The good news is that this is the greatest time in history to be an entrepreneur, and the better news is that in the near future, it’s going to be even greater. Significant problems and opportunities face every country and business sector, and large organizations often struggle with these problems and opportunities. Agility and innovation are necessary, and entrepreneurs possess these qualities in spades.
At the same time, the entrepreneurial company is changing, as are the people who work there. As you’ve probably experienced, things are moving faster; growth rates are increasing; the employee population is skewing younger; funding is more available. These and other trends are picking up steam and in the coming years, they will have a profound effect on who you hire and how you hire.
By taking a close look at these trends and their effects on entrepreneurs, we can see how they can and should impact your recruiting practices.
It’s not that the rules of entrepreneurial recruiting are going to change—in fact, everything I’ve written up to this point will be as valid five years from now as it is today—but that you’ll need to keep other factors in mind as you recruit. To help you do so, let’s look at the four most significant trends for entrepreneurs:
This term, originally attributed to economist Joseph Schumpeter a hundred years ago, means that innovation kills old models in order to usher in new ones. Schumpeter was referring to the death and birth cycle of industries caused by technological innovation. Today, it translates into the death and birth cycle of products and services—a cycle that is occurring faster and faster. The innovative cell phone from five years ago seems hopelessly old-fashioned today; no doubt, the creative destruction of our current smartphones will make them seem just as old fashioned in two or three years.
This trend affects recruiting in many ways, but one of them is the mindset of your workforce. Years ago, my parents assumed they could work at one company for thirty years and then retire with a pension. Obviously, that attitude has shifted. The liquidity in the labor market is increasing rapidly, so people join companies assuming that they may not be there for long. You need to recruit with a sense of what will keep a valued employee in place for more than a year or two. It’s not going to be salary or perks or titles. It will be mission and values. Again, this is my mantra, and it should be yours: Find highly qualified employees who share your vision and beliefs about work, and they are likely to stay with you for the long term, or at least help you achieve your longer term goals.
New entrepreneurial companies, especially in the tech sector, are flourishing. More money from venture capital, angel investors, and other sources is flowing toward great ideas than ever before. As beneficial a trend as this is for entrepreneurs with great ideas, it also comes with a hidden people cost. The drive to learn and grow requires employees who want to acquire new skills and knowledge and reach higher performance levels. When you’re recruiting, you need to identify candidates who aren’t simply content to do a job competently—even at a high level of competence. They must have a thirst for knowledge, be willing to endure a measure of discomfort as they try to master new skills and projects, and possess the motivation to become better managers and leaders.
Social media is a catalyst of this trend. Many people have difficulty sticking to one activity or even one project for long without their attention drifting to the notifications on their screens. This is a problem since focus is crucial to solving complex problems and coming up with innovative solutions. Entrepreneurial leaders need to be able to engage and motivate their people to focus—to concentrate with commitment and energy on their tasks. Therefore, they must recruit with an eye toward “engageability.” Is a candidate someone who fidgets during interviews and who can’t stay on topic? Or is this someone who has a laser-like focus and stays on point during a conversation?
More twenty-six-year-olds exist in the United States than any other age, and by 2025, 75 percent of the workforce will be Millennials. As per the earlier point, this group often has more opportunities than ever before to fragment their attention spans and focus. Entrepreneurs, therefore, need to be especially alert to the ability of Millennial candidates to concentrate. Startups attract Millennials more than just about any other business, so founders must look beyond technological brilliance (which Millennials often possess in abundance) and look for employees who can focus and do deep work.
At some point in the future, recruiting will be completely automated. I’ve heard a number of people make this suggestion, and I understand why they make it. Many entrepreneurs have used technology to spread the news of a job opening and search for potential candidates. It may seem logical to make the leap that in the future, new software will help them find exactly the right candidate both for a given position and a given company, that they will be able to plug all the job data in and find a candidate match.
What they’re forgetting is that recruiting is the most human of business functions. Yes, technology can help generate a big list of candidates. But I defy anyone to make the argument that a piece of software can discern nuances of personality or depth of beliefs. Software may help you find a candidate who has all the right financial skills and experience to be your CFO, but it won’t tell you if she’ll fit into your culture; if her values and mission align with your own; if her more intangible qualities as a leader and a manager mesh with the people she’ll be managing and leading. Assessing and selecting candidates is much more art than science, and technology hasn’t yet reached the point where it’s particularly good at the art part of the equation.
Speaking of CFOs and the financial department, you would think that this would be the first area where people would be replaced by machines, since the function is all about numbers. In fact, the typical financial department in an entrepreneurial company has at least as many employees today as it did ten years ago. While this function is far more dependent on technology tools than in the past, people still need to do a lot of the higher level, more abstract work—such as assessing the implications of the numbers and working with other functions to prioritize budgetary requests.
