Hiring and firing: the 2 questions startup CEOs always ask me

Written by Jenny do Forno, OMERS Ventures, Director, Talent

Before entering venture capital, I helped build companies from teams of zero to 1,500. I was part of teams that did seed, series A, and debt financing, and saw five different company acquisitions within three different organizations. Each of these experiences brought its own rewards, but by far my biggest joy was in the early days of startup life: turning an idea on a coffee-shop napkin into a fully-functioning, successful company.

Everything feels so make-or-break at this early stage. I know exactly how we agonized over our first, big hires and every time we had to part with employees — and the CEOs with whom I talk everyday in my role at OV still do. It’s no wonder their most common questions are often the simplest: What do we need to think about in making our first big hires? What do I do when someone we’ve come to know so well isn’t who we need in a role?

Thankfully, after 20 years, I have some ideas about these questions that founders continually ask me.

Jenny, how do we make our first big hires?

Think about it. When you and your co-founder make your first hire, you will be growing your company and capacity by over 33%. If you get that hire right, it will be a godsend that brings your startup much-needed expertise and momentum. If you get it wrong, you have just diluted your company and its capacity.

It’s nerve-wracking just thinking about it, isn’t it? First hires are hard, and these are the tips I share with founders to help them think about how to get this right more often than not:

• Hire for values and attitudes that make a good colleague, and not just for the technical skills your company needs.
• Reach out to experts in the domain you’re looking to hire in, especially if you are not an expert, and let those folks help you focus in on the specific skills and attributes you will need for that particular role.
• Don’t look for the right candidate for every stage of your company’s growth. Focus on the skills and the people that are excellent at what you need for the next 12 to 18 months.
• Reference, reference, reference. Ask around. Dig deep into your candidate’s history. Be thoughtful about what you want and need to know about your hire, and the people with whom you want to speak before signing them on; make sure at least one of those people is someone the potential hire reported into, one is a former colleague, and one is someone who reported to them.
• Hire for the values and attitudes that make for a good colleague and not just for the technical skills they will need. (No, this is not an editing mistake. It’s important enough to be said twice.)
• A good mantra to have in hiring is this: “Hire to raise the bar.” “Good enough” rarely raises the bar; don’t settle.

In one of my past companies, we had just raised a seed round and had seven people on the team. Then, suddenly, we had the opportunity to hire someone from a huge, big name tech darling. The experience, the pedigree, the credibility this person could bring was all so tempting. “This could be a game changer,” we thought.

Problem? He was a jerk, and there’s no other way to say it. We twisted ourselves in so many directions trying to convince ourselves that there was a way to hire him… that we could manage him… But ultimately, we couldn’t escape the fact that he was a risk to the culture and team we were trying to build and I had to tell the CEO it just didn’t feel right.

That person we didn’t hire? Last I heard, after a bunch of very short stints at other startups, creating a trail of discord in his wake, he went back to the big corporation from which he came. Don’t make a mistake and hire for just technical skills, without asking yourself if this person is a good fit for the team.

Jenny, we have someone on the team who isn’t the person we need in the role at this stage of our company. Help!?

This one comes as a hot tip that I learned the hard way. If someone is really not right for the business anymore, please, please, please don’t make a new role for them, change their title, move them around, or just find them “something.” This can create confusion, conflict, inefficiencies and — trust me — the inevitable will eventually happen. They will either leave, or you will be forced to let them go, with a high cost all around.

Let’s just say, I know all about your employee, “Joe.” He joined the company in the early, early days when you only had a half-dozen employees. Joe is amazing. He’s the best kind of colleague for an early-stage team, and helped get the first MVP out. He did a little bit of everything — coding, product management, sales, customer service. You name it; Joe was there to step in. So, as you grow and formalize, you enthusiastically gave Joe a slot on your Senior Leadership Team…but, turns out, Joe isn’t very good at that. Still, you cannot just get rid of Joe! He’s been there since the start. He is loyal. He was a critical employee for years one and two of the business. Everyone likes Joe; you must keep Joe.

So, you get him some training, but it doesn’t exactly work. And as the company grows, moving Joe around causes disruption on the teams you add him to. More-qualified talent in the company is overlooked — maybe lost — as you try to find the perfect slot for Joe. Finally, you settle on a senior-level individual contributor role for Joe, but he’s not really happy there. He knows what you are doing, and you know what? He doesn’t appreciate it! Joe kind of feels humiliated. And you know what else? The rest of the company also knows what you are doing; they feel bad for Joe, and also a little worried that you will do the same to them someday. Eventually, Joe leaves. Or you have to let him go, because he just doesn’t fit the company.

What happened here? Well, we both knew Joe wasn’t a fit. But in trying to delay the inevitable, we spent 18 months moving him from role to role before the company and Joe mutually decided to part ways. Sadly, though, Joe felt unnecessarily embarrassed and tired from this process, and we wasted valuable energy, time and resources internally. We damaged people and teams. People were distracted, forced to pick sides, forced to hear rumours, murmurs that they “saw it coming.” There was a lot of heartache, all around. In trying to make things easier for ourselves, we made it so much worse for our team.

So, when this happens to you — when you find yourself with a “Joe” on your team — first, breathe. Take a moment, and evaluate. Ask yourself:

• Is there still a role for this person in the company where they can drive value?
• Can you hire over them, allowing an opportunity for them to contribute and grow?
• What specific skills are they lacking? Can they develop them?
• Can you get them a mentor? A coach? Even training?

Think of those first.

But if deep down, you know this role isn’t the right thing for “Joe,” it isn’t the right thing for the company either. Think about it this way: The most compassionate thing you can do is set your once-perfect-for-the-business hire free to go knock it out of the park someplace where they are the right person, at the right time in the company. Help them be excellent somewhere else.

Separately, but importantly, on letting go: If you are sure you made a mistake in hiring someone new to a role — and you will make a mistake or two along the way — fire fast. It can be hard to recover from the time and cost associated with a bad hire, along with the corrosive impact it can have on your company and culture long-term.

Whatever your choice or path, lead with kindness and be generous where you can. Write a reference letter, help the person find a new role elsewhere, make introductions, etc. It costs you very little, and can go a long way to build good will and a strong brand.

On a final note, perhaps 90% of the time, these quick guidelines will get you through, and will be all you need to know. But the joy and frustration of people is that we are all tricky and messy, and things don’t always go to plan. I know it is much easier said than done, but the best you can do is start with good faith and transparency and, when you think of taking advice from others, remember that you know your team and company better than anyone else. Trust your gut.