Human Resources and Recruitment in Startups - Entrepreneurship 101

Business Sherpa Group

Business Sherpa Group HR Strength. Guidance. Support.Entrepreneurship 101Human Resources &Recruitment in Start-Ups Business Sherpa Group

BackgroundMargo Crawford Ø  25+ years of HR experience (12+ years in start-ups as a founder and business sherpa) Ø  HR Professional of the Year Ø  Co-founder of Meriton Networks (optical networking start-up) from formation to sale 8 years laterBusiness Sherpa Group Ø  Business Sherpa Group is a full service HR team - from executive level to new grad HR professional – providing full HR functionality for small enterprises Ø  Supporting over 20 companies in Ottawa and Toronto Business Sherpa Group

IntroductionThemes •  HR in start-ups today – best practices •  Planning your organization •  Recruitment vs. Strategic Talent Sourcing •  Effective recruitment in 2012 Business Sherpa Group

What has changed…Start-up realities in 2012 •  Start-ups today know cash is king, so: •  They will not grow larger than they absolutely must •  Each new hire must = best decision for the next dime spent •  Marketing efforts focused on reach to customers, partners & investors - not on creating local presence •  May have to last longer before realizing an exit •  These are all significant hurdles for effective HR and recruitment Business Sherpa Group

What has changed…Some additional pressures: •  Finding people has never been easier; finding talent has never been harder •  Social media for professional use has been fully embraced and now is being exploited – creating a lot of noise •  Supply and demand – lingering tech bubble in Silicon Valley could become a threat locally •  Time and bandwidth pressures have not lessened!! Business Sherpa Group

HR in start-ups – getting it rightSmall companies can be ‘best-employers’through:1.  Effective planning2.  Discipline with best practices will save $$, time and build the best team and culture3.  Strategic talent sourcing vs. recruitment Business Sherpa Group

Business Plans & HR Plans – usual approach HUMAN RESOURCES MARKET •  More of a budgeCng •  Customers exercise than •  CompeCtors organizaCon plan •  Partners •  Headcount •  Inﬂuencers •  Maybe a Ctle Product •  posiConing •  Maybe a level SoluCon FINANCIAL Service TECHNOLOGY •  Business case •  Features & specs •  Pricing, costs, margin •  Technical milestones •  Resources needed •  Schedule & road map •  Investments required •  What it will look like •  Budget •  What it will do Business Sherpa Group

Organization Design Life Cycle Strategic“DEFINE” •  Founders and early staﬀ take on mulCple roles •  Usually a build up of technical resources (sr. level) Operational •  Selling is performed by CEO, CTO, founders “PLAN” •  Board – focus on direcCon and advice, supporCng team to achieve early proof points Tactical “DO” Formation •  Proof points •  Get resources •  Achieve milestones •  Early customer engagement Business Sherpa Group

Organization Design Life Cycle •  ExpectaCons focus on customer Strategic engagement “DEFINE” •  Technical team may be pulled into more customer based acCviCes •  Timelines Cght for product and technical deliveries Operational •  AddiConal ﬁnancing requirements “PLAN” arise •  Board – expectaCons increase around customer acCvity and accurate reporCng and forecasCng •  More business operaConal needs to Tactical manage more staﬀ, transacCons and “DO” reporCng Formation Pre-revenue •  Proof points •  Product ready •  Get resources •  Customer engagement wins •  Achieve milestones •  Clarity on forecast & results •  Early customer engagement •  Internal operations forming Business Sherpa Group

Organization Design Life Cycle Strategic“DEFINE” ExpectaCons Operational in all areas “PLAN” increase and intensify Tactical “DO” Formation Pre-revenue In revenue •  Proof points •  Product ready •  Tight execution: design, build & delivery •  Get resources •  Customer engagement wins •  Internal operations smooth and robust •  Achieve milestones •  Clarity on forecast & results •  Strong performance/reporting •  Early customer engagement •  Internal operations forming •  Established customer base Business Sherpa Group

