6 challenges and solutions when hiring for startups

Last updated:
July 13, 2021
December 18, 2021
min read
Adrie Smith
Table of contents

When it comes to startup hiring, every action and every decision is critical. Because of the small team size, one additional employee has the potential to contribute massively and drive growth in the company. But, on the other hand, they have the power to disrupt the workflow and organization.

The price of a bad hire is more costly in startups where their contributions can tip the scales in favor of success or failure. So, startup hiring practices need to be implemented to reduce the risk as much as possible.

With the stakes so high, it should come as no surprise that startup hiring can become any founder’s greatest challenge. To add to the challenge,  startups often look for a special kind of hire: they want self-starters, professionally driven, and passionate people. Founders look for A players, not just