Hiring for hypergrowth

Hiring for Hyper-Growth A Pocket Guide to building great teams for VC/PE-backed companies

Eight Scenarios At The Up Group, we’ve established a reputation for delivering outstanding digital talent for the world’s most innovative companies, from global tech giants, to corporates undergoing digital transformation, to fast-growing internet stars.

We have particular experience in helping younger companies scale. For these companies, identifying and landing the right candidate in a world of disruptive business models, emerging technologies, and scarcity of talent is a challenge.

In this Pocket Guide we examine eight scenarios which pose particularly thorny challenges, even for great companies. In each case, we suggest approaches which we have found helpful, in the hope that you will find them helpful too.

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Scaling effectively requires top management in key positions. All things being equal, the sooner those positions can be filled, the faster and more efficiently the business can grow.

But hiring fast is difficult, and few companies do it well.

There are three main challenges. The first is the chronic shortage of available talent. This is common to all hires, but is particularly acute where time is of the essence. The second is the opportunity cost of the time spent on the hiring process. This a function of the overall workload on the participants - which is greater in a high-growth company. The temptation therefore is to rush things.

Finally, the urgency of having someone in place can trump the usual quality bar. If a moderate candidate can dramatically improve productivity, it takes iron discipline to say no.

So how can hiring mistakes be avoided? Here are some tips:

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Strong candidates view the prospect of being the first senior international hire with caution. They imagine long periods away from home; dialing into executive meetings late at night, where it’s hard to make out who’s saying what to whom; experiencing most of the risks of a start-up with few of the rewards; and spending years in serviced offices, trying to sell a product built for the home market against local competitors. They may question the strength of the company’s commitment to foreign expansion.

This is a rational starting point, because those risks are inherent in these roles.

Naturally, many turn out to be exciting and lucrative. With an appropriate executive structure and robust organisational support, the opportunity exists to truly empower executives. However, smart candidates will often discount great opportunities because of the preponderance of bad ones.

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The circumstances in which founders are replaced vary. The classic scenario is business underperformance, but there are others too. Sometimes the founder actively seeks a role that better plays to her strengths; on other occasions, the founder steps aside only with great reluctance. The company may be perceived to be heading in the right direction, but needing a different skillset to manage the next phase of its growth; or there could be a clash of vision between founder and Board.

It may not, in fact, be clear what’s really driving the decision, and how much consensus exists at Board level. In every case, the chemistry between the newcomer, the founder and the Board will play a big part in determining the success of the hire.

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At The Up Group we sometimes see a disconnect between the calibre of person a company is looking to hire and the remuneration being offered.

This is only loosely correlated with the financial strength of the hiring company.

It’s more commonly a function of existing pay structures, experience of hiring for that type of role, and the company’s perception of its brand strength.

The best advice, in most cases, is that you get what you pay for. Also, relying on features unique to a given candidate, such as a passion for your industry or business, rarely works out in the long run. The passion may diminish, but the feeling of being underpaid won’t.

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Companies in difficulty invariably find it tough to attract and retain great talent.

This is particularly true for businesses that have had several rounds of investment, where stakeholder management is often problematic, painful decisions may be required, and the obvious business solutions have typically already been tried.

The experience of AOL, Yahoo and many other companies going through tough times suggests that it’s possible to bring on great leadership talent if you’re willing to pay for it, and excite credible candidates with a turnaround opportunity. The question is how to do it with a modest balance sheet.

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High-growth companies typically look for an entrepreneurial streak in senior hires.

This can range from an insistence that the candidate has founded and exited at least one company, to merely requiring some evidence that the candidate has an entrepreneurial instinct, or is comfortable in fast-moving environments.

The challenge here is that the more entrepreneurial a candidate, the less she’s going to be interested in getting hired - by you, or anyone else. This applies even where the opportunity is very early stage, and the rewards somewhat mirror those of a complete start-up. And even if she can be persuaded to take on the role, a highly entrepreneurial executive may find it difficult to adapt to being an employee.

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Some investors insist on being part of the full hiring process of their portfolio companies. They look to input into all major hiring decisions and often have significant influence over the outcome. Other investors seek limited or no involvement, with little interest in meeting or calibrating prospective candidates.

There are pros and cons to investor involvement. Hiring well is difficult, and having the Board help with key appointments can enhance candidate evaluation, and improve the prospects of securing a target hire. On the other hand, co-ordinating schedules can slow the process down, and there is a risk of mixed messages being communicated if the Board is not properly in sync with the management team.

Here are some approaches to consider:

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From time to time we work on roles where a series of previous occupants - often hired through internal networks - have been unsuccessful.

This presents a mixed picture for candidates. The smartest of them will investigate the history of the role, and hesitate before volunteering to be the latest person on a conveyor belt. On the other hand, persevering through multiple hires is a signal that the role is regarded as critical - as opposed to a newly-created position, which may be seen as experimental. Another consideration is the impact on the team reporting into the role. The new hire may lack credibility from day one if she is seen as yet another casualty-in-waiting. Conversely, the new hire’s performance is more likely to be viewed favourably when compared with the underperformance of her predecessors.

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Text © The Up Group Ltd 2013. Images © Last Lemon Productions Ltd 2013.