Tier One People interviewed over 150 leaders in 2019 on how to scale a Fintech. We found less than 1% of founders have a background in HR/People. And only 10% of Fintech startups we interviewed have a dedicated HR/People professional in place.
It stands to reason that with no HR and hiring expertise, startups are at putting themselves at great risk when it comes to hiring, retention, performance and culture.
We have put together the best bits of advice from the 100 founder interviews to help you scale your Fintech startup and avoid the growing pains.
Plan before hiring.
It is a worrying fact that founders put way more thought, effort, planning and commitment into raising capital than hiring. The two are intertwined, without a great team you will struggle to raise the capital to grow.
A well thought out people strategy should be part of your business plan from day one. If you are promising to deliver cutting edge technology and don’t have the talent on board to deliver, you will fail your investors.
Our research shows three distinct phases of growth for a Fintech.
- Startup: 1 – 49 People
- Scaleup: 50 – 300 People
- Blitz Scale: 300 People with global growth
Getting from 1 – 50 people can seem easy. But this is where all future growth and cultural problems are created. So it is essential to get phase one right if you plan to avoid the growing pains and scale effectively.
Each stage requires a different people strategy. But for the purpose of this article we are going to focus on the Startup phase.
And if you are a startup, please don’t just copy the Netflix, Google, Amazon or Facebook strategy. These are some of the largest businesses in the world with unlimited resources, you are a startup.
Finding great people can be easy – hiring them is not.
If you are running a Fintech startup, finding the time to recruit yourself is tough and using recruitment companies is expensive. Technology and social media have made finding potential candidates a lot easier. The challenge lies in engaging, assessing and hiring the right people.
Think of potential hires as customers.
Why would a top performer be interested in working with you? What is unique about you and the business you are creating? Just as you have created a brand to attract the right customers, create a brand that attracts the right employees.
Develop a list of core values.
If you are the business owner/founder, honesty is critical for this process to work. It is important that you look at your values and behaviour, as they ultimately define the company culture.
‘The culture of any organisation is determined by the worst behaviour the CEO is prepared to tolerate, in themselves and others.’
Evan Wong, CEO of award winning Regtech startup Checkbox had this to say;
Culture has the biggest impact on retaining talent, especially if you’re a startup. If you’re a startup with a crap culture, then you are a crap business and a crap place to work. As founders you need to work out exactly what your culture is going to be. Get your vision, your purpose and your values set early days. The values of your company must flow from the values of the founders. I feel very strongly about this. When you are starting a business, the founders are the brand of the company. The founders are going to set the energy, the expectations and the culture of the company as well.
Similarly, the values of the company must reflect the values of the founders. Values we can demonstrate and action every day, values our customers and employees would also care about.
Hire for your current business NOT the future.
A startup business is very different to a scaleup. At each step you require different people with different skills, expertise and experience. Often times the people required to build a business are not the same people required to grow the business.
Early employees will have a shorter life cycle with the business and that is natural. When things do turn bad is usually when people hang around too long because of loyalty. You need to plan how the business will grow and the skills, experience and people you need to deliver each growth stage.
In the early stages of growth it is often better to hire on skills over culture fit, especially in the short term when delivery is critical to the survival of the business.
Create opportunity descriptions – Not job descriptions.
The person you need to hire is likely to be in a great role already. Moving to a smaller business just to do the same job is not a compelling proposition.
A great way around this challenge is to create an opportunity NOT a job. Rather than creating a job description, listing daily tasks and responsibilities. Try creating an opportunity description, with a set of goals, targets and accomplishments to be achieved within a specific time-frame. For example:
– Within the first six months implement a new billing system with full integration of sales systems and no bugs or errors.
– Within the first 12 months have hired and groomed a potential successor into your role, enabling your advancement into a managerial position.
– Within 18 months have contributed to cost savings in the business of $100,000 by identifying outsourcing and automation opportunities.
Incentivising each milestone with bonus, equity or promotion will make the opportunity even more compelling.
Get absolutely clear on the type of person you want to hire.
You know what the new hire needs to accomplish. Now build a picture of the ideal person for the business. What qualities, behaviours and values will they demonstrate on a consistent basis? What characteristics are required to be a success in the business? What is the dynamic of the current team?
Contemplate where your new hire fits in the business 6 months, 1, 2, 3, 4 and 5 years from now.
Use your networks.
Approximately 90% of Tier One People hires come via our networks. It costs nothing and candidates come pre-endorsed, massively reducing time and massively decreasing the risks of making the wrong hire.
Linkedin is an excellent platform to generate candidate leads. But posting “We’re Hiring. Looking for Rockstar developers” and expecting results is madness. It’s just lazy marketing.
Creating thought leadership content is the way forward. Our own content strategy generates 20 inbound enquiries per day from high-calibre, relevant talent.
Engaging your network via content is the way to go.