In the next few years, I anticipate that recruiting will add a variety of technological tools to facilitate higher level, more abstract tasks, especially for the screening and securing functions. At the very least, these tools will provide entrepreneurs with greater insights about each candidate’s social media activities and web searches. At the most basic level, they will be able to discover if a potential candidate has done searches about his position salary, indicating that he may be unhappy with what he’s receiving and is interested in moving elsewhere; or that he’s visited sites providing career advice or how to deal with difficult bosses. On a more sophisticated level, technology might help us craft a deeper profile of a candidate. It might reveal that a given individual wrote a blog about the need for greater transparency in organizational communication or is active on sites that are involved in a philanthropic activity or participates in online forums about mentoring.
As useful as this technology will be for obtaining a clearer picture of who an individual candidate is, recruiting still boils down to a one-on-one process, especially when hiring for a senior leadership position or other key slot. There is no substitute for a genuine smile, understanding a person’s deep motivations, and having a direct conversation with candidates and engaging in dialogues that reveal who these candidates are beyond what their actions—both in former jobs and online—suggest. What’s more, the best target candidates will still need to be courted. The importance of properly evaluating potential hires is as high as engaging potential hires. But you must first recruit candidates into your hiring process before you can evaluate them.
As you’re no doubt aware, startups are everywhere. If possible, they will be even more ubiquitous in the coming years. Whether you’re launching a new app from your home or an alternative energy business from an old-fashioned brick-and-mortar office, you’re probably aiming for rapid growth—almost a necessity in a hyper-competitive marketplace. Fast growth will affect your recruiting efforts. More specifically, here are the six common phases of startup growth from a revenue perspective:
$0 to $10 million in revenues
$10 million to $25 million in revenues
$25 million to $125 million in revenues
$125 million to $375 million in revenues
$375 million to $1 billion in revenues
$1 billion plus in revenues
Think about these growth stages versus how companies used to grow much more slowly, often stabilizing in one of those growth categories and staying there. Back then, you could hire people for a stable stage and be reasonably assured that you wouldn’t grow out of it for a number of years. Today, startups sometimes move through these revenue stages with surprising speed. As a result, they need to change their recruiting priorities.
In the beginning, startups need pioneers and missionaries. As the company matures, they require diplomats and politicians. Early on, startups need employees who can endure a financially brutal environment—they need people with guts and grit to get through the first and even the second stage. They also need dreamers, innovators, people who are believers and evangelists.
With growth, though, requirements shift. Companies need team builders and leaders, individuals who can help facilitate consensus and who can help others learn and grow. The more mature a company becomes, the greater the need for systems and processes, policies and procedures. I’m not saying companies should hire bureaucrats, but without structure and culture, mature companies will struggle.
If you’re running a growing startup, you must adopt a continuous recruitment mentality. That’s because employees generally don’t stay engaged beyond two growth stages. They become disillusioned with the company’s new direction: “It’s not like it was around here when I joined” is a typical comment. Other people leave because as the company has grown, they have become more marketable; they receive offers from other startups that want them to help replicate this growth.
As a leader, therefore, be prepared to adapt your recruiting as people come and go (because you can be sure they will come and go). This means:
In early growth stages, seek employees who relish flying by the seat of their pants; who are comfortable working without much structure; who are fiercely independent; who resonate strongly to the business you’ve created.
In middle growth stages, look for people who want to build something, who want to be part of a company that is making a difference; who are capable of transitioning from being independent contributors to working on teams; who are interested in learning and growing in their careers.
In the later stages, identify candidates who are adept at compromise and consensus building; who understand the nature of teamwork and function effectively leading or being part of teams; who want to put down roots in a company rather than hit the jackpot and run.
Obviously, this advice is generalized for different growth stages and who you hire depends on all the factors we’ve discussed previously. But you need to be prepared to do a lot more recruiting in the future, and to recruit with an eye toward the growth stage in which you find your company.
If you have a growing company, you need people who possess a growth mindset. No matter what stage your company is at, these individuals resonate with enterprises and cultures where getting bigger and better are priorities. Growth is already a common goal for startups and many entrepreneurial ventures, but in the next five or ten years, it will become an imperative. Think about how your business and industry are changing. It’s no longer possible for even small, out-of-the-way companies to rest on their laurels. No one can hide from global competition, the quick commoditization of innovative products, and escalating costs. The Internet makes new and old competitors all over the world immediately aware of your success, and you can expect someone to challenge you and try to take away some of your customers. As a result, you need to improve your strategy continuously, to be agile, to be creative, to take risks.
Employees who are content to remain in place, who settle for “good enough,” who refuse to work harder than the norm, who prefer to do the same thing over and over rather than try something new—these are individuals who you don’t want to recruit for your growing company in the coming years. They will make it difficult to be sufficiently flexible, innovative, and change-oriented to capitalize on all the abundant opportunities that exist.
In 2005, author Daniel Pink wrote a book titled, A Whole New Brain: Why Right Brainers Will Rule the Future. Though published quite a while ago, its lesson is still relevant—perhaps even more relevant today and in the next decade than it was when published. (This was a book ahead of its time.) Pink’s premise is that we are moving from a time of left brain thinkers (analytical, detail-oriented, logical) to right brain ones (empathic, collaborative, story-centric). Other thought leaders have echoed Pink’s points, but they are especially relevant to entrepreneurs.
