book titled “The Culture Map: Decoding How People Lead, Think and Get Things Done Across Cultures.”
Firing
Layoffs can be incredibly painful experiences for both employees and management. Which is why if it’s necessary to do so, it’s best done with empathy and dignity. In light of the current economic climate, this scenario hit headlines often, and there are a few standout cases where the leadership team did a commendable job in one of the hardest moments of their career. Companies like AirBnB, OnDeck and Shopify have all had to go through this process and these were the critical measures they took to soften the blow and maintain their positive public image:
- Issue a genuine, heartfelt statement from leadership on the current state outlining your logic behind the layoffs and measures you’re taking to reduce the pain. Here is what Brian Chesky, CEO of AirBnb, shared with employees in the early days of the pandemic which slowed the travel industry to a standstill.
- Provide a generous off-boarding package in the form of severance, advanced bonuses and continued healthcare coverage, where possible.
- Make serious efforts to help your employees get re-hired elsewhere. This can be as simple as managers sharing on LinkedIn or Twitter or by building a recruiting site to showcase laid off employees to prospective hiring managers
Got Talent?
Talent often appears abundant but can feel scarce. Starting a company is hard and part of the challenge is convincing a group of intelligent, driven people to get on board and work tirelessly to achieve what is often a bold, seemingly unattainable vision. If you’re at any stage of the employee lifecycle, hopefully these frameworks provide some value. The journey is long, keep building!
Speaking of talent… we’re looking to hire some ambitious people in Paris and Berlin.
