How to Staff an Emerging Company - ITB Partners

I work with many startups and emerging brands. They have become the core of my business. It gives me great satisfaction in helping them with their recruiting needs. When my colleagues and I created ITB Partners, our strategy was to focus on this sector. Companies in this phase of their life cycle face decisions that carry significant risk. One or two bad choices can sink an otherwise viable company, even if they have proof of concept. We believed we could help emerging companies achieve success by avoiding business-killing mistakes. Recruiting new employees is one of those high-risk activities.

A growing company will eventually need to increase its staffing level. They must approach this high potential risk with caution. For many of my clients, i.e., emerging brands, the first consideration is to find an outsourced solution. Many job functions can be outsourced, including accounting and human resources. A recent client had even outsourced most of their marketing function. However, a viable outsourcing strategy requires a strategic-level employee on staff to manage the outsourced function.

A good example is to hire a Controller or CFO to manage the outsourced accounting function and interface with the financial community and investors. Mission-critical job functions probably cannot and should not be outsourced. Early on, outsourcing non-mission-critical job functions may be a better use of a company’s resources. It is also a valuable way to reduce the risk associated with an expanding workforce.

Some Pitfalls.

- Adding too much staff too soon.
- Failure to use outsourced solutions
- Lack of prioritization of positions to fill
- Lack of processes for recruiting and selection
- Lack of training for interviewing and selection
- Lack of a coherent reason why someone should join your company

Recruiting for startups is different from hiring for a going concern. As I say, the risk is more significant. The costs for hiring a non-competent employee or someone whose behavioral issues negatively impact the culture may significantly affect a small company. Established companies have less difficulty attracting good employees. They have people, processes, and systems to ensure an effective recruiting and selection process and lower risk profile. They have an established culture and look to fill positions with people who reflect their mission.

Small, emerging companies have fewer resources, are less political, and have a bias for action. Speed rules! Entrepreneurs often have unconventional management styles. They can be chaotic. Employees working in these environments must demonstrate a high degree of flexibility and adaptability. Job roles have a wider scope, requiring employees to have a broader experience. It requires employees with greater self-confidence who are comfortable in an ambiguous, less-structured work environment. Many entrepreneurs lack training in recruiting, selection, onboarding, and retention. Job descriptions are challenging to create as ideal candidate profiles, and behavioral components may be more important than skills and experience. Finally, an emerging company may have more difficulty selling employment opportunities as their brands are unknown.

What to Do?

- Begin with a plan!
- Set staffing priorities w/timeline for hires
- Can function/position be outsourced?
- Establish processes for recruiting, selection, and onboarding.
- Determine training needs of key managers and decision-makers.
- Determine selection criteria (skills, experience, cultural fit)
- Determine employer’s Unique Selling Proposition – Why should I join this company?

Let’s assume that you have a process in place to determine if a function should be covered by a contractor, an outside resource provider, or to hire W-2 employees. You have determined that you need a significant addition to staff in one or more mission-critical areas. Your solution is to hire employees to meet this need. How should you proceed?

As with any initiative in business or life generally, a successful outcome usually begins with a plan. Actionable data is required to develop an effective plan. So, what is the information you need? First, understand the work to be done and the importance of that work to the current year P&L. In other words, a cost-benefit analysis for each position you need to fill. This information provides the priority for filling each position.

The second consideration is the capabilities of the people involved in this project. One of the most significant issues I encounter is the lack of training and development among the people managing the recruiting and selection process. Click To Tweet Often, they do not have the skills and experience to create and execute an approach that works. It is a common problem among emerging companies. To compensate, I must devote my time to help the client build those skills. If recruiting and selection skills are in doubt, consider training and development and the use of outsourced resources.

To summarize, you have determined that increasing your company’s employment base is necessary for growth. But adding employees carries risk. You understand that minimizing this risk is critical to your company’s survival. Fortunately, you can mitigate this risk by improving the skills of those responsible for recruiting and selection. The solution is to find a consultant or a program that will give your managers the training and development they need. The cost of failure in this regard cannot be understated.

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Some Pitfalls.

What to Do?

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