Does it still make good business sense for you to handle hiring all on your own? Here, startup and scaleup founders share when it’s worth investing in outside help.
There’s no denying that working with a startup recruiter comes with a price tag. For scrappy startups and scaleups accustomed to taking on as many jobs as they can internally to keep costs down, this deters them from partnering with hiring experts. But what about when your DIY hiring approach is costing you talent, opportunities, IP, growth, velocity, and more? How do you spot when it’s time to hire a recruiter versus keep doing it yourself?
It’s different for every business, and it comes down to cost-benefit, but here are seven instances where founders think it can be worth the expense to partner with startup recruiters.
1. You’re inexperienced at hiring
Startup and scaleup founders come in all shapes and sizes. Some have risen to the C-Suite and have decades of experience building teams before launching their startups. However, just as often, founders emerge from more junior roles—or have only ever worked for themselves—and have never hired a soul.
When you don’t come from a recruitment background, it’s easy to think that the process goes something like this: write a job description, post it somewhere, read a few resumes, and hire your favourite candidate. In truth, it’s a mult-stage process that comprises:
- strategy and planning;
- development of job descriptions;
- In-bound and out-bound talent searches;
- resume review;
- scheduling and execution of pre-screening calls;
- planning and preparation of assessments;
- scheduling and execution of formal interviews;
- evaluation and selection;
- making of offers and negotiation; and
Even former senior executives are rarely exposed to the full hiring experience—instead relying on internal HR teams to establish processes and handle the majority of the steps. It is a lot to take on if you’ve never done it before, as a massive number of issues need to be discussed and agreed to build up and carry out a recruitment process.
These include but aren’t limited to: What stages will you include and exclude and what is the detail of each? Will your talent search include paid ads and job board placements, or just organic posts on your social channels and why? What is the max number of pre-screening calls and interviews you want to host for each position? What are the key criteria that will get a candidate through to pre-screening phone? What criteria must they meet during your initial conversation to pass through to the formal interview stage? How many interviews must each candidate complete? Who will sit in on which interviews? What core questions do you want to ask at an interview? What assessment tasks will you include, who will create them, who will evaluate them and what will constitute a pass?
“Partnering with a startup recruiter provides you with a tried and tested hiring methodology that has worked successfully for other startups (so you don’t have to build your process from scratch),” explains Michael Blackwood, founder and CEO of TeamScaler. “It also gives you a guide who’ll help you reach clarity and internal alignment on screening criteria, interview criteria, and scoring.”
2. You’ve exhausted your network
Personal networks can be fantastic sources of talent for your startup, but they’re not bottomless.
“The first couple of hires we made on our own came fairly easily, because we were hiring through connections in our network,” recalls Kevin Hoffman, founder and CEO of Vector Remote Care, a health-tech scaleup in Oregon. “But you’d be surprised how quickly that dries up…and once it does, it’s harder to continue growing at that pace. That’s when you need help.”
When you’ve plumbed the depths of your team’s networks and already plucked the cream of the crop, a quality startup recruiter can introduce you to a lucrative new pipeline of quality candidates—both active jobseekers and those passive candidates who aren’t even hunting for new opportunities. “Several of our latest hires have left roles they were really happy in because [TeamScaler] helped them realize there was something even better for them with us.”
“A recruiter’s reach is so much greater than a company’s because our networks are vast by comparison,” explains Michael. “We’re evaluating and talking to hundreds of candidates every week from our own databases, the professional tools and platforms we have access to, and our outreach to passive leads. That means when you work with us, you’re immediately reaping the benefits of the work we’ve done, the contacts we made, and the candidate insights we’ve gleaned for the startup clients who’ve come before you.”
3. You have gaps in your network
Closely related to network exhaustion is network diversity. Just as your connections aren’t limitless, frequently they’re also not varied enough for all of your talent needs.
“Your strategy should vary depending on the role you need to fill and what your strengths are,” explains Andrew Flint, Co-founder of Occupier, a property-tech scaleup in New York. “For example, two founders in our company have a background in sales and it’s still easy for us to find candidates with that experience through our own networks, so we might not immediately hire a startup recruiter to help us with a sales role. Finding engineers is much tougher for us, though, so that’s where we invest in outside help. If you’re a technical founder, the opposite might be true for you and hiring a startup recruiter to fill your sales or marketing roles might make sense.”
When your network lacks the roles that you need, a recruiter can find, pre-screen, and introduce you to those candidates. But also consider their help when the gaps in your network run deeper than job titles. “Most often, the people in our networks are just like us,” says Michael. “They look like us, they think like us, they’re our age, our race, our gender, have similar professional backgrounds, and so on. The problem with only ever hiring from within your network is bias, lack of diversity, and the limitations this can have on your growth as a scaleup. Surrounding yourself with people who think just like you will constrain your company’s ability to innovate, adapt, and grow.”
