Hiring Strategy for Startups - Building an Effective Team

post written by Dimitris

Building an effective team is one of the most difficult things you will do as a startup owner. You may have a vision for your company's future, but that is hardly enough. Without a strong team by your side, that vision will never materialize.

But how can you attract the best talent? In this article, we will help you create a hiring strategy for startups that will propel your business to success.

Developing a hiring strategy for startups - 7 Tips

Hiring strategy for startups

There are several tactics you can use when building a hiring strategy. Their goal is to make the process more organized, thorough, and cost-effective. Let's have a look at the most important points:

  1. Don't be afraid to outsource
  2. With early-stage companies, the workload may often feel overwhelming. In your attempts to lighten that load you may speed up the hiring process and make wrong decisions. This can be a time-consuming and costly mistake. Instead, consider hiring freelancers and working with agencies.

    • Agencies can help you take care of all your company's needs, including software development, marketing, and customer support. More on that below.
    • If there are specific tasks that take up a lot of your time while not producing the most results (e.g. writing press releases), consider hiring a freelancer from Upwork to do it for you.
    • Working with freelancers and agencies will help you to get a better understanding of the skills and requirements a candidate needs to fulfill to be a successful hire.
  3. Hire Slow, Fire Fast
  4. The startup world is very dynamic. And this often reflects in the hiring process. Before creating an HR department, recruiting falls under the responsibilities of the startup founder. But a company is only as strong as its weakest link, so this process should be anything but fast.

    • The least you can do to qualify a candidate is to split the hiring process into 3 rounds - (A) an introduction meeting, (B) a deep dive into the candidate's knowledge and experience, and (C) a test assignment.
    • Begin with a temporary agreement that lasts 1-3 months. The probation period will help you better understand a candidate's performance and team spirit.
    • If the candidate is not performing as expected, don't wait too long. The sooner you let them go, the faster you can start looking for a better fit.
    • “Hire slow - fire fast” is one of the most effective hiring strategies for startups.
  5. Money > Perks
  6. Many startup founders feel passionate about company culture. This usually entails different perks and benefits. Maybe a free gym membership or "wine after lunch" on Fridays. This is a great method to build up team dynamics, but not the best way to attract talented candidates.

    • By giving more money instead, you allow employees to enjoy the perks if they want to. Not everyone wants to go to the gym and not everyone drinks alcohol. But everyone uses money.
    • Since startups pay less salary than established businesses, offering more money can be beneficial when building a hiring strategy for startups.
    • It can also be a great way to increase your company’s visibility in the market, when working with recruitment agencies for startups.
  7. Create an employee referral bonus policy
  8. What does employee referral mean? In short, you incentivize individuals with large networks to go "bounty hunting" for your startup. Upon hiring the right candidate, you reward the person who made the referral.

    • Rewards can vary, but it may be a good idea to offer an amount equal to the hire's first-month salary.
    • You can advertise your employee referral program on Social Media, email newsletters, and Slack groups. You can even promote it in recruiting events.
    • Referrals can expedite the process of team building for startups, as word-of-mouth recommendations usually lead to qualified and experienced candidates.
  9. Let potential candidates know you're hiring
  10. Unless your startup is very popular, you will probably need to promote your career openings. Here are a few creative and cost-effective ways of doing so:

    • Promote on popular email newsletters in your industry. A great way to find such newsletters is through Substack or Twitter.
    • Email local universities for entry-level and internship positions.
    • Contact recruitment agencies that specialize in your industry (more on this below).
    • Upgrade your Linkedin account to Recruiter Lite. For the first month, you can make use of the Recruiter Lite free trial. After that, the service costs $105 per month.
    • Post in local slack communities of your target group (developers, UX designers, SEO experts, etc.).
  11. Get to know your candidates
  12. Work-related skills are not the only factors that determine a candidate's success. Another very important aspect is one's personality. Do they fit the company culture? If not, it could have a detrimental effect on their motivation to do good work.

    • During the hiring process, ask personal questions. What are the candidate's hobbies and extracurricular activities? The answers offer hints about one's personality and social skills.
    • Consider taking your candidates on a fun trip outdoors, testing their problem-solving skills. You'd be surprised by the insights you can get from an escape room or a treasure hunt experience.
    • All in all, when hiring for strategy roles at startups, you should be looking at your candidates’ response (or reaction) when they are under pressure, and how their problem-solving skills help them.
  13. Don't forget to check Angel.co
  14. Angel.co or Angellist is one of the best platforms to search for startup talent. The platform helps startups find investment opportunities (through Angel investors) and connects startup founders with experienced candidates.

    • Pricing plans range between $199 and $1999 per month, depending on the needs of your startup. You can also use a free plan, but most of the filtering options will not be available.
    • There is a 14-day free trial to test out any of the plans to see if they work for you. Start with the free version to find out whether this option works for you. If it does, you can always upgrade to narrow down your final candidate selection.

Startup hiring process challenges

Hiring strategy for startups

If you are wondering why you can't attract top talent, your company may be facing one of the following challenges:

  1. Lack of resources
  2. Early-stage companies often struggle with a lack of resources, expertise, and time. As there is no HR department, finding the right candidate for open positions can be very challenging.

    How to solve the problem: Create a roadmap on an Excel sheet and track each and every part of the hiring process. Create separate tabs for advertising efforts, employee referral programs, and all three stages of the interview process. This way, you will keep a better overview while spending the least amount of time.

  3. No established reputation
  4. Your company could become the next unicorn in Silicon Valley but, for now, it's just one more startup in the pile of potential failures. While this may sound depressing, it is important to recognize the risks from an employee's perspective. After all, only 25% of new businesses survive in the long term.

