Tom Davenport, co-founder of Talent Pool, discusses how to attract the best candidates for your startup or scaleup.
It’s not the money that makes high growth SMEs attractive places to work.
As a rule, this sector offers a better work-life balance, greater opportunities to assume ‘outsized’ responsibilities and a healthier and more stimulating working environment than can be found in the corporate world.
And then, of course, there is the social opprobrium associated with working for (say) a bulge bracket bank versus the kudos enjoyed by the employees of a FinTech scaleup.
So as an employer in the high growth sector, what can you do to differentiate yourself?
Salary is clearly important; it’s ultimately why nearly everyone goes to work.
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But benchmarking should be against peers – not the market at large (i.e. you don’t have to compete with corporates).
Of course, the better everything else is, the more modest salary can be.
A salary may be a barrier to joining an SME or a startup – but it is very rarely a reason to accept an offer. For this reason, I’m taking it off the table.
Similarly, while the terms of an offer are important, they are generally enablers as opposed to deal-breakers.
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It’s good to be generous with holiday and benefits from a retention perspective, but these rarely impact joining decisions.
For a front line commercial role, commission and bonus structures are important. But the issue is that these are rarely fixed – and most candidates know this.
Besides this, and particularly with early-stage businesses, it’s not all that helpful knowing what share you’ll get when you have a very limited idea of how large the pie itself might be.
Bandwidth for commissions will very often be determined by unit economics, leaving very little room for flexibility. So I’m also taking the terms of an offer off the table.
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From my experience, there are three real needle movers which are particularly pertinent to startups or SMEs.
Together they constitute a helpful framework for assessing an offer: Position, Prospects and People.
Outsized responsibilities are a hallmark of startup and scaleup jobs.
This is doubly the case because not only are high growth companies typically resource constrained, spreading more responsibility over a smaller team, but also they are generally much closer to their customers.
There are no layers of management to obfuscate the impact of any one individual. This often makes working at an SME feel more ‘real’ than at a corporate; not only is there scope to have a greater impact, but also that impact can be seen and measured much more directly.
So for high growth employers, it’s important to understand that new team members will expect to assume significantly more responsibilities than they would elsewhere.
Then, of course, there is the individual’s title, simplistic as that may seem. This is more important than is generally understood; and of course, doesn’t cost a penny.
SMEs should see role titles just as the civil service does the honours system; a great way to hire above your paygrade.
This applies particularly to SMEs where role titles are fluid, flexible and not operationally important, compared with a large corporate which requires consistency across a workforce, enabling a hierarchy to function and individuals to be aligned to departments.
The situation in an SME is distinct because, critically, everyone will know each other. A hierarchy may well exist (although it is likely to be less pronounced) but it can be enforced by relationships, not titles.
SMEs should use this to their advantage; for some prospective employees it’s not a big deal; for others, it’s a game changer.
Although it is evidently important, a good candidate is likely to be just as interested in what a job might lead to as what it involves in the short term.
So it’s critical that employers explain clearly what future prospects they believe a role might offer.
This could be entry into new sectors or geographies, gaining invaluable experience and, of course, increased responsibilities.
Remember that this could well be beyond a company as well as within it; it’s important to be realistic. Individuals typically see current and future roles through two lenses.
The first is what their responsibilities will be – the company perspective, as it were.
The second is what this this means they will do; what skills will they develop, and what a typical day will look like.
Will they be travelling, sending emails or speaking on the phone?
Companies are frequently good at explaining the first category; they see a hire from a ‘delivery’ perspective and should at least be clear on this.
However, as a rule, employers struggle to properly articulate what a prospective employee might actually do.
So there is a real opportunity for employers to strengthen their position by getting to the bottom of the prospects of a role, not only from the employer’s perspective (what an individual will deliver), but also from a employee’s perspective (what they will do).
Candidates will always be selective about the sort of business they join.
They will be concerned with the sector, the product or service, the brand, the leadership team, the story and the vision.
They will also care about the office location – and, of course, the look and feel of the office.
But more important than all of these factors put together are the people, the prospective future colleagues.
From my experience, more roles are accepted and turned down on this factor (‘It didn’t feel right’ / ‘I really got on with the team’) than any others.
Of course, founders and CEOs can’t change a strategy – let alone a team – for a candidate.
But the key here is to understand what is most likely to drive a candidate’s decision; as effective business leaders know, a good decision is very difficult in the absence of good information.
In summary, rather than playing the same game as the corporate world, startups and scaleups should seek attract talent by thinking very carefully about their strengths, and translating these into opportunities.
The ‘enablers’ need to be in place; without these, the ‘needle movers’ can’t play their role.
But provided that the salary and terms of an offer are good, a decision is likely to come down to Position, Prospects and People.
Have your say in the comments section below!