Augmenting your headcount to expand is a critical decision for a growing start-up. Here are 6 pitfalls you should avoid while choosing recruits to take your business forward
This is a balancing act start-ups have to wrestle with sooner or later – hiring more employees and keeping customers happy versus increasing their cash flow. So just when is the time right to expand your workforce?
Hiring new recruits is not an ad hoc decision. If the workload is chipping away at the morale of your staff and customer complaints have begun trickling in, it may be time to augment your headcount. But is there an optimum employee cost-to-cash generation ratio to consider? No, there isn’t but there are some guidelines. “The greater the number of products, the more employees you should have to take care of operations for quicker delivery of the end product,” advises Rajiv Vidyarthy, founder and CEO of Talent Bazaar, which has created a platform to connect HR consultancy firms with employers.
1. Going on a hiring spree
Keeping customers satisfied is a golden rule but don’t go off the deep end. “I received a call from a young start-up that which employs 80 people. Now they want to double the number,” reveals out Kapoor of Mettl, an online-assessment tool provider. But it’s more about need than absolute numbers. Take, for instance, Snapdeal.com, which had barely 20 employees two years ago and now has over 1,500. Asked where the talent was absorbed, Kunal Bahl, Chief Executive Officer at Snapdeal.com, said, “Most of them were placed in operational areas.” The trick is to save costs and hire fresh graduates or trainees when possible. “The average age of our company is 24-25,” Bahl reveals.
If you do tend go overboard, you can be sure your investors will put the brakes on it. “Most e-commerce portals that use our services for growth and replacement hiring are going slow now. We hear their investors have raised objections,” says Vidyarthy of Talent Bazaar.
“Instead of hiring full-time employees, some tasks cam be managed by using outsourced staff. For instance, back-office functions such as accounting. On the other hand, marketing and sales staff, who help generate profits, should be full-time employees,” suggests Himanshu Kothari, Director of SynCore, a management consultancy firm focusing on business excellence.
2. Qualifications are the best yardstick
Hiring someone with the great attitude even though he or she may not have great qualifications could be more cost-effective and even profitable. Someone who is low on qualifications but high on ‘jugaad’ may do the trick while MBA grads from top institutes usually eye big pay packets and a short career path
Kothari of SynCore explains, “While hiring for start-ups, one needs to focus on whether the candidate has an attitude that suits a start-up. If they are looking only for a ‘job’, they are likely to quit in a few months while candidates who are go-getters might be a great fit.”
3. Aptitude is more important than attitude
But how do the cards stack up when you weigh aptitude against attitude? Kapoor of Mettl clarifies. “As an entrepreneur, I would assign aptitude 20-30 per cent weightage and 70-80 per cent to traits like hardworking, discipline and commitment to work. Self-motivated or not, hardworking people get far more weightage than those who are high on aptitude when it comes to a start-up.”
4. Letting them find their feet
Your quest doesn’t end with finding the right candidate. Helping them imbibe the company’s culture is equally important. This means introducing them to the vision and goals of your start-up so that they find the right focus early on. “If you’re hiring rapidly, you may not have the time to introduce your new recruits to your work culture. As a result, everyone will start a new culture, which will create problems,” points out Kapoor. You therefore need to have the right people at the top to take care of the team and make sure that different cultures are not being created.
5. Shying away from firing
If you discover that you’ve hired the wrong person, you should correct that error of judgement at the appropriate time. Hiring and then firing is not a crime. While addressing the audience at a recent TiE Summit, Bahl of Snapdeal.com admitted he had hired the wrong people initially but was initially reluctant to fire them. “Guard against being ‘too soft’,” he said. Sometimes, firing an unsuitable recruit may send the right signals to your team and benefit you in the long run.
6. Blinkers on poaching
While you’re grooming talent, competitors may want to snatch your key people. “The toughest challenge for entrepreneurs is to prevent losing good employees to the competition,” says Kothari of SynCore. Sometimes examining the candidate’s track record and looking at their career path reveals their intentions. “There are instances where competitors plant an employee in another company to learn the latter’s secrets. We had a partner who was placed by a competitor this but the employee is back with us. He realised that we have better values and treat our staff well.”
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