Are you stuck in the Catch-22 of hiring for hyper-growth?
Karat CTO Neil Kumar shares techniques for hitting hiring targets without sacrificing product deadlines
In 2018, total venture capital (VC) funds invested totaled $131 billion surpassing $84 billion invested during all of 2017. Compared to 2017, the median VC deal size experienced double-digit percentage growth across all investment stages — the highest jump since 2015.
The primary investment target of these funds are software-driven companies whose products and solutions are expected to change the way we do everything, from how we commute to the way we’re treated for cancer. These funds are often invested in companies that show huge potential in the short term, pushing them into hyper-growth mode. If these hyper-growth phase companies funnel their capital into the right teams and develop the right products, they will propel significant revenue growth in the very near future.
For many companies, this means hiring software engineers to do that product development. But two challenges quickly rear their heads:
1. Software engineering talent isn’t as plentiful as capital.
2. There isn’t enough current engineering capacity internally to conduct the interviews needed to hire new engineers and hit product goals.
At Karat, we see that the average company in a high growth or hyper-growth phase will increase the size of its software engineering team by 117% in 2019. Many have teams that are 100% dedicated to software development to begin with, with no available time for interviewing.
As a result, engineering leaders are fielding questions about the ability (or inability) to hire as well as reach product deadlines. Who among us hasn’t heard these questions like these, only moments apart:
“Your team needs to hire 20 new engineers this quarter, but you’ve only extended 5 offers so far. What’s going on?”
“Why is the deadline for X feature being pushed? Customers are begging for this.”
The answer may be tough to swallow. The fact is that you can rarely achieve both when you only have a portion of the existing team size you need to achieve product and corresponding revenue goals.
Due to this Catch-22, companies often miss hiring goals by as much as 40%. This leads to a significant amount of anxiety among tech hiring managers and recruiters. 83% feel that the tech talent shortage has hurt their business through lost revenue, slower product development, market expansion and/or increased employee tension and burnout.
I’ve been responsible for growing software engineering teams in a variety of circumstances as talent and capital markets have fluctuated. I helped grow the software engineering team at Yelp from 12 to over 200 software engineers. I conducted thousands (maybe tens of thousands) of first-round interviews and onsites in the process. It wasn’t easy then and it’s not easy today.
Yet, there are techniques you can use to get through it and optimize the hiring process while climbing a steep growth curve. Here are a few approaches I’ve taken in the past and continue to find helpful today.
1. Streamline the hiring funnel and reduce the number of onsites per hire.
When I was the VP of Engineering at Yelp, I created a recruiting team within my software engineering team. This was necessary because the skills we were looking for were incredibly specialized.
We found that building strong relationships between these two teams helped them make informed decisions on the cultural add and technical skills candidates would bring to the table. Recruiters and hiring managers should be able to speak about these topics early in the interview process. If they wait until the onsite interview to figure this out they’re wasting time.
However, if you’re trying to increase the size of your team by 50% or even 150%, you’ll probably need to look at other options to gain efficiencies throughout the hiring funnel. These options may include decreasing the number of onsite interviews you need through more a more rigorous first-round technical interview.
2. Pair a structured and consistent interview with a flexible candidate experience.
Investing in candidate experience will leave a big (and positive) impression on candidates. Consider that 83% of talent say a negative interview experience can change their mind about a role or company they once liked, while 87% say a positive interview experience can change their mind about a role or company they once doubted.
Dedication to establishing interview success criteria early in the recruiting process and quickly responding to candidates give you a speed advantage that other companies might not have. Also, recruiters who build relationships with candidates can more easily keep track of those who took offers at other companies, helping you better understand your hiring bar.
Technical interviews should be structured and consistent across your organization so that candidates can be evaluated on their merit and skills. Structure and consistency make repeatability possible. If multiple engineers are aware of this process and the criteria for success, then they should be able to assess each skill with equal reliability in the onsite loop. As a result, interviews won’t get delayed by scheduling.
Interviewing 24/7, giving candidates the option to redo the interview and the ability to schedule their interview directly with the interviewer will make your company stand out — no matter how sexy or unsexy you may feel your product is. Speed and flexibility are both critical to the candidate experience. At Karat, we see that when given the opportunity, 60% of candidates interview outside of business hours and 14% will redo their interview.
3. Unlock software engineering time and put it into product development.
Software engineers are motivated by solving problems. Interviewing can be a major distraction from that primary motivation. I’ve heard software engineers say that when interviewing, they only get about one and a half to two productive coding hours in a day. That’s a shame.
You can take steps to mitigate the amount of time software engineers spend interviewing and reward those that do.
- Schedule interviews in blocks of time: To help maximize productive coding time, consider accommodating maker schedules. This approach to scheduling recognizes that creative employees, like engineers, are most productive when they aren’t interrupted by meetings and interviews. Instead, it may be better to book them for blocks of time, rather than 30-minute interviews sporadically placed throughout the day.
- Test your technical interviews to verify they can accurately identify candidates that meet your hiring bar: Your team will ultimately decrease the number of onsite interviews software engineers need to participate in. Then, the creativity and time of a happy and focused team can be unlocked and reinvested into product development.
- Recognize interviewing as a skill in performance reviews: It can be very demotivating for software engineers to spend time interviewing and feel that it’s a tax on job performance, rather than a benefit to themselves and the team. Consider recognizing and evaluating interviewing skills on performance reviews. This way, you can reward it as well as look for opportunities to team members to improve.
Tech companies claimed the top five spots in the U.S. for R&D spending in 2017, investing a combined total of $76 billion. In order to keep up with the largest tech companies, it’s imperative to be strategic with how you motivate your software engineers and allocate their time.
Getting out of the hyper-growth catch 22
It’s true that there isn’t enough software engineering talent to meet demand. The tech talent shortage is real and the competition is not going to relent. However, you can find competitive advantages by:
- Working in lockstep with recruiting to streamline the process
- Testing your first-round technical interviews to ensure they identify talent that meets your bar
- Ensuring your interviews are structured, consistent, but are part of a flexible and fast process
- Reducing the amount of time software engineers spend interviewing altogether
As you look forward to your growth plans in 2019, you may feel like achieving your hiring targets while reaching product development deadlines isn’t possible. To be frank, if nothing changes in the existing process, that might be the case. To achieve your hiring targets and product development goals you’ll have to do what you’ve always done as a tech leader: experiment, innovate and lead by finding a better way to solve a very big problem.
To learn more about Karat and what we’re doing to increase interviewing capacity on software engineering teams, visit us at Karat.com.