So what!!! Strategic“DEFINE” May have Individuals who covers a lot of territory in early days Operational “PLAN” Tactical “DO” Formation Pre-revenue In revenue •  Proof points •  Product ready •  Tight execution: design, build & delivery •  Get resources •  Customer engagement wins •  Internal operations smooth and robust •  Achieve milestones •  Clarity on forecast & results •  Strong performance/reporting •  Early customer engagement •  Internal operations forming •  Established customer base Business Sherpa Group

So what!!! Strategic“DEFINE” In Cme will only be able to cover porCons of requirements Operational “PLAN” Tactical “DO” Formation Pre-revenue In revenue •  Proof points •  Product ready •  Tight execution: design, build & delivery •  Get resources •  Customer engagement wins •  Internal operations smooth and robust •  Achieve milestones •  Clarity on forecast & results •  Strong performance/reporting •  Early customer engagement •  Internal operations forming •  Established customer base Business Sherpa Group

So what!!! Strategic“DEFINE” Leaving signiﬁcant criCcal gaps Operational CapabiliCes “PLAN” may be limited in the face of greater expectaCons Tactical “DO” Formation Pre-revenue In revenue •  Proof points •  Product ready •  Tight execution: design, build & delivery •  Get resources •  Customer engagement wins •  Internal operations smooth and robust •  Achieve milestones •  Clarity on forecast & results •  Strong performance/reporting •  Early customer engagement •  Internal operations forming •  Established customer base Business Sherpa Group

Impact on the company.Ø  Leaders drawn into day to day operational activities….not out in front of customers enoughØ  Leaders with a huge number of direct reportsØ  As scaling pressures increase – response is to add more bodiesØ  Start seeing major bottlenecks in some roles (doing too much and too many decisions flowing through one individual)Ø  Titles for early stage leaders – blocking senior leader hires at a latter stageØ  Mix of titles (reflecting what was offered vs. organization plan) – confusion over reporting, responsibilities, career pathØ  Board expectations not being met (reporting, performance)Ø  Challenges in hiring sales – sometimes too early, sometimes wrong DNAØ  Lack of separation of roles leading to weaker strategic decisions e.g. product management - development -sales Business Sherpa Group

Plan the organization - not the headcountSo in planning the organization: Ø  Consider the potential future critical gaps – feature these into your plan Ø  Also as you bring people in at different stages, consider if these hires will also leave gaps later on Ø  Consider that the requirements for planning, reporting, coordinating will increase – these will be important resources Ø  Individuals performing multiple roles will need to eventually gravitate to fewer or one…… plan to build in for separation of role Ø  There will always be the need to be looking forward from a market and technology perspective and at the same time address the market and technology now Business Sherpa Group

Features of strong organization planning Key Run the Define ‘What’ Build Reach Deliver Design FuncCons business market technology & Test & Sell & Support Generally Marketing External & Comms Prod. Head of Facing CEO Mgmt. CTO Head of R&D Head of Ops. Sales Customer Support & Sr. Head of Design Head of Prod. Leadership CFO Bus. Dev. Market. R&D Leaders Manufact. Sales Eng. Prod. Bus. Dev. “Define & Market. Plan” Marcomms Logistics PM Install & TestGenerally Controller Manuf Eng. Mark. Supp. Product Market Engineers Internal Accountant Technical Supply chain Research Scientists Support Office Mgr. planners Lab Tech Sales Eng. Facing HR Techs. Test Tech Media Trainer Marketing QA Customer Purchasing Research Research collateral PM Support “Do” IT assistant Relations assembly Sales Supp. Business Sherpa Group

Financial Technical Customer Milestones Milestones Milestones Milestones Organizational Seed Formation Early Proof of CEO CFO CTO (P/T?) PLM Customer Funding Concept BD Lead HR (P/T?) Series A Sales V.1 Customer Product R&D Sr. R&D Trials BD/ Marcomms QA Company Launch Strategic SE s V.1 GA Revenue R&D Product Int./Jr. Strategic Admin. Support Sales Customer (Hunter) Sales Series B (F/T) VP CFO Repeat V.2 Sales Sales Product + Margin Revenue New Sales VP Accounts (Farmer) Marketing V.2 GA Product Yearly Accountant COO? Repeat Revenue Sales Growth HR (F/T?) Sales Support New V.1 Accounts Series C Sustaining Repeat Quarterly Sales Support Customer Revenue Growth Integrating Organization Plan & Business Plan New V.2 Accounts IPO/M&A SustainingBusiness Sherpa Group

