2nd Annual Lightspeed Startup Hiring Trends Report
Startup Human Resources (HR) and Recruiting leaders are emerging as the next wave of business executives. Gone is the perception of HR processing paperwork as Recruiters passively wait for applicants. A modern HR/Recruiting leader makes their executive team smarter about finding, hiring, and developing a company’s most important asset; people. To do this effectively, they must be armed with data and insights that span recruiting, human resources, and people operations. Unfortunately, there is very little startup benchmarking data in these critical areas.
The mission of Lightspeed’s Talent Infrastructure team is to empower startups with such data. Our 2nd annual Startup Hiring Trends report analyses trends at 300+ companies within Lightspeed’s portfolio and the broader startup ecosystem. The report dives into challenges, highlights, and best practices across the employee life-cycle.
Data makes the difference
Startups who tracked metrics were 58% more likely to hit their hiring goals.
While tracking metrics to improve decisions may seem obvious, only 60% of startups reported tracking anything. Without data, companies are left with guesswork and maintaining legacy decisions.
At a minimum, companies should track interview pass-through rates, interview time, and reasons for offer declines. More advanced companies will measure the full employee journey including engagement, attrition drivers, and the impact of people programs.
The majority of startups feel they are behind on diversity hiring
93% of startups rated themselves as “not at all effective” ”minimally effective” or “somewhat effective” at diversity hiring
Progress doesn’t happen on its own. While diversity and inclusion is an increasingly common focus within hiring, we have not seen a proportional investment of resources. Less than half of respondents had a diversity hiring goal, only 27% provide unconscious bias training, and only 24% invest in diversity and inclusion programs. It’s not surprising that the vast majority of companies feel behind in their diversity and inclusion efforts when very few set goals or invest in workplace programs to support them.
Building a diverse team not only affects a company’s internal culture, it can directly impact the bottom line. McKinsey recently found that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.” To build more successful companies, startups need to invest in diversity and inclusion: recruiters, programs, training, etc.
The rule of “happy thirds” for hiring
Successful startups at all stages maintained “happy thirds” hiring ratios: 1/3 sourced, 1/3 applied, 1/3 employee referral.
A balance in source of hires mitigates the risk of over-relying on any specific channel, as well as maximizes your ability to meet the best candidates. If one of these hiring channels decrease, companies will need to make up the difference with staffing agencies, which are expensive and can have variable quality.
To ensure your thirds stay happy, invest in company branding, develop an effective referral program, and teach your entire team how to engage passive candidates.
Where to go from here
Use the full Startup Hiring Trends Report to understand how you compare to peers, anticipate challenges, and arm your executives with critical data. Getting a seat at the table is not just about solving problems, business partners make their executives smarter about how they scale their organizations.