One of the major errors neophyte entrepreneurs make is hiring for technical chops. They are so focused on hiring people with the best skills that they ignore or discount other qualities such as empathy, collaboration, and so on. In the past, they may have been able to get away with this error, but not in the future. They will see their best and brightest people deserting in droves because the company is growing and changing—they haven’t affixed employees to the organizational essence by making sure they recruited individuals whose values and beliefs mirror their own. Or, they discover that their highly skilled workforce cannot work productively in teams (though they are excellent individual contributors).
Perhaps this is an oversimplification, but at some point in the future, there will only be two types of entrepreneurial companies—those that grow and those that die. The vast middle ground of companies that make modest, consistent profits year after year will become fewer and fewer.
If you are a company that is on the path of continuous growth, you have to recruit people with sales maven Zig Ziglar’s advice in mind: “Your attitude, not your aptitude, will determine your altitude.” Increasingly, technology in the form of artificial intelligence, machine learning, and other tools will provide a lot of the aptitude entrepreneurs require. What companies do with this aptitude depends on their people—on their ability to innovate, work together, take risks, take on stretch assignments, and so on.
Candidates with these growth mindsets don’t accept jobs only because you’ve offered them the best salary. Though money is important, so too is their trust in what you’re trying to accomplish and an affiliation with your values and goals. During the recruiting process, you build that trust and affiliation by focusing on purpose—theirs and yours.
It really wasn’t that long ago when most entrepreneurs recruited by placing a help wanted ad in newspapers listing a fax number for resumes. On Monday morning, the human resources person would come in and find hundreds of resumes in the fax machine (assuming the HR person remembered to load it with paper and change the ink cartridge). Based on the resumes alone, HR would decide who to interview for the job; sometimes deciding that only half of the stack was worth looking at and that “luck” would play a role in who got interviewed.
We’ve come a long way in the past few years. We understand that with some additional work, you can know the whole person—not just where they work and what skills they’ve acquired. Interviews have become a crucial part of the process, in large part because they provide three-dimensional data that can be obtained nowhere else. This is the only way to know what makes a candidate tick.
More than ever before, we need to know what makes her tick. Now and in the years ahead, we need to dig deeper into who candidates are and how they will fit with a given company. It doesn’t take a seer to predict that people more than products, services, and strategies will make the difference in the years ahead. There is so much parity in just about every product category that it’s no longer who is first to market or who has the highest quality product or who has the best social media strategy.
It’s about the people who execute that strategy. More specifically, it’s about filling your company with people whose beliefs, goals, and vision add momentum to yours. I’ve emphasized this point so much throughout the book because I know the reflexive skepticism of pragmatic entrepreneurs. “I want to hire someone who can balance the damn books” or “I need to fill this position with the best programmer on the planet.” When you’re hungry for competency, it’s easy to overlook values.
But competency will only get you so far in a world where all your competitors are competent. To gain a true competitive edge in a world where skilled people are ubiquitous, you need to find people with purpose—especially people whose purpose matches yours. That will not only provide you with a longer-term employee but with someone who works harder, faster, more productively, and more creatively. Mission-to-mission alignment creates exponential value for a company.
So recruit with purpose, today and in the foreseeable future. Don’t wing it; recruit with a process to avoid hiring someone just because he “seems right.” Purpose means methodology, and this book offers a method that has been proven to be effective time and again.
And recruit like an entrepreneurial leader. The most successful startup leaders—people I know and have worked with (and who are mentioned in these pages)—focused their recruiting efforts on core values alignment. They inspired and engaged their new hires based on this alignment. As a result, they brought in people who performed better than at any point in their careers, regardless of how their previous performance might have been.
You have all the knowledge you need to recruit in this way. And the knowledge you don’t have you can acquire with ease (visit HireSmartFromTheStart.com for resources that will help you build your recruiting expertise). But to recruit at a high level, you really need to make a commitment—a commitment to align your workforce with your vision for and values of the business.
In one of the greatest motivational speeches ever made, Earl Nightingale quotes the psychologist and philosopher William James: “We need only in cold blood act as if the thing in question were real, and it . . . will become so knit with habit and emotion that our interests in it will be those which characterize belief.”
James was suggesting that if you set a singular goal as your guiding star, your thoughts and habits will bend to it, and your mind will work toward it in ways you don’t even consciously realize. In this way, you’ll focus on this goal and figure out a way to make it a reality. Do this and you can facilitate self-transformation in the lives of the people you recruit, manage, and lead as well as in your own life.
Let your overarching purpose become a guiding star for your company. Then recruit people who can see that star just as clearly as you do. Find the talent who can navigate by its light.
If you do, you’ll be amazed at how many candidates you select exceed even your most optimistic expectations. It all boils down to making the right match, and when you do, your company’s fortunes will soar. What’s more, you will achieve your mission.