Attracting talent to a startup

Despite the rough ride for dotcoms, many young companies still successful in luring top executives

Recruiting top talent is a challenge for any organization. But it’s particularly tough on young companies looking to build a solid team in the face of an uncertain future and financial limitations.

As the economy slowly turns around, many of these young companies are looking to grow or improve operational and leadership teams, especially in the areas of sales and marketing.

With continuing layoffs in many industries, decreased market valuations and skeptical customers, it seems unlikely a skilled executive would consider joining a startup today. The promise of becoming a “dotcom millionaire” has vanished, and the times ahead hold serious challenges for young companies needing the support of the investment community, customers and partners in order to realize dreams.

There remains, however, a significant number of talented executives who have gladly given up prestigious positions with established companies to pursue a role in the struggling startup economy. There is also a population of executives who have seen their existing companies fail in the current economy, but who are anxious learn from their mistakes and try it again, and again, despite the risks.

The challenge for HR professionals is to understand these executives and find ways to attract and retain the best. So, who are these entrepreneurial die-hards, and what is motivating them today?

The top five reasons why executives choose to join or stay with early stage companies:

1. Impact. In a small and growing organization every individual has the opportunity to make a significant and noticeable difference. The results of your efforts are easier to see and you are truly able to shape the future of the organization.

2. Rewards. Even though the short-term gains are not what they appeared to be during the technology boom, there remain substantial financial rewards for the executive who helps build a solid business from the ground up. These rewards could be in the form of ownership, stock options or performance bonuses, combined with a reasonable base salary.

3. Achievement. While it is tougher to create and execute a winning strategy today, the feeling of achievement that is realized when you succeed in a difficult environment has no match. Executives realize that the strongest companies will emerge in this tough economic climate, and they want to be part of that success.

4. Passion. Through the ups and downs of a young company, you will almost always find a passion for the business and the dreams of success that permeate through all levels of the organization. For a true team-player, there is no greater working environment.

5. Challenge. With exposure to all aspects of business and the ability to roll-up the sleeves and get involved in a variety of projects and high-level decisions, the startup remains an intense and highly stimulating learning environment. This requires executives to stay sharp and on their toes, ready to craft and deploy creative strategies to deal with new situations.

The entrepreneurial environment of a startup is clearly not suited to an executive who is looking to ease into retirement. It is a highly intense and stressful world that these executives must thrive in, with roles demanding determination, commitment and a strong drive to overcome obstacles and succeed. One of the most desirable traits of an executive for a growing company should be the proven ability to achieve great results with significant resource constraints and challenges such as building brand and attracting investors. The best executives thrive in a chaotic environment and are able to communicate a credible vision employees, investors and customers will follow.

Most executives realize there is a risk and reward relationship in any career decision. It is the role of the HR professional, recruiter and hiring manager to help the potential employee understand the potential rewards and the real risks. Even though it appears candidates are at a surplus, it is critical companies recognize the need to sell opportunities in order to attract and hire the best. Interviewers and hiring managers need to continue to sell the opportunity throughout the assessment process to keep the best candidates engaged and interested. There is one thing that you can count on — your number one candidate is also at the top of someone else’s candidate list.

The savvy executive candidate will evaluate a career opportunity and a company in much the same way as an investor. For the recruiter, this means carefully positioning the challenges and rewards of the opportunity, and crafting a compelling story that will convince a candidate the risk is well worth taking. Candidates will need to know about the details of your business plan, your forecasts, your financial history, your customers and partners, the backgrounds of other executives and how you stack up against the competition. Some of the more sensitive details can be revealed later in the recruitment and selection process, once a non-disclosure agreement has been signed, but the hiring team must be willing and prepared to share both the good and bad news to win over the best candidates. Well positioned, all of these factors can be either selling features or exciting challenges to tackle as a team.

Most companies recognize the extreme cost of making a hiring mistake, especially now when the timing of strategic moves is so critical. Investors are advising companies to spend carefully, and only in areas that will immediately reduce costs or increase revenues. This means that now, more than ever, companies have to attract and select executives and contributors that will almost certainly bring immediate value.

In most cases, a company should look to find and hire a candidate who has held a similar role, in a similar company and achieved the same desired results, in order to reduce the risk of failure. This often means seeking out the best talent from the industry, rather than the top candidate in a readily available pool of resumes. Though the time and cost of conducting a thorough search needs to be considered, it can be justified when the result is a selection of candidates who will most certainly perform above expectations.

To ensure recruits are capable of achieving sales targets, leading a successful team or building a successful strategy, carefully assess them against a consistent and rigorous set of criteria. These criteria should include relevant industry or product experience and achievements that can be easily translated into the performance objectives for the new role. This screening requires the recruiter to validate candidates’ accomplishments and understand the environments in which they worked. It is critical to not only understand what results a candidate can point to, but more importantly, what specific steps were taken to achieve these results and with what resources.

Especially for a startup, a carefully planned reference process is critical to the assessment of candidates, to verify both qualifications and accomplishments. It is surprising how many companies skip the reference step, or place no value on its findings. Though candidates choose only references who they believe will praise their skills and experience, a detailed conversation with a reference can reveal much about a candidate’s work style and qualifications.

In a tough economic time it is important for companies that are growing, hiring and realizing positive cash flows to offer tremendous career opportunities to executives. The challenge for HR professionals will be to identify and attract these risk-taking executives who will enable the company to become a market leader.

Kristina McDougall is the co-founder of McDougall Davies Inc., an executive search firm focused on helping Canadian startups build sales and marketing leadership teams. She can be reached at (416) 410-4061, [email protected] or visit

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