Decisions relating to people are among the most consequential decisions founders make in the company-building journey. This is especially true for companies in the knowledge economy, because unlike traditional companies, new-economy companies have no physical assets or plant & machinery. Talent is your principal asset; hire the right people and they will find solutions to difficult problems, discover business models, recognize new opportunities, build new products, shape company culture and ultimately recruit other talented people.
When we look across the Lightspeed India portfolio, there is a clear relationship between the quality of people, quality of execution and ultimate success. Said another way, outlier execution ultimately revolves around people – quality, fit to the specific context, and how they are harnessed (alignment, culture, empowerment, process).
Given the importance of getting people decisions right, you would likely assume that most leaders are proactive, thoughtful and deliberate about the people they hire. But I’ve observed that hiring decisions are frequently made superficially, reactively, and sometimes even impulsively – all in the name of speed. While the decision-making is fast, the irony is that the vast majority of these decisions will actually slow the company down.
Imagine you’re building a complex, sophisticated machine (which is what the best organizations are). Would you just start putting together the first parts that come your way? Or would you invest some time and effort in designing the system, identifying the most critical parts, thinking about how those parts fit together and making sure you find the right ones? Which machine would ultimately go fastest and be most durable (or even simply work as intended) – the one assembled thoughtlessly but rapidly, or the one assembled deliberately and mindfully? The ultimate goal is to solve for speed and quality – to move fast while identifying and attracting the right people; those that will make a huge positive impact on the company.
This post captures some of the things I’ve learnt about how best to plan and execute on hiring leadership talent at early or growth stage companies in the knowledge economy in India. I hope you find this helpful and look forward to hearing what has or hasn’t worked for you.
Look into the future and around corners. Consider the following questions:
- What are the most important things your company will need to accomplish over the next 18-24 months?
- What capabilities will you need to accomplish those things?
- Where are your capabilities currently strong and where are they weak?
- What does that mean for the capabilities you need to build and the types of people you will need to hire?
Ask yourself what you value in the following areas:
- Personality traits e.g. curious, hungry, collaborative, intense
- Specific domain experience e.g. financial services, education, healthcare
- Specific capabilities e.g. problem-solving, sales, attracting talent
- What someone has seen e.g. rapid scaling, driving monetization, business model discovery etc
- Other attributes e.g. first-principles thinking, fast learners, bias to action
Be as specific as possible and write down what you’re looking for before you meet any candidates. This is essential, because you will only recognize something if you’re actively looking for it. This approach will help you find diamonds in the rough and reduce the likelihood of false positives i.e. reacting positively to things you may like in a candidate (e.g. well spoken, strong ‘pedigree’, nice person, friendly etc) but which may not be core to the hiring decision.
You can only get behind the curve! Start the hiring process 6-9 months before you need the candidate.
Identifying and Assessing
Recognize the phase your company is in, as this really impacts the type of people you should hire. Companies that are still in the discovery phase i.e. searching and navigating towards product-market-fit need very different types of people/skills than companies that are scaling a validated model. The former require strong problem-solvers who are entrepreneurial, agile and adaptable, with a strong growth-mindset. These people move fast, are oriented towards running experiments, thrive in ambiguity/uncertainty and have a strong ‘nose’ for opportunity. The latter needs people with proven strengths who ‘know’ how to scale and have seen the movie before. In thinking about what the right candidate looks like, be as specific as possible, for example ask yourself “For the 10 key decisions this person is expected to make in the next 6-12 months, is s/he likely to get most of them right”, or “For the type of people and operations execution s/he has to drive, does s/he have the necessary people skills & intuition?”.
Leverage your network, especially your highest performing team members, to recruit. When it’s time to expand beyond your network, complement network driven searches with a recruiter-driven search so you can benchmark and see the full range of talent that’s out there.
Don’t hire just for what you need today. Start-ups evolve rapidly so if you hire people that are right ‘for now’, its likely you’ll outgrow them in 12 months. Instead, look for people that can take you where you need to go and have seen the part of the journey that lies ahead.
Double-click on what someone has done, how she/he thinks, learns and approaches challenges. This will yield insight into how a candidate will likely perform in different situations where evolving fast and figuring things out before others is more important than static knowledge. When founders talk about potential candidates, I frequently hear <<title>> <<company>> as a principal reason to hire, both of which are meaningless without additional depth and context. The biggest hiring mistakes I’ve made were when I attached too much weight to the role someone played at a high-profile company and failed to more deeply understand his actual accomplishments, personality traits, capabilities and fit to the specific context that we were hiring for.
Reference thoroughly to build conviction, avoid mistakes and understand how to set a new hire up for success.
How many reference calls should you make? Keep going until you start hearing consistent things (typically 4-6 calls). Here are a few tips for doing effective reference checks:
- Speak to people that you know well, have seen high-quality people and will tell you the truth. If you’re speaking to candidate-provided referees, be prepared to probe more deeply and read between the lines where necessary, as its unlikely those people will say anything negative. Give them opportunities to say something really positive….and if they don’t, that is an important (and negative) signal.
- Know what questions to ask based on what you are looking for and your own assessment of the candidate. For example, if hiring a VP Engineering, ask about how strong the candidate is at attracting/recruiting talented engineers (would the best engineers want to work for her/him?), and inspiring/leading them, in addition to technical competence. For a sales leader, understand his/her sales style (consultative or aggressive?), how strong he/she is at listening to what customers are really saying and whether he/she understands how to build ‘sales machinery’ vs. simply being a good individual contributor. Shallow questions will get shallow answers, so you’ve got to tailor the questions and go off-script to really understand a candidate.
- Try and form a holistic/360 image of the candidate by speaking with peers, managers and people she/he managed.
- You are most likely running a ref check because you are positive on a candidate. But don’t go looking to confirm your bias. Instead, go looking for what you might have missed and be prepared to pull on threads even though you might not like what you hear.
- If referencing does not support your instincts, do not hire! Its tempting to think that we’re right and everyone else is wrong, or that someone will magically change under your influence! If you’ve done high quality referencing, people almost always turn out to be exactly as their references said they would. Let intuition lead you, but support your intuition with data.
Own and run the process yourself: The importance of recruiting should be reflected in the time you personally allocate to it. By meeting a wide range of candidates yourself, you will gain clarity on what you really value and what trade-offs you might need to make given the available talent pool. Once you have clarity on the spec and what you’re looking for, leverage others to assist with process, but retain ownership of judgment/evaluation.
And finally, closing.
If you’ve done the above, and managed to find someone you’re really excited about, do everything in your power to close her/him. Share your excitement and reasons for believing in the candidate, write a personal offer letter and leverage all available resources (board members, advisors, common contacts etc) to help close.
Compensation: Getting leadership hires right is priceless, especially because one great hire usually ends up making 3-5 more in quick succession (from other high performers who are often ready to follow). So work extra hard to build conviction and if you ‘know’ that this is the right hire, stretch on compensation if that’s what it takes. A clarifying question to ask yourself if you’re struggling with compensation is ‘will this person really move the needle for our company’? If the answer is yes, do what it takes (within reason) to hire her. If the answer is no, compensation isn’t the issue – just don’t make the hire!
Be paranoid and alert from the time a candidate accepts your offer letter to the date s/he joins. Talented people will not easily be let go by their current employers so its really important to engage them throughout this period and ideally even start looping them in on evenings and weekends.
If all of this sounds painful and challenging, it is! But trust me, getting people decisions right is worth its weight in gold.