Monday, February 6, 2012

Talent for Tech: Hiring A-Players, at a minimal salary

Provided all goes well, you may reach that point in your venture when you receive funding. In order to grow, the next step is to expand the team by hiring “A-players.” These are people who can wear multiple hats, fit with the company culture and communicate well. While they are not part of the founding team, they are crucial to advancing your startup to that next level.
Chris De Sousa, of headhunting firm Hireglyphics, has a high volume of clients seeking A-players. “It’s a challenge finding these high-quality candidates because they know they are good. As a result, they are just as picky as the companies.” De Sousa believes we are seeing a “candidate market” right now, since many companies are looking for the same type of talent.
Where to look

Wondering how to find an A-player? Start with the obvious: tap into your own networks and those of your fellow founders. Make use of local innovation centres and see if any advisors can provide referrals. And don’t hesitate to pursue candidates not formally in the job market, because they may be willing to take on a new challenge.
Your next option is the tried-and-true tactic of posting your job on as many websites as you can. Alex Norman, co-founder of HomeSav, said he found LinkedIn to be the best channel through which to hire for sales, marketing and HR positions. “It was not especially good for seeking out developers.”

Another option is to engage a recruiting agency―one that specializes in technology companies would be ideal. These agencies know the trends in the market, they can help you with HR activities such as writing job descriptions, and they can promote your company and its positions on your behalf. But the agency route does not work for everyone. In Norman’s experience, “the recruiting agencies had a solid candidate pool, but were only able to pull people that wanted high salaries. This is not as effective when you’re looking to bring a $40K/year developer on board. Plus, agencies often take a 20% commission so it ends up being quite expensive if you’re at an early stage.”

To find developers who were willing to take a lower salary, Norman had the best luck with classified websites Kijiji and Craigslist.

How to entice them
Think about location

If you still haven’t picked a location for your company’s headquarters, give it some thought based on the type of people you wish to hire. For example, where is your talent located now? De Sousa says, “office space may be cheaper in suburbia, but does your talent want to commute there?”
Derek Webb, a recent computer science graduate now working with Xtreme Labs, says “location wasn’t a huge concern to me when I was looking for a job. I didn’t want to base my job around where I wanted to live.” However, with Xtreme Labs based in downtown Toronto, Webb adds “being in the heart of Toronto is definitely a nice perk!”
Build a compelling website

Phil Noelting, founder of hiring platform Qwalify, has spent a lot of time speaking with job seekers in Ontario. Through his research, he’s found that a Gen Y job seeker tends to look first at a company’s website in order to learn more about them, and then will continue to search for job postings there. “This is different from Gen X, who tend to search for jobs locally.” Noelting sees a website as being a company’s main identity, and advises startups to keep their sites fresh, relevant and interesting in order to entice talent. In his own experience with recruiting, Noelting found “there was a lot of traction around our website―people were visiting it and sending us emails saying they were interested in working for us.”
Compete like a startup, not a tech giant

Let’s face it. Tech startups do not have the means to compete with giant tech companies on salary, nor on benefits or reputation. Says Webb, “many of the Valley firms come up to Waterloo to hire―including Facebook, Apple and Google. A lot of students apply to these!” What makes the situation for startups even harder is that companies like Google have created an entrepreneurial environment, where engineers and product managers get to own entire products. So what can startups offer a candidate?

When hiring technical staff, it’s a lot better to try and sell the potential of who that person can become moving forward. For example, emphasize what languages that developer will learn, and who they will learn it from. Says Noelting, “Facebook can’t give developers as much breadth of learning because their technologies are established, so a developer is limited by what languages he/she will code in.”
Suneel Acharya, formerly with startup TalentBin, was attracted to the company based on their promise of responsibility, growth, on-the-job learning, a broad variety of work, and direct involvement in the success of the organization. Helen Robert from TechEdge, a firm that advises technology companies on compensation, feels “this is surprisingly important to people. It’s important that employees feel connected to the organization and that what they do directly helps with the company’s success.”
Lastly, stay flexible. Offer some leeway in time and location so that your employees can work on their own schedule. Says Robert, “flexibility doesn’t cost an organization anything, but it can really set apart a small company from a big one.”
Provide equity

Experts in the tech industry often advise startups to treat their early staff like late founders, by giving them a stake in the company. It comes down to the cash vs. king mentality, where you shouldn’t be afraid of giving up ownership if your end goal is to raise money and continue growing the pie. And providing equity is a great way to get your employees dedicated, and feeling like an integral part of the team.

Webb remembers the lacklustre attitude his classmates had about joining smaller startups. “They weren’t a part of the inception, so it wasn’t really their company. It’s more exciting when you help to create it.”
Of course, many startups fear that employees will take equity and leave a few months later. One way to mitigate this is to bring new hires in on a “trial” basis. Acharya was brought on board his Silicon Valley startup with a six-month contract, with a potential for hire. “Contracting is a big thing in the Valley―it provides a safety net for companies.”
And Acharya recommends advancing new hires slowly vis-à-vis their equity amounts, so that startups remain protected from employee turnover. Acharya shared with us how a common contract in the Valley reads:
No equity for one year

25% of your end-state equity share after the first year

A pro-rated amount of equity every month thereafter

Another common practice that Acharya shared is to align incentives by writing contracts based around milestones. “If you’re targeting a major milestone in three years and need a technical lead for that, structure their contract around the three-year mark. Arrange the contract so that once the milestone has been met or the three-year mark is up, they receive their equity.”
Be honest about salary

Media outlets report that Google is paying new computer science graduates $90,000–$105,0001, a figure that most startups simply cannot match. But do young workers really prioritize salary when seeking a job? Robert from TechEdge feels “they want to be treated fairly in relation to their peers. Salary may not be driving their decision, but it will become an issue if their salary dips below what they perceive to be fair.”
Norman of HomeSav, however, had a different experience. “Although we were offering many of our candidates Options to join us, they were more interested in salary and benefits. We had a hard time convincing them to forgo higher salaries at a firm like Google or Microsoft and to work for us instead.”
What did recent graduate Webb have to say about this? “Salary was always at the back of my mind, whether I said it or not. Then again, if I’m going to get paid a lot but not enjoy the work, then it’s not worth being there. I need to care about the work and be passionate about what I’m doing.”

Robert advises that “it’s better to be upfront with your staff from the onset, and let them know if you can’t pay the market average at the moment. But commit to increasing their salary once the business hits a certain revenue point―a point you will need their help getting to.”
Support their development

A recent article in The New York Times shared the story of Valley-based startups that lure talent by providing weekly lessons on how to start a business and how to find venture capitalists to finance it. Redfin, an online real-estate brokerage, is one of these companies. They set up meetings between recruits and venture capitalists so that new hires can start talking about their own companies. Redfin also runs classes twice a month on entrepreneurship.
As the war for talent in Silicon Valley continues, companies are using these strategies to lure in good candidates―candidates that are eager to start their own ventures, but may not yet have the experience or connections to succeed.

On the whole, remember that championing the development of your employees will yield benefits. While they may not stay with you for the long run, if you create a good rapport they will be more likely to refer other talent to you, or help out later on a part-time basis.

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