Executing on a plan – discipline & best practicesØ  Thinking about organization – sets foundation for many HR best practices: Ø  Job levels and compensation planning Ø  Clearer understanding of what is required in roles Ø  More compelling job descriptions Ø  Effective sourcing and recruitmentØ  Other foundational HR best practices critical for optimizing performance: Ø  Setting out employment terms, policies and practices Ø  Looking at total rewards; not just salary – benefits, options, career growth, incidental rewards Ø  Performance management Ø  Employment agreements, protecting IP and confidential information Ø  Professional development & employee engagementØ  Not out of reach – many ways of achieving best practices Business Sherpa Group

Finding talent: Strategic Sourcing vs. Recruitment Conventional sourcing BUT this is a very strategies really only competitive market! target active or near- active candidates. NEAR-ACTIVE ACTIVE PASSIVE CANDIDATE CANDIDATE CANDIDATECareer Sasfacon Factors Like People Happy in Job CompensaCon SaCsfactory Career is growing Learning/having new experiences ExciCng Work Fulﬁlling other needs (altruisCc) Business Sherpa Group

Strategic Sourcing vs. Recruitment NEAR-‐ACTIVE NEAR-ACTIVE ACTIVE ACTIVE PASSIVE CANDIDATE PASSIVE CANDIDATE CANDIDATE CANDIDATE CANDIDATE CANDIDATE Perfect Candidate Active Near Active Active Active Near Active Near Active AcCve Active Near Active Active This approach ignores a very Near AcCve This approach is not large addressable market Near AcCve Active AcCve AcCve Active Activetargeted to the perfect Activecandidate for the Active Activecompany. Near Most sourcing draws in Active Active Active those actively or thinking about a career change. Active Business Sherpa Group

Strategic Sourcing & Recruitment NEAR-ACTIVE ACTIVE PASSIVE CANDIDATE CANDIDATE CANDIDATE Effective Recruitment Campaigns CRM – Candidate Relationship Management Program Active Active Near Active Business Sherpa Group

HOW - Strategic Sourcing & Recruitment Understand your perfect candidate! Same principles as understanding your customerSEGMENTATION •  Research the profile of the perfect candidate for each role •  What are the attributes, behaviours, career patterns and indicators of high potential •  What are the relevant career satisfaction factors Ø  This will inform key messages to these target candidates Ø  AND channels to reach them Business Sherpa Group

HOW - Strategic Sourcing & Recruitment Understand your perfect candidate! Same principles as understanding your customerMESSAGING •  Based on what you know and what you discover – develop the messages and brand that speaks to these passive candidates •  GOAL is to implant the idea of your company as a career choice to all passive and active ideal candidates •  This messaging will be heard through branding, recruitment activities, marketing programs, speaking notes, and on-line activities and promotions Business Sherpa Group

HOW - Strategic Sourcing & Recruitment Understand your perfect candidate! Same principles as understanding your customerCHANNELS •  Based on what you know and what you discover – develop strategic sourcing programs that address a full spectrum of channels to REACH the active, near- active and passive candidates •  Develop plans and programs with a view to: Ø  find talent Ø  nurture relationships Ø  convert passive candidates to active candidates Ø  close on perfect candidates Business Sherpa Group

HOW - Strategic Sourcing & RecruitmentUnderstanding who you are targeting; what they care about and how to reach themwill result in: 1.  Clarity on what a successful candidate looks like for your organization And avoid hiring based on what skills present themselves 2.  Creating a compelling job posting that will speak to the best candidates for your company – giving higher likelihood of good matches And avoid generic descriptions that cast a wide net and loses the interest of your highest potential hires 3.  Allows you to roll out an effective recruitment campaign that will reach the target candidates that are best for your organization Avoid shotgun approaches that can be noisy and expensive that miss reaching your high potential hires Business Sherpa Group

