Hiring well is one of the most difficult – and in my opinion critical – tasks for any tech CEO and his management team, especially in the early days. There are a lot of different approaches and opinions the optimal hiring process. There are a lot of software companies out there these days promising to crack the hiring code with AI and other algorithms. Personally, I think that much of doing it well comes down to discipline and common sense. Here’s what I believe are some key hiring mistakes that I see many tech companies make, especially those under the strains of startup life:
12 Common Hiring Mistakes
Hiring too soon
This is maybe the most avoidable – and damaging – of all hiring mistakes. In hiring – especially in tech startups – there is a tendency for managers to think “if only I could hire someone to do XXX or YYY things will get a lot better”. It doesn’t even matter what the role is. Everyone, everywhere, ALWAYS thinks that they need another body or two. And many times they are correct (although I can think of some bureaucratic organizations where quite the opposite is true). But in many cases that itchy trigger finger on hiring can get you in trouble. In a startup, it can deplete precious, scarce capital that is really needed elsewhere – especially to extend the company’s runway before running out of funds. In larger tech companies, this tendency may hurt profitability, as hiring gets ahead of actual growth. In any case, wait until you really can afford it! Back in the day when I was at HP we had a simple rule of thumb to limit our staff hiring growth rate to 25% of the rate of revenue growth. This wouldn’t work for every company, especially very early stage software and hardware companies. But I’d encourage you to institute SOME objective process as a governor on run-away hiring. And remember that there is a difference between a JOB and a TASK; don’t hire someone for the former just to accomplish the latter. There are many ways to accomplish tasks, but staff is hard to get rid of (and should be!).
Hiring too late
The converse of hiring too soon is obviously hiring too late. This usually happens when the management team has a very conservative nature, especially if there is out-sized influence by the finance professionals. I actually personally prefer this as the lesser of two evils to hiring too soon, but it still fits into the category of hiring mistakes. Hiring too rapidly can’t be undone without a number of negative effects. But being too conservative and waiting too long can also have severely negative effects, especially in dynamic markets. Lacking key skill sets and experience can have huge negative implications in complex and fast-moving hardware, software or SaaS markets if it causes you to miss opportunities you might otherwise capture. Even if you have the right skills in house, lacking enough personnel bandwidth can still lead to significant missed opportunities, as well as risk burning out those critical resources that you do have. So as difficult as it is, striking the proper balance in hiring between too fast and too slow is often quite important in tech company success.
Hiring too fast
First to avoid any confusion, here I referring to the actual time taken during the hiring process, not when in the life of a company that it happens. Once it’s identified that a new hire is necessary, a common attitude is “I need someone NOW!” Try to refrain from this urgency to the extent that it prevents you from taking the time to find the “right” person for the role. Even in a tech startup, a few weeks or even months don’t really matter, in comparison to the relative effect of hiring the right vs. wrong person for the role. It usually doesn’t feel that way at the time, but it’s true.
Hiring too slow
Again, this is the converse to the point directly above. You need to hire carefully, but taken to an extreme with an excessive process, you will lose out on good candidates as well as opportunities in the market. Try to remember the 80/20 rule applies here, especially in a startup situation. Aim for a very good hire; if you aim for perfection you may miss out on very good candidates that can move your company forward. At the upper end of the scale there may be very little difference in the performance of two top candidates.
Hiring your friends or other people because you like them
I think that this should be obvious, but I see people do it over and over. It’s DEFINITELY important to hire people that you don’t hate, as well as those that will “fit” in the company. But this is business; social and personality aspects need to be considered a distance second to skills and experience. Some managers have a tendency to romanticize how great the work environment will be if they surround themselves with their friends and others that fit the same profile. The reality is that this often results in reduced rather than optimal performance of the organization, because those best prepared for the job weren’t hired. In addition, all too frequently those friendships can become strained or even end when manager/worker dynamics and job responsibilities are mixed into the relationship. In my opinion, it’s usually better to keep business and personal separate.
