Oops! Avoid these 6 big hiring and firing mistakes

Progressive startup entrepreneurs held a #FailCon — and this is all we talked about

Photo by Alex Proimos

As an entrepreneur, if you could guarantee that you would make excellent decisions in exactly one realm, what should it be?

The answer is: Hiring and firing.

Recently, half a dozen entrepreneurs who have been funded by New Media Ventures over the past 6 years got together to host a “FailCon” — where we shared the biggest mistakes we had made and what lessons we took from them early on. We didn’t discuss in advance what those mistakes were, we just started sharing.

Turns out, almost every single one of us shared a mistake we had made around hiring and firing. So, to save you a lot of time, money, and heartache, here’s a recap of the top tips we shared:

1. When you’re deciding what to hire for next, always revisit your mission.

One entrepreneur shared how, when her organization was around 10 people, she thought “we should have a Comms Director, because that’s what 10-person nonprofits do.” But the organization’s mission didn’t require earned media or much in the way of what comms directors normally do. So when they did hire someone, the person didn’t have enough work and created more of a burden than a help.

2. Be honest with yourself about how much time you’ll have to train new staff — and hire accordingly.

One founder shared an experience of hiring a junior level person for a piece of core work for her organization thinking that she would have the time and space to train that person up. She misread the amount of time it would take to do that training, leaving the junior level person frustrated with a lack of support and herself without a leader for core business for the organization. When you’re hiring, really think about whether you need a junior or senior level person, and don’t overestimate your ability to train someone up, especially if the work is urgent and central to your early success.

3. You *will* make hiring mistakes — and you need to let those people go quickly.

Especially if you have not had to fire many staff in previous jobs, this may be one of the hardest things for you as an entrepreneur. No matter how carefully you vet new hires, you will hire people who simply aren’t the right fit. You have to recognize the poor fit early, stop investing time and money into the employee, and let them go quickly.

One founder shared that he had a handful of early staff members who for various reasons weren’t really working out. He doubled down and invested in more training and management for them, in the hopes that he could make it work. And then he encountered the sunk cost fallacy: the more he invested in them, the harder it felt to give up and let them go. So he ended up wasting a lot of money and time over several years, and didn’t get the right replacements into the roles nearly as quickly as he could have if he had fired the poor fits quickly.

4. Invest in hiring great operations people early.

Finance, legal, HR, fundraising — these are areas that many entrepreneurs aren’t that excited about, or feel are less essential to their mission. But getting these things right is hugely valuable for avoiding completely avoidable disasters; they’re critical to having a strong foundation if you end up being in a position to scale rapidly; and they just make everything else much smoother.

Speaking for myself, I regret not hiring an experienced Finance Director until a year and a half after launch — it was a lot of extra work for her to put our books in any semblance of retrospective order, and I think it was pure luck that nothing had gone dramatically wrong with our bookkeeping up until that point. I’ve heard stories from other entrepreneurs who discover that they only actually have half as much cash in the bank as they thought they did, or owe lots of back taxes in a category that they didn’t know about.

Several founders talked about how revolutionary it was to find people for these roles who not only loved the organization’s mission but really loved the specific operations role they’d be playing — not people who just wound up as an accountant or an HR manager by accident. Those people do exist, and they will make your organization thrive.

5. Never skip formal processes (like evaluation periods) for friends or relatives.

Especially when you’re small, your time as an entrepreneur feels so limited that it’s easy to try to skip processes that feel unnecessary. You might be considering hiring a close friend, or taking an investment from a cofounder’s family member, and it might feel unnecessary or awkward to put in place processes like a formal evaluation period for them as a new employee. But not doing so makes your life much harder if something goes wrong, often with high interpersonal costs because of the pre-existing relationship.

6. Invest in equity and inclusion training before your team becomes more diverse, not just after.

Startups in early stages often have fairly homogenous staffs — e.g., your cofounders might not only come from the same racial and socioeconomic background, but all be the same age, have gone to the same college and pursued similar career paths. (To be clear: I wouldn’t recommend homogeneity at any stage, all else being equal — but early on it is very common.)

Meanwhile, as progressives, we all want to have diverse teams in the long run. I can attest from personal experience that, as you diversify, your internal organizational culture and processes will have to change if you’re going to be a good employer for more different kinds of people. This is a good thing, but brings plenty of challenges — and it’s best to start laying the groundwork as early as possible. Make sure that your job descriptions and hiring processes align with your diversity goals (see my piece “How your job descriptions are holding your organization back”). And invest in a training for your team around equity and inclusion even before you think it is necessary. By the time it feels essential, you’re probably already on the verge of losing your first female engineer, your only staff member from a working class background, etc.

Overall, remember: Missions succeed and fail because of your team:

who’s on the team, the culture they’re working within, and how you’ve structured their responsibilities and relationship to each other. If you focus on getting a single thing right as you grow from your original founding team to a sustainable organization, it’s got to be the people.

This article is one of a series of pieces I’m publishing with New Media Ventures, to support their investments in a new cohort of 17 startups doing vital work building progressive political infrastructure and championing progressive values.