Effective RecruitmentTight Execution is Key•  Know what you are looking for and when•  Think of a highly targeted approach•  Process from start to ‘in-seat’ will generally take no less than six weeks WITH all stars aligning – plan for 2 months or more if highly specialize role•  Think before you act – a little preparation will make the effort much more productive Focus in on a tight plan in the context of a bigger picture CEO HR QA Admin. Accountant COO? (P/T?) Support HR CFO (P/T?) Sr. R&D CFO (F/T?)Organizational R&D Int./Jr. (F/T) VP CTO MarketingMilestones Lead R&D Sales Customer PLM Marcomms VP (Hunter)Sales Sales Sales Support SE s (Farmer) Support BD/Sales Business Sherpa Group

Sourcing – a new world. There is a LOT of noise!!!High Cost Process Executive Search Recruitment Firms Internal HR Employee Referral Program Job Board Social Networking Employee Trusted Individual Low Cost Recommendations Word of Mouth Endorsement Process Low Credibility High Credibility Sourcing Sourcing Business Sherpa Group

Sample Sourcing Strategy & Recruitment Plan Business Sherpa Group

Social networking tools Pro’s Con’s TipsHuge reach in all geographies Volume is overwhelming Filter your search in terms of geography and use additional filtersCan reach specific individuals who Will be contacted by many who Use In-mails to send customizeseem to be a good fit think they are a good fit messages to candidates of interest AND follow upCan post jobs Any posting will get a huge Compelling description that speaks response from candidates around to the candidate you want to reach the world will allow for easier filteringCan target communities by Some user communities shun Preferable to have outreach fromconnecting with user groups and recruitment efforts someone in the companyusing other social media Some user groups have job boardsCan see recommendations on Some have become expert at Filter the recommendations – whichindividuals getting referrals from everyone – ones do you trust more noise Still do your own reference checksLots of statistics to look at about You have to read into these to Read with a note of skepticism –companies and individuals understand what is self-promotion always do your own due diligence vs. legitimate signs of excellence Business Sherpa Group

Social networking tools 90 ? 69 Business Sherpa Group

Social networking tools Business Sherpa Group

Social Networking Tools – Best PracticesØ  Post your opportunities on your corporate Linked In and personal LIØ  Push out to target communitiesØ  Search and contact those of interest with In-mail or call; customized contact onlyØ  Trust your own networks – with a critical eyeØ  Consider Ad-words to create presence in relevant communitiesØ  Post messages or tweet opportunitiesØ  Give attention to your company’s corporate profile Business Sherpa Group

WRAP UP The Case for Candidate Relationship ManagementØ  Increasing competitive pressuresØ  Sourcing tools creating a lot of noiseØ  Recruiters – still the most expensive optionØ  Small teams = more accurate recruitingIt is not hard – you know your perfect candidate IF you think about it inadvance! Ø  Use this knowledge to describe what you are looking for and what you offer Ø  Use this to set a sourcing strategy – who to target, where to target and what messages to use Ø  Use this knowledge to screen and select your perfect candidate Ø  Manage relationships with passive candidates – let them know about you BEFORE you need them and before they think about career changes Business Sherpa Group

WRAP UP The Case for Candidate Relationship ManagementØ  Similar concepts to Customer Relation Management principlesØ  Once you identify high potential targets – you want to nurture the relationship Ø  Let them know about you Ø  Contact them periodically with your news Ø  Network with them Ø  Let them know about you before they are thinking about a decision on their careerØ  This can be as sophisticated or as simplistic as you wish – the goal is the philosophy of nurturing relationships – founded on knowing your high potential candidates Planning the organization & knowing what you want and need will ultimately drive TALENT MANAGEMENT SUCCESS !! Business Sherpa Group

THANK YOU!QUESTIONS or COMMENTS Business Sherpa Group

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Human Resources and Recruitment in Startups - Entrepreneurship 101

by Cathy Bogaart

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