Secret No. 1: Always be looking. You're missing prime opportunities if you wait to recruit until you need someone--anyone!--to fill a position.
Online tools--LinkedIn in particular--make it easier than ever for small businesses without dedicated HR staffs to recruit and hire employees.
Easier doesn't always mean better, though.
Here's another in my series where I pick a topic and connect with someone a lot smarter than me. (There's a list of some previous installments at the end of this article.)
This time I talked to Chris Sargent, the managing director of Akascia, an executive search firm for predominately pre-IPO tech startups.
Why shouldn't I keep recruiting in house? After all, I know my needs better than anyone.
We see more and more companies rely on their own efforts, whether through job boards, or LinkedIn, or trying to build their own talent pools. They see this as the path to hiring the best talent in the market.
But in our experience only about 5 percent of the proactive approaches/applications we receive are ever right for a position--and very, very rarely are those people the best candidates.
It shouldn't come as a surprise that we only receive applications from people who are actively looking for a job. Typically those candidates aren't in the top echelons of their industry, aren't blowing away their sales figures, or aren't the absolute best at customer support.
I doubt internal recruitment teams really yield drastically different results. The only conclusion I can come to is that, at best, internal teams typically hire slightly better than average candidates.
But since the average length of employment continues to drop, aren't more people looking?
We are seeing more and more candidates who only spend two years in a job before they move on. Clearly they think that is an at least acceptable term of employment to show on their CV. But I think most of those people are serial job hunters--they're the ones who are applying, making themselves available to talent pools, etc.
The people you really want to hire--the cream of the crop--aren't looking or applying.
So how do you find great people who aren't actively looking for jobs?
Since they're not actively looking for you, you need to actively look for them.
It's relatively easy to identify people who work in certain positions or in certain companies. Almost all companies have a page dedicated to their management team, if the role is senior enough.
Plus, while many people may not be looking for a job right now, most people have at some point in their lives looked for a job. So most of them will have created a Linkedin profile, etc. It may be old, it may be somewhat out of date... but it does give us a name. For example, it's extremely rare that we find any salesperson who doesn't have a LinkedIn profile, particularly in the tech sector. And many people have created some form of online presence for themselves for their own professional purposes.
But we don't just rely on online social networks to find great people. If we know that 10 people are on the sales team of ABC Company and we can only find seven names, we'll call the company directly and try to glean that information.
Once you find people... how do you find the superstars?
You're right. It's relatively easy to get names. We often start with a long list of 90 to 100 names. The real key is to narrow down that list through iterations of screening and interviewing.
Say we're looking for a superstar salesperson. We look at organizations of similar stature with similar sales results, and we look for the people who consistently over-perform.
Because we do a lot of recruiting for start-ups, this often takes on a slightly different flavor. Those companies don't need prima donnas. They need people who don't need a big office, don't need a fancy desk, don't need a huge sales support team to help them achieve their numbers.
So we go hunting in companies who have experienced similar phases of growth. The first stage of the process, identifying target companies, is one of the most important to ensure you quickly identify the superstars.
Still, aren't the superstars often invisible? That awesome sales rep isn't busy blowing her own horn; she's busy selling.
Sometimes, sure, but not always. Many people speak at conferences, seminars etc., and most of the times these details are published.
But maybe what those people are really good at is selling themselves.
That's where due diligence comes in. Most people, particularly in sales roles, can talk a good game... so we have to see past that and find details of their deals, their targets, their achievements, etc. Often this information comes through informal references and talking to people we know who have worked with them in the past--that's a huge value from having a large network.
As with any candidate, you absolutely must make sure the person is a known quantity with a proven, verifiable track record. The more people you know, the easier it is to do your due diligence. Build a big enough network and someone you know knows someone you need to know.
Speaking of networking, how can that play a role for an entrepreneur where hiring is concerned?
When we're searching and talking to people we are constantly asking who they know, who did this, who led this deal, who was responsibly for that.
That builds a picture and a map of the client's market. Any entrepreneur can and should do the same thing. It's easy, because people love to talk about people. But you do have to beware of false claims--sometimes several different people will claim they were the lead or the linchpin of a particular deal or project.
The key is to understand the context. I think it's much easier, for example, to sell a market-leading product than it is to sell a challenger. When you're the market leader, everyone knows you, customers call you, and in some cases salespeople actually become glorified order takers.
That doesn't happen in a start-up trying to challenge or disrupt; every deal they do is hard damn work!
Give me an example of how this might work.
Pretend you're a U.S. company seeking to expand your cloud-based service into the Asia-Pacific region. You need to hire two or three salespeople who can take your business from near-standing start to producing around $1.5 to $2 million in sales per person by selling to large enterprise companies.
The first thing is to investigate the cloud computing market in APAC. As it happens that market is, relatively speaking, in it's infancy compared to in the U.S., and there aren't many companies with a cloud-based product who have built a sales team.
Sure, you could look at big companies like IBM, HP, Oracle, etc. who have cloud-based products. But those companies have a huge installed base already, so when they're rolling out new products they can often go to warm leads and existing customers. Plus, they have huge sales support functions, pre-sales technicians, extensive marketing, and are well-known brands. You don't have any of that.
But with a little digging you learn that many of the big companies' cloud offerings have been brought in through acquisition. So you look for people who worked for those companies pre-acquisition, start reaching the people who have been there, done that... and now (hopefully!) they're bored of doing that in a big company... and they're ready for their next challenge.
Of course you'd also look at other start-ups performing well in complementary tech areas. In our case, we aim for 20 to 30 companies on our target list. You might be able to get away with less--but why limit yourself?
What is the biggest mistake a start-up makes where sourcing and hiring is concerned?
If you only think about hiring when it's time to hire someone then you're already a little too late.
Finding great people should be an ongoing process. For example, I already have an idea of the next five to 10 people I'll approach when we need to hire someone. I basically keep a note of any interactions I have with people who seemed interesting and employable.
Anyone can do that. Every business has customers, competitors, and partners; all you have to do is pay attention to the people doing great work. For example, companies in the open-source tech community found many of their employees simply by paying attention to early adopters and users who were very active on forums and user groups.
Keep notes on any people who seem promising. Even if they're not doing the same job, they might have the perfect attitude.) Ask your customers who impresses them. Ask your staff who impresses them. When you're ready to hire, you'll have your very own talent pool already in place.
Check out other articles in this series: