As a startup, one of the first challenges you’ll encounter is hiring the right people for your organization. It’s critical to craft a hiring plan for a startup, as the first employees often fill much larger roles and are charged with the task of laying foundations for the business.
First off, what is a hiring plan?
A hiring plan budgets every role and department in your organization. It includes details such as financials, headcount, and target hiring timelines. The startup’s leadership team and major stakeholders are responsible for crafting the hiring plan and making sure it provides a clear roadmap for the business’s hiring goals.
Why do startups need a strong hiring plan? And why do VCs care about hiring plans?
All businesses need hiring plans, but startups must have strong hiring plans in place. If you’re a startup, your key stakeholders—such as venture capitalists (VC)—will want to know that you’re getting this area right, too. There are a few reasons for this:
Startup hiring is different
Unlike the established business that hires as a position is vacated or as an area of the business grows, the startup hires differently—including hiring from the top down. When filling your first major positions, there is much at stake with every hire. The employees you bring on board early on will set the tone for the company.
Concrete infrastructures and corporate hierarchies
While having the right team is highly important to VCs, the reality is that it might be weeks, months, or up to a few years before you hire all of the right pieces. Crafting a hiring plan demonstrates that you’re invested in the structure of your organization. It also shows stakeholders where their money is going. For this reason, talent partners at VCs may collaborate on your hiring plan.
It’s never more important to fill skill gaps for major positions
Let’s face it—when you’re filling your first major positions, you need a few people who are capable of doing a whole lot of hard work. Skills gaps that are usually filled by specialists down the road need to be filled by fewer employees. By fleshing out a hiring plan, covering these skill gaps won’t be an afterthought. You’ll define clear roles and responsibilities for all of your new hires.
Determining budgets and salaries
Now it’s time to talk about money. What is your budget for payroll? How do you determine salaries for different positions? Here are a few important tips:
Play “day one” costs for your business startup
Knowing exactly where the money is going on day one of your business is critical to figuring payroll costs. Run the numbers, check them twice, and then you can begin to work on payroll.
Offer competitive executive-level salaries without draining your operating costs
When determining executive-level salaries, there are a handful of factors to consider:
- These employees are going to drive success at your organization
- Some executives are deterred by the volatility of a startup
- You may need executives to take on larger roles and fill skill gaps initially
- You need to incentivize loyalty to your organization for continuity’s sake
With all of this in mind, it’s not likely that your startup will be able to attract top executive-level talent without offering competitive salaries. But of course, you may not be able to outbid other organizations with your budget, either.
Find a middle ground where you’re able to offer competitive compensation without putting unneeded financial pressure on your business.
Set salaries based on contribution to the organization
As a startup, you’re likely going to need your employees to shape-shift from time to time—filling skills gaps and performing tasks outside their traditional roles. With this in mind, be sure to set salaries based on how much your employees will be contributing to your organization—not solely what their job title typically demands.
Navigating candidate fears of joining a startup
At a startup, the first employees are often the most difficult to find. But persuading candidates to join your startup is an equally difficult challenge.
Nine out of 10 startups fail, making the decision to join your startup a risky one at best. How can you convince a candidate to join your early-stage startup? What can you offer to help ease their worry and make the opportunity to feel more secure?
Offer competitive compensation
There is little reason for a highly qualified candidate to choose your startup over an established business if the dollars don’t add up. While you may not have the money to outbid large companies, it’s important that you at least offer competitive compensation.
Sell them on your business
Similar to how you would earn the support of investors, sell your business to your candidates. Paint a full picture of your business, showcasing your business plan, company infrastructure, vision, values, and culture. This will go a long way towards ensuring candidates that you’re offering a stable opportunity.
Sell them on their role
If there’s one major selling point of working at a startup, it’s the roles that employees are given. Startups entrust their first employees with plenty of responsibility and many candidates enjoy that challenge.
Show your candidate that there’s a clear role carved out for them and that they will function as a key cog in the company’s direction and decision-making processes.
Offer opportunities they might not find elsewhere
Your company may not be able to offer comprehensive benefit packages at this point, which means you’ll need to get creative with benefits.
Accommodating their needs, offering flexible hours, and providing work-from-home opportunities will help offset what you may be unable to provide in traditional benefits.
How to create a hiring infrastructure
Systems and processes exist to promote organization and efficiency. Without a strong hiring infrastructure in place, you may find that the hiring process is highly expensive and drawn out, and that top candidates often slip through your fingers.
What does a hiring system look like?
While hiring systems may differ slightly from company to company, they typically include the following steps:
- Identify a need. Especially at a startup, you don’t hire an employee without having a clear need. Determine what role is most important to fill.
- Craft a job description. Once you have a title, a list of responsibilities, and skill gaps you need your new hire to fill, carefully craft a job description that will attract the right candidates.
- Source candidates. Post your job description and ad to job boards, recruitment sites, and social media networks. Also, consider referrals as a method of sourcing candidates.
- Review and screen candidates. Review applications and resumes and start narrowing down your list to the top candidates you want to consider for the position.
- Hold interviews. Conduct interviews with shortlisted candidates. Determine in advance how many “rounds” of interviews you plan on holding.
- Check references. If you don’t already have references from your candidate(s), request and check them as a final measure.
- Make an offer. Extend an offer to your top candidate. This letter should include the position’s salary, benefits, and start date.
- Onboard your new employee. The onboarding process is often overlooked but can make or break the employee experience. Provide proper orientation and training for your new employee.
What technologies and tools do you need?
At a minimum, you’ll need to develop a hiring plan. This spreadsheet is your roadmap for hiring—not only for the next few weeks but also throughout the coming months and years. Your hiring plan should include the following:
- Headcount (positions and departments)
- Annual salary
- Start month
- Payroll timeline
You can also leverage recruiting software to make the hiring process more efficient—such as applicant tracking systems and candidate relationship management tools. Keep in mind that you’ll also need active accounts on job boards, career sites, and social media networks to move quickly and waste no time sourcing candidates.
Finally, if you plan on conducting digital interviews, you’ll need to use software with two-way and recording capabilities.
Doing it yourself vs. hiring an agency
If the hiring process already sounds exhausting, that’s because it is. While some startups opt to conduct the entire hiring process internally, many benefit from working directly with a recruiting agency.
The reality is that startups often lack the expertise, experience, and resources to perform the hiring process properly. Not to mention, most startups don’t have recruiters on staff. Recruiting agencies, on the other hand, have established hiring infrastructures and networks, allowing them to operate on behalf of the startup and deliver stronger candidates, much faster.
Leverage the expertise of a top recruiting agency for your startup
If you want to give your startup a recruiting advantage, consider partnering with a top recruiting company such as Hunt Club. Hunt Club leverages the power of relationships and referrals to find the best talent.
Whether it’s identifying your hiring needs or finding the right candidates for your startup, we can help.
Ready to hire top talent for your startup?