Fintech founders know more than most, the damage caused by making the wrong hire. Especially when a company is in the earlier stages of growth.
Since launching in 2016, Tier One People has interviewed over 300 leaders on how to scale a Fintech.
We've gained a lot of insights on how and how not to hire for rapid and sustainable growth.
Startlingly our research and data suggest less than 1% of founders have a professional background in HR/People/Culture. While only 10% of Fintech startups we interviewed have a dedicated HR/People executive in place.
Hiring is one of the most complex challenges facing every business. So it stands to reason that with no HR expertise to lean on, startups are at risk of suffering major growth challenges in hiring, employee retention, performance and culture.
With 300 plus founder interviews and over 150 successful leadership hires to learn from, here's our list of actionable steps to help founders hire successfully and avoid the growing/scaling pains.
Founders tend to put more thought, effort, planning and commitment into raising capital than hiring the right talent. 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 and fail your people.
Our research shows three distinct phases of growth for a Fintech.
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 playbook. These are some of the largest businesses in the world with thousands of employees and unlimited resources, you are a startup!
If you are running a Fintech startup, finding the time to recruit yourself is tough and using recruitment companies is expensive (and delivers very mixed results.) Technology and social media have made finding potential candidates a lot easier. The challenge lies in engaging, assessing and hiring the right people.
Just like your customers, top talent has a lot of options. 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.
What is the genuine purpose of your business? If your plan is to build a rocket ship and sell in 5 years, make that clear. Top talent will see right through any false claims of 'changing the world' or 'democratising finance'
If you have a clear purpose, then your talent attraction strategy should mirror your customer acquisition strategy.
If you are the business owner/founder, honesty and transparency is critical for this process to work. It is important you analyse your own values and behaviors, as they will ultimately define the company culture.
'The culture of any organisation is determined by the worst behavior the CEO is prepared to tolerate, in themselves and others.'
I've had many discussions on culture, this quote from Evan Wong, CEO of award-winning Regtech startup Checkbox really nailed it for me;
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.
Read the full interview with Evan
A startup business can be very different to a scaleup. At each step, you require different people with different skills, expertise and experience. Often times the people required to launch 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. Cultural issues often occur when people hang around too long because of loyalty. You need to plan how the business will grow and identify the skills, experience and people you need to deliver each growth stage.
In the early stages of growth, it may be necessary to hire on skills and experience over culture fit, especially in the short term when delivery is critical to the survival of the business. Startups rarely have the luxury of enforcing a 'No Dickheads' policy especially when it comes to hard to find skills. In this instance (and this may come across as ruthless) the best strategy can be to hire fast and fire fast.
How do you create a job description when the role will continue to evolve as you rapidly grow the business? If you regularly struggle to come up with a job description, then this could be the reason why.
It may comfort you to know that the right person for the role does not expect a job description. What they are looking for is an opportunity to take something and make their mark.
Keep in mind 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.
At Tier One People we don't work from job descriptions and instead work with our clients to create opportunity descriptions.
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:
Rather than a list of bullets on A4 PDF, try creating a pitch deck for the opportunity description. Or even better a video presentation. Bringing the opportunity to life helps engage the right people and can often turn around a candidate who may not be interested.
Sell the legacy, not the job!
You know what the new hire needs to accomplish. Now start to build a picture of the ideal person for the business. What qualities, behaviors 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?
What kind of experience will they need to deliver? Which kinds of companies will they work at?
Contemplate where your new hire fits in the business 6 months, 1, 2, 3, 4, and 5 years from now.
Hubspot has a handy tool to help build customer personas, try using it to build the ideal candidate persona - you will likely find there are three or four archetypes for the role. This means you can begin searching for people in more efficient ways than keyword searches.
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.
Advertising a job on the platform isn't the answer either.
Think of LinkedIn as the perfect marketing platform. On here you can advertise a job, but you can also share posts, content, podcasts and videos.
Creating thought leadership content is the way forward as it helps you build followers and develop a community.
Tier One People's content strategy generates 10-20 inbound inquiries per day from high-caliber, Fintech talent.
Engaging your network via content massively increases the response rate to reach outs. Since launching our podcast we have seen response rates from potential candidates go from 15% to 80%
If you do decide to ask your network for recommendations and referrals, the most effective way is to ask for their opinion.
Rather than ask
"Who is looking?" or "Do you know anyone?"
ask
"If you were looking to hire someone to do blank, who is the first person you would approach?".
Guests of Fintech Chatter Podcast often have talent approach them directly about potential opportunities.
The reality is people buy people, not brands. That's why influencer marketing can be so effective in talent acquisition.
Founders who actively promote their business on TV, Podcasts, Youtube, Instagram and events can play a big role in attracting the right talent.
The best founders we work with never turn down a chance to appear on the podcast.
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 subtly advertise the fact you are growing and successful. Great PR and you may find your next hire.
Tier One People use job boards sparingly as a channel to attract talent. Advertising isn't that effective for specialist roles and in-demand talent. If you do decide to go down the job board route, the quality of 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 hire's shoes. What would attract them to this opportunity and your business? Don't advertise the job itself but use the opportunity description you created.
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.
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. Headhunting is an art and there are certain steps you can follow that will make you more effective.
Here's some of the basics:
Linkedin's recruiter lite solution for AUS $200 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 (without a comprehensive content strategy to support the campaign).
You could use your current CRM or plain old Excel to track potential targets. There are loads of free tools out there like Hubspot, Insightly, Zoho. If you are a fan of Airtable you could also use this free template
Who are your competitors, which companies do you admire and want to emulate? Create a target list and then go connecting with people from these companies.
Linkedin, Twitter, Facebook, Glassdoor, 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, Reddit, Discord.
Follow this simple philosophy, fish where the fish are.
If someone responds to your direct approach, make sure you answer back. Begin a dialogue and suggest catching up over a coffee or a call.
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, either track down their phone number or find a mutual connection to introduce you. You will be guaranteed an introduction.
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's how it is. In some instances, it's a matter of timing. If you do find great people, it is up to you to start building a relationship. Don't go acting all aloof and difficult to reach. Give someone the impression your time is more important than theirs and you have lost them.
Consider hiring like dating. You are trying to build a relationship over time. 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.
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?
Make the interview like a date and you are likely to hire people who are far better suited to your business and culture. The whole aim of the interview is to connect with people on a human level, not interrogate them.
There is research to prove traditional/competency-based interviews are one of the least effective ways to identify suitable talent. Why is that? It turns out 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 minimum (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 the dynamic.
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.
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 a perceived threat. If what we are sensing is not congruent with what we are seeing or hearing then the 'fight or flight' reaction comes into play.
To put it in layman's terms, the candidate you are about to offer is telling you what we want to hear and isn’t necessarily sharing their full story.
References provide limited insight of a potential hire's chances of success in the role, 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.
You could always contact Tier One People and ask for our help.
info@tieronepeople.com
