By Brian Mitchell, Managing Partner & CEO.

Founders are not always great managers and are often not great evaluators of talent. Sorry, but it’s true. They may be brilliant at product, finance, operations, commercialization, or technology, but that doesn’t always equate to attracting, onboarding, and retaining outstanding talent. And no matter how unique your product/tech/solution is, you need great people to actualize the scale. Yes, some Founders have an uncanny knack for evangelism, inspiration, and attracting good people, but how can you replicate this uncommon intangible? Others have outstanding systems and execution skills that an A-player candidate would like to work with, however, they lack the care, charm, or effort to get the top people in the door to ever appreciate the operational excellence. It’s a conundrum and a minefield of human capital waste can and often does occur, which is not a minor concern to venture capitalists who’ve invested millions (maybe tens of millions or more) dollars into the business so it can become the next unicorn. 

Of course, a good operator also doesn’t want to stifle the creative and high-energy environment of a startup or early-stage company with over-analysis and bureaucracy. So what is the healthy balance? The efficiencies stem from “positive disruptions”. Positive disruptions might just be a tweak of an existing method or system, but it’s oftentimes a complete overhaul of an ineffective process or the introduction of something designed to improve performance which is unprecedented.    

Look at the macro private equity model: they typically take controlling interest in companies that have a fundamental value, but are underperforming and/or not accelerating performance. The PE firms have a “playbook” they run at every single portfolio company without deviation. They own the company so they dictate processes and methods which will drive efficiencies leading to better margins and top-line growth. It’s not complicated – they take over, they quickly institutionalize proven best practices including vendors, benefits, payroll, legal, and most importantly all measures of finance and reporting. They also often make disruptions in HR, compensation planning, and hiring practices including aptitude tests, milestones of an interview process, onboarding checklists and training, 90 day and ongoing evaluations. These are all classic “slow down to speed up” designs meaning leaders need to take time to focus ON the business and not just IN the business. 

Obviously, most Founders don’t have the time nor the resources to implement an elaborate system, however, given their board is going to evaluate their performance on outcomes, I cannot imagine a more vital area of focus for an ambitious founder than the people and culture s/he wants in the hallways. Leadership is accomplished through others so ensuring those ‘others’ are top caliber people, challenged and satisfied, and loyal to the company ethos and mission should be a critical objective of the founder/operator/CEO.

Here are a few minimal criteria every next Bill Gates or Zuck should have implemented at their company in one form or another:

  • Well-defined common values within the business. Yes, these are softer points like integrity, attitude, etc., however deviation from core values to bring in a leader (or even an individual contributor) who is not really a “team player” is a mistake, especially in the early days of growth where a wrong turn can lead to a true dead end. Don’t settle here.
  • Invest in company promotion. Well beyond job boards, the companies that are most attractive are the ones that are known and project energy, success, challenge, innovation, and fun. Social media, email, and video distribution; philanthropy and community events; building an entire sister website focused only on what it’s like to work here and why someone exceptional should be interested is an outstanding differentiator.
  • A well-defined interview process that ALL hiring managers utilize. Winging it is a recipe for disaster. Have defined stages and commit to a certain cadence. Have pre-prepared follow up correspondence with the candidates you want to advance with including info, insights, assignments, etc. related to the company or the interview process (and have pre-prepared correspondence with the candidates you don’t want to move on with also, professionalism matters and comes back in indirect ways in the market). 
  • Track every candidate in an applicant tracking system or simple CRM. You want to do this so you can build an archive, but even with simple software the data can be broken down by department, manager, position, hiring success, and over time tenure and promotability…….these are phenomenal stats on managerial and hiring effectiveness let alone a barometer of leadership.
  • And here’s the critical inch – the hiring managers must prioritize interviewing and responding and keeping the process going. If they are under-resourced and “don’t have time”, that’s when they should slow down to speed up…and invest to bring on the people to execute all the work that needs to be accomplished. Otherwise, it’s just a cycle of inefficiency and no way to get off the wheel. Hiring execs must have the discipline to make the time and not take shortcuts.
  • Have a roadmap for where the company is going and career opportunities for exceptional employees. Have a “high tides lift all boats” culture so everyone is rowing towards the boat’s rise 
  • Fire underperformers and allow your exceptional people to grow even if it means they need to go to another company. When leaders don’t hold underperformers accountable, it sends a message to the rest of the organization and it’s the road to average or worse. Give your exceptional performers new assignments, informal responsibilities and formal promotions, and keep asking them how they’re feeling and bring them into the inner circle at the company so they have a real voice. And if they get courted to another outstanding career opportunity you simply can’t offer, then let them go and transition them out professionally. It’ll sting, but that’s what real leaders do and it will come back in other positive ways.

So my collective point is that startups and early-stage companies, and frankly plenty of inefficient (some floundering) mature companies, can often improve their approach to human capital. It’s perpetually urgent and it’s perpetually important. The attraction, identification, courtship, hiring, onboarding, training, investing, and evaluation of employees at all levels is critical, but often overlooked. Don’t let that happen to your company or your company might not remain relevant.