    How to solve this problem: Build a great reputation by highlighting the benefits of working at your company. Make sure you are as vocal as possible and try to relate with your audience on a deeper level. Social media - especially LinkedIn posts - are a great way to do this.

  5. Not exactly a "secure" job
  6. Most people value safety above freedom. This is why they want a secure and stable job. You might be lucky enough to find 20-somethings that like the excitement of sleeping under a desk and eating noodles for dinner. Most startups, however, will need to find a way to compete with big brands. Why would top-talent choose you over a company that offers more stability and a higher salary?

    How to solve this problem: High salary and luxurious perks may not be your strong points, but there are many ways to improve your value proposition. Consider flexible or remote working opportunities, regular team-building events, or a non-corporate work atmosphere.

    Why hire when you can outsource?

    This is a question you should ponder on. Outsourcing has many benefits for early-stage startups:

    • Most contracts allow you to stop the collaboration anytime you want, with a 30-day notice.
    • Working with an agency is oftentimes cheaper than hiring an employee (holidays, sick leave, government tax, etc.).
    • You get the support of a whole team instead of just one person.

    Most employers are hesitant to outsource their work, thinking that "in-house" teams perform better. If we learned anything from the recent COVID-19 pandemic it is that this way of thinking is wrong. Remote work allows for more flexibility and improves the quality of life. On top of that, studies claim that it increases productivity.

    We, at Coara, understand that building a team can be challenging. Our team consists of 2nd and 3rd time founders, who have a track record of building their own products, and helping other startups grow. And this is what makes us different.

    • We are not just a software development team. Our agency can complement your startup with valuable lessons learned through our own experiences.
    • When working with Coara, you do not only work with a software development team. You rather work with likeminded people who know what it takes to build a successful business.
    • Whether you want to test, build, or promote your innovative idea, let us support your company's growth.

    Click here to get in touch and find out what we can do for you.

    Is a startup recruitment agency worth it?

    As soon as you start a new company, you will likely get offers from recruitment agencies. This may be a great way to hire developers for a startup, especially if they can be sourced from countries that are considered to be "cheaper". Many new companies, for example, hire talented developers from Ukraine or Romania.

    Apart from developers, however, it can be very challenging to find strong candidates for executive roles. Top talent doesn't need to approach a recruitment agency to get new job offers. They usually find work opportunities through their existing network.

    A much more effective "hands-on" method to find qualified candidates is to use LinkedIn Recruiter. Here are a short demonstration of how this works:

    Final thoughts

    All great companies once started from a small team of hard-working visionaries. While finding great employees is not easy, it is one of the most important elements of future success.

    The information of this article should help you find and hire top talent in your industry while outsourcing tasks until you get there. Keep in mind that each hiring strategy for startups will look different based on your company's individual needs. Therefore, use this article as a guide to developing a unique strategy that works for you.

    We hope this article was helpful and valuable. If any questions on the topic remain, make sure to check the most common questions and answers down below.

    Frequently asked questions

    The following questions are most often asked when discussing hiring strategies for startups.

    How to find developers for startup companies?

    Assuming you have no technical experience, it may be hard to find talented developers for your startup.

    • Find a technical co-founder or at least an experienced developer to help you understand the requirements and experience you should be looking for.
    • Visit places where you can find good technical talent (hackathons, conferences, meetups, etc).
    • Contact recruitment agencies and start scouring LinkedIn, as aforementioned.

    When you find a potential candidate, start working based on a consultation agreement to better understand if they make a good fit with your company. This is done as much for them as it is for you.

    What are the key hires for startups?

    During the early stages of your company it is important to find multi-talented employees that can function across multiple departments. As a founder and CEO, the most important roles you should cover either with co-founders or recruits at this initial stage include:

    • Chief Operations Officer - Consider this your right hand who covers your back and handles day-to-day operations.
    • Chief Product Officer - Specializes in the development of your product.
    • Chief Marketing Officer - Paid/Organic promotion and community management. Most important for B2C products.
    • Sales Manager - Focuses on generating new leads for your company. Most important for B2B products.

    Who should develop a hiring plan for startups?

    For all early-stage companies, the hiring plan should be created by the CEO or the COO of the company. These two roles have the best overview and are able to draft a plan without any additional help.

    Where can I find startup talent?

    There are many ways to find startup talent. Here is an overview of all the different methods you can use, as described in the chapters above:

    • Contact local universities
    • Use LinkedIn Recruiter Lite
    • Participate in or visit hackathons
    • Network at expos and meetups
    • Contact recruitment agencies that are actively hiring for startups
    • Research online to discover the best recruitment software for startups and have your HR manager explore its potential.
    • Advertise in industry-relevant email newsletters
    • Recruit through Angel.co

    How can I determine the effectiveness of a startup recruiting agency?

    Apart from communicating thoroughly with the agency, it is important that you also reach out to past clients. What do other startups have to say about their work? Were their candidates qualified enough? Would they recommend them as the most effective recruitment agency for startups?

    Next to that, you might want to ask the company how they source their talent. Where do they find them? Do they visit any recruitment events? What about startup-related conferences? This information is very important and helps you understand what kind of training period you’re facing.

    Do you have any more tips when building a recruitment strategy for startups?

    Recruitment strategies for startups are very similar to any other type of hiring plan. However, the main difference lies in your speed and knowing where to look at:

    • Established companies have already built work systems, which allows them to find temporary solutions until a new candidate is hired.
    • When building a hiring strategy for startups, however, especially early-stage ones, you need to focus on hiring people that do not require lots of training. Ideally, they should have at least 2 years of experience.
    • Also, don’t undermine the power of motivated junior employees. Candidates that have just finished university are able to put in more work to learn new skills and are usually cheaper to hire. While this contradicts the previous point, it may be wise to consider for simpler tasks.