What to consider when hiring employees in a startup

Hiring new employees is a big decision, especially as a startup with obvious funding constraints.

If the employee ends up being a good fit for the business, both the employee and the startup will benefit. If, however, the employee, for whatever reason doesn’t work out and is eventually let go, the startup may have suffered financially because of the significant outlay in training and induction of new staff generally.

Before you go ahead and hire new employees that you think you need, you should ask yourself whether or not there are any viable alternatives.

What kind of work do you need done, and can it be outsourced? Is a contractor more appropriate and financially sensible in the short term? Think about the regularity with which the job and its tasks will need to be performed. Is it a one-off job, so to speak?

If the answer is ‘yes, perhaps hiring or outsourcing a contractor is more appropriate in your early stages as a startup. If, however, you’re looking for someone to take up a role that is more ongoing and permanent, it may be more economical to hire him or her as an employee.

If you make the decision to hire new employees, how do you go about finding them? What skills or qualities should potential candidates have? Of course, the type of business you run might influence the type of employee you’re looking for, but here’s a general guide to help you along the way.

What to look for and where to look

• See if your friends, industry colleagues or advisers can give you any referrals. The benefit is that the referrer already knows you and your business, which means they’ll know whether the person is a good fit both in skill set and personality.

• It’s always better to take on employees who have previous experience in another startup, as opposed to large corporate businesses. Teamwork and autonomy are both valuable attribute when working in a startup, not to mention being familiar and comfortable working in a fast-paced environment. By hiring someone with previous startup experience, it’s a safe bet they’ll already have these qualities.

• Don’t avoid using recruitment agencies. These businesses are well equipped to source the right candidates, especially when you’re looking to fill the more senior, executive roles in the business. These agencies take a placement fee as payment, which is a small price to pay for the right employee.

• Another great resource is online job directories, blogs and industry websites. This is an excellent way to gain access to potential candidates, usually without any significant outlay.

• Place advertisements in any relevant trade publications or newspapers. While digital media is becoming more and more relevant, there are those who still seek employment this way. Like online, you should get significant interest without spending too much.

• When you’re choosing which candidates to offer an interview, try to gauge whether their skill set complements existing employees and/or fills any skill shortages in the business.

• Make sure that you provide a fairly detailed description of the role, what it entails, what skills it requires, what previous experience you’ll need, and so on. This will narrow the applications to the most relevant candidates and help to separate the sheep from the goats.

Alternatives to full-time employees

It is not uncommon for startups to be unable to take on new employees due to financial constraints. If you business falls into this category, here are some alternatives to full-time employment:

• Go with casual or part-time employees. This shouldn’t be a problem finding those willing to work in a part-time role, as many people don’t want a full-time position.

• If you can defer or delay paying your employees until the business becomes profitable, then you should do so. You’ll have to sweeten the offer if you want any potential employee to be interested in this kind of arrangement.

• Offer equity to employees through an Employee Share Scheme. This brings on highly skilled employees and gives you some breathing room with respect to the salary you end up paying them. It also gives you confidence that this person is in the business for the long run.

• Look for interns to employ. You can offer industry experience to university students and those with little to no experience at little to no expense, provided they learn valuable industry-based skills during their internship.

Read more: Intern or employee – what’s the difference?