If you do decide to ask people for recommendations and referrals, the most effective way is to ask for their opinion.
Rather than ask
“Who is available?”
“If you were looking to hire someone to help you do blank, who is the first person you would approach?”.
Ask your clients.
Everybody loves to help out a smaller business. Contact your clients and ask if they can recommend someone. You get an opportunity to call them about something and subtley advertise the fact you are growing and successful. Great PR and you may find your next hire.
Advertise fulfillment, not the job.
We use job boards as only one possible channel to attract talent. And it isn’t that effective for specialist roles and in demand talent. If you do decide to go down the job board route, the quality copy in your ad will determine your success. Most job ads suck because they just list a heap of responsibilities.
When writing the ad try to put yourself in a potential hires shoes. What would attract them to this opportunity and your business? Don’t advertise the job itself but the opportunity.
While most people will state that work/life balance, money, an equity stake, location, benefits, free bar or ping pong tables as attractions – the biggest attraction is the challenge or opportunity to make a difference.
Present potential hires with a compelling vision to create their legacy.
If you decide to advertise your opportunities on job boards, expect to receive lots of irrelevant applicants. It can be a lottery finding the right person using traditional advertising methods. However, by positioning your ad this way you will increase the chances of attracting the right person.
The blue eyed unicorn will not come looking for you.
It is highly likely you will need to proactively search if you want great people to join your startup. Tier One People is a Search business. We have to go out and find the right people and tap them on the shoulder. In many searches we may approach 100 people or more before we find the right match. Head Hunting is an art and there are certain steps you can follow that will make you more effective. Here are some of the basics:
Use a CRM tool.
Linkedin’s recruiterlite solution for AUS $150 per month may be a good option. But not everyone is an active user of Linkedin and responses to emails from the platform run at about a 10% hit rate (in my experience). You could use your current CRM or plain old Excel to track potential targets. There are loads of free cheap tools out there like Hubspot, Insightly, Zoho. The best tool we have found for hiring is JobAdder and costs around $150 per month per user.
Get creative with your searches.
Linkedin, Twitter, Facebook, any social media platform is a good way to find potential candidates. A plain old google search can bring up some great results too. If you are looking for developers, start communicating with people on sites such as Github. Follow this simple philosophy, fish where the fish are.
Follow up religiously.
If someone responds to your direct approach, make sure you answer back.
What if you approach people direct and there is no response? Send a polite follow-up email three days later. The initial email usually gets a 1/10 hit rate; the follow-up gets a 3/10 hit rate.
Want a 100% hit rate? Go old school, call reception and speak to the person, they will be impressed.
Connect even if you are not hiring.
If you are a Fintech founder, you should always be recruiting. Events and conferences are a great way to meet people who could be future employees. Most people you reach out to won’t be interested in a move, that is just how it is. In some instances, it is just a matter of timing. If you do find great people, you MUST start building a relationship.
Consider it a dating processl. Reach out every three months or so, invite people to office functions, connect on Linkedin, ask them for advice in their specialist area. Make them feel wanted and special, and when the time is right, they will ask you for a job. If you meet people at networking events, don’t connect and forget.
Don’t interview candidates.
When you go out on dates do you go armed with a bunch of questions and start interrogating your date? Or do you start the conversation with the intent of establishing a connection?
Approach recruitment like dating, and you are likely to hire people who are far better suited to your business. The whole aim of the interview is to connect with people on a human level, not interrogate them.
There is research to prove interviews are one of the least effective ways to identify suitable talent. It turns out that the skills required to do well in an interview are often not the skills required to be a success in the job.
Businesses are literally hiring the best ‘story teller’ and then wondering where it all went wrong. I highly recommend reading Work Rules! By Laszlo Bock (HR director of Google.)
You should aim for three interview stages (if it is a permanent hire.) One of those stages should involve potential colleagues/peers, ideally in a social setting. The goal is to ensure that everyone feels comfortable with each other.
In my experience, a technical test, presentation or pitch relevant to the position is the best indicator of potential. Treat this stage as an audition for the job. It takes planning, but it is well worth the effort.
Always go with your gut feel.
The only evidence I can give to support this advice is that I have never met anyone who regretted going with their gut feel. However, I have met hundreds of people who have regretted going against it!
There is scientific data showing gut feel is our brain processing sensory data we are receiving from someone. What we are sensing is not congruent with what we are seeing. In other words, the person is telling us what we want to hear and isn’t necessarily sharing the full story.
Should I take references?
References provide limited insight into the potential success of a hire, unless you know the referee. A reference without context is useless, but a reference with context can be the difference between hiring a dud or a superstar.
If the references are not perfect, it may be that you need to have another discussion with the candidate. They could have concerns too, and it is better to give them a “get out of jail free card” so they can withdraw from the opportunity before it is too late.
And finally – If all else fails.
You could always contact Tier One People and ask for our help.