Serial founder Jeff Veen, explained the benefits of this really well in his 2016 talk ‘Crafting a Creative Culture’. He said, “A diverse team has broader product insights. When you have a team that comes from a variety of socio-economic levels, gender, ethnicity, culture … that are a mix of many, many different types of people with many different lenses to look at a problem … you get better results.”
“That’s why you need to aim for team diversity early,” adds Michael, “and a good startup recruiter will help you achieve that.”
4. You’re offering equity
Equity is one of a startup’s most important and competitive tools in the hunt for top talent. Leadership teams and investors spend significant time working out what equity allocation should look like for the company. But whenever equity is a benefit, you want to invest just as much care making certain that you’re hiring the right person.
“You’ve got to be really careful about who you let in at the ground level and give equity to,” warns Diarmuid Maloney, founder and CEO of the UK-based scaleup Rotor Videos. “It’s tempting when you’re moving fast and rushing to get things going to bring people on board so you can improve your velocity and take responsibilities off your own plate. But once they have equity, they’re always going to be a part of your business.
“When we were starting out I brought in a director, and it wasn’t until we were raising a round of funding that it came to light that he was also a director of another company. He’d never disclosed that, and it was problematic for us. As we tried to part ways, he tried to claim ownership of pieces of our technology. When an equity hire turns out to be the wrong fit, it can be a real nightmare, and costly, to get them out of the business.”
Whether you want to ensure a cultural, values and personality fit; skills and experience; adequate networks and connections; or protect against conflicts of interest, an experienced startup recruiter will guide you safely past the pitfalls of talent acquisition to help ensure any equity hires you bring on board align to your company’s needs for the long term.
5. Leadership’s time is at a premium
Time-rich cash-poor early stage startups typically handle hiring themselves. But as your company transitions from startup to scaleup, your founders’ availability becomes more scarce and, therefore, their time is more valuable.
“As a founder, you’re managing the existing team, leading sales, coordinating with the product team on direction, fundraising, and managing customer success,” says Andrew. “You’ve got your hands in every single part of the business, and recruitment can become a massive addition to that workload.”
Kevin agrees. “Knowing that your time is valuable and where you need to allocate it is important,” he says. “And this process is a much bigger time drain that you may anticipate, especially if you’re going to be hiring consistently.”
“Once we exhausted our network pool, we discovered what a major strain it was on me, our CTO, product manager and their support staff to actively look for, screen, and interview candidates,” recalls Kevin. “ It took everyone away from our day-to-day responsibilities. We collectively committed 100s of hours just researching and refining search criteria. Nearly just as much time was required for arriving at a list of qualified candidates.”
While senior leaders like founders need to be involved in a startup’s and scaleup’s hiring, a recruiter can slash the amount of time they need to invest and, thereby, reduce opportunity costs—conserving founders’ input to only the most important stages. “You need to ask yourself how detrimental is it going to be to the business if I spend X amount of time finding and hiring this person myself?” adds Diarmuid.
6. Speed matters
The world is facing a talent shortage—with 69% of employers struggling to fill vacant roles. As a result, competition for candidates is greater than ever and companies are moving at lightning speed to bring talent on board. For example, over a short 48 hour period it’s now the norm for a candidate to complete multiple interviews AND receive offers—whereas pre-Covid that process took approximately 10 days.
So supply and demand are forcing every employer to accelerate their hiring processes for every role. But it’s not only external factors that may be setting your pace. Inside startups and scaleups, where new talent is sometimes needed urgently in order to respond immediately to new market opportunities or competitor threats, finding someone great fast can be the difference between success and failure.
“You have to ask yourself ‘How valuable would it be if we had someone in 30 days rather than 120 days?’” says Andrew. “That right there could be worth a recruiter’s fees if it means you find the right person at a very integral stage of your business.”
“At Teamscaler, within 48 hours of engagement we typically are ready to kick off with an audit of your recruitment plan,” says Michael, “and in as fast as 10 business days we have suitable candidates pre-screened and ready for you to interview. That kind of velocity is very hard to achieve on your own, especially if you’ve never done this before.”
7. Your hiring plan is hefty
Depending on the importance of the role, recruiting for one open position might seem manageable without impacting day-to-day business. But when you need to scale quickly to capitalize on opportunities, resolve issues, or meet investor targets, volume hiring exponentially increases effort. “Imagine you’ve 10 roles to fill,” says Michael. “Based on typical conversion rates throughout a recruitment process, you’d need to find and review around 700 candidates in order to identify 300 that are suitable for inviting to a telephone call for a pre-screening chat. Of those 300, you’d only speak to about 150, because not every candidate will get back to you. Then you’d select 60 candidates to attend formal interviews in order to fill your 10 vacancies. That’s approximately 440 hours of effort just to fill those 10 positions. When the roles are spread across varied disciplines, or the volume you need to hire is more like 20 or 30 roles, the effort increases exponentially.”
If your startup or scaleup is facing any of these scenarios and could use an expert hand with hiring, get in touch to discuss how TeamScaler can help.