In a start-up company, every employee counts, and it's important to have a talented, smart, enthusiastic person in every job. But you can't afford to pay the salaries such employees usually command.
"The reality is you're not going to be able to pay market rates as an entrepreneur. You need to compensate for the higher level of talent you can't initially pay for," says Scott Lerner, founder of Solixir, a seven-person company which makes all-natural energy drinks. "So you need to take a step back and take a careful look at the talent you're hiring."
That's why the standard interview process won't cut it for a start-up, Lerner says. "It's not plug-and-play like it was when we hired at Pepsi," he adds. (Lerner was a PepsiCo executive before starting his own company.) "You need to move beyond the resume and get insight into the person. You can't do that in an hour-long interview--and references really don't amount to anything."
What does Lerner recommend instead?
1. Try them before you hire them.
For lower level positions, give prospective employees a thorough test by first hiring them as interns, or give college students part-time jobs with a view to possible full-time employment when they graduate. "If I can find those opportunities, especially for inexperienced folks, it covers our backside and gives them a chance to see how our company works," Lerner says.
It's important not to let people know they're being considered for full-time employment during this trial period. "I've told them in the past it was a tryout, and it was a mistake," he says. "It corrupts the process. If they know that's in front of them, they may take less money, or work harder."
And, he notes, most of the people he tries out wouldn't make it as full-time employees. "It's a weeding-out process," he says. "It's not over the course of a week, it's over two or three months seeing them in action."
This means Lerner must plan well in advance. For instance, if he knows he'll need a new field marketing person in December, he'll start looking in June for appropriate college students to hire as interns or part time. "By October or November I'll feel comfortable offering someone a full-time position," he says.
2. Go to lunch.
Internships and part-time tryouts work great for hiring lower level employees, but not for senior positions, Lerner notes. Yet getting the right employees in responsible positions is crucial, and start-ups can't afford to pay competitive rates for them. "We can't hire someone from Red Bull at a senior level position," he says. "I'd rather hire someone with less experience but an extremely aggressive personality who's ready to grow."
To identify candidates who fit that profile, Lerner says it's important to get to know a job-seeker outside the confines of the interview. Often he takes them out to one or more lunches. "First and foremost, I like to get them out of the standard environment and understand who the candidate is as a person," he says. "Will they want to work for me? Will they work well in our culture?"
When seeking to get to know someone, it's important to keep in mind that asking certain questions of a job candidate remains illegal, whether you do it in your office or over a burger. Lerner says he only asks candidates the same questions he'd ask as part of a standard job interview.
3. Take a tour.
You learn a lot about a potential candidate by walking him or her through your operation or marketplace. "That might be having them come along with me, shadowing me on an in-store demonstration or walking through a store and chatting about the candidates' experiences and the energy drink category," Lerner says. "What I've found is that I can learn their thought process, whether they're going to gel with how I think about the category and how aggressive their thinking is."
4. Don't talk titles.
"If a person is really into titles, in my opinion, that's the kiss of death in a start-up," Lerner says. It might mean the candidate will be rigid about the parameters of his or her job. "You might need someone in a CFO position, but that person will also have to do other things--that's the nature of the beast. It's such a flat structure that you have to be a generalist."
For instance, he says, on a recent day his company's CFO headed to a grocery store with other Solixir employees to put drinks on the shelves. "We'd just gotten into the store and we had to put the product out," Lerner explains. (He himself was back at the office packing up boxes for a UPS pick-up.)
In fact, he prefers to have people start their jobs with no title at all. "There's always a job description," he says. "But when it comes to titles, a better way is, 'Hey Tom, you're working for us. And we'll figure out later what your title is.'"