Hiring only in your network
This is of a similar nature to the point made directly above, but includes people you don’t know well but are referred to you by those that do. This will likely be a VERY controversial bullet with a lot of readers; in my experience this is a common practice and one that is considered a “best practice” by many in the tech business. But from my perspective, it’s one of the most common hiring mistakes. The biggest point to be made here is that this approach severely restricts your talent pool, as well as risks limiting the diversity of opinion within the company. I understand why people do it; a previous relationship with those you are hiring (or at least a relationship with someone that you know well) can give great comfort. But folks don’t always refer candidates to you for the right reasons, and those folks you know casually from a past company may be a poor fit for the current one. I think it’s great you use your network as a starting point in hiring. I just think it’s a very bad idea to use your network almost exclusively.
Paying too little
This is sometimes a tough one, especially if you’re in a early stage tech company or startup. But in my opinion, it’s usually better to pay a bit better and have less people than the converse. If you pay too little they’ll leave if they’re good; or you may only be able to attract people you want to fire later. I have found that the productivity difference between a good employee and a bad one generally far exceeds the delta in compensation required to attract and keep the good ones happy.
Paying too much
This is simple; you can’t afford to do it. Paying more than you need to in attracting and retaining good employees is just pouring money down the drain, and that will prevent you from investing properly in other areas of the business apart from personnel (including extending the a fore-mentioned runway). I realize this sounds harsh; every good manager wants to treat their employees well and make sure they are happy. Do so; just don’t overdo it. Make use of compensation bench-marking in the appropriate geographic and functional areas. Tack on a bit if you like, just to make sure you’re erring on the side of generosity. But don’t throw a lot of money away that is needed elsewhere.
Hiring big company folks without startup experience
This is specific to tech startups and is a pet peeve of mine. I’ve written an article dedicated to the topic of hiring big company executives in tech startups. So give it a read if you’re interested. By the way, I believe this is a relevant topic for ALL employees, not just executives. To summarize the article, they may suck at startup stuff as the required skill set is not always the same as a big company. Or they may have the skill set, but just HATE startup life. It takes a special mentality to like working in a startup; if someone has never done it they may not know if they really like it until they try it. So these hiring mistakes are regretful for both parties, the company and the employee, and particularly damaging to a startup company. Startup life is often romanticized in the technology business, but done right it is HARD. Don’t get me wrong, it can and often does work. I myself made the jump from big companies to startups and after doing so I would never go back. But I’ve seen many, many disasters where startup founders are wowed by the huge numbers on an executive resume. Remember that how those huge numbers were actually achieved may have little to do with the task at hand in your startup.
Not vetting adequately
This should go without saying; every hire counts in a technology company, especially in a startup situation. But time pressures, lack of management bandwidth, management fatigue and distaste for the vetting process can really cost you. Once you’ve found that someone that your really like, there is a tendency for some to “trust their instincts”. Some managers don’t want to risk hearing negative feedback on a candidate once they feel good about them. This often leads to big hiring mistakes. I recommend that there be objective vetting done on every candidate, whether that means hiring an outside service to check backgrounds and references, using someone in HR, or simply having multiple people at different levels in the company as part of the interview process. Multiples viewpoints and objective reviews can prevent big hiring mistakes.
Forgetting about the effects on culture
The old saying “One bad apple truly can spoil the whole bunch” is absolutely true. I’ve seen it first hand, and it is a particularly acute danger in a small startup group that needs to fit tightly together and work in a highly productive manner for success to occur. One abrasive personality, one poor team player, an individual lacking in character or integrity can all be poisonous to the other great people you have on staff. If these bad actors get away with bad stuff, others may believe it must be ok, or be demotivated by what’s happening within the organization. These hiring mistakes can have a very corrosive effect on your ability to execute as a team.
Hiring people only in a specific age range or “tribe”
This point is similar to the ones I made about limiting your hiring to your hiring to friends or you close network. Anything that limits both the talent pool and diversity of perspective puts an artificial limit on your company’s potential, in my opinion. It only provides a false sense of comfort, and keeps you from expanding your range of acquaintances, knowledge and perspective. Hiring only people under the age of 30, over the age of 35, or just from a particular ethnic or socioeconomic group has the same limiting effect. Don’t do it. It makes you feel more comfortable, but it doesn’t make the company better. It’s scary to hire outside of your comfort zone, but that’s often what is needed for optimal corporate success.
There you have my take on 12 common tech hiring mistakes to avoid. So have hired well or poorly in the past? If you don’t mind, please add to the discussion with you own experiences, as well as you opinions on what it takes to do it right. You can simply use the comment field or contact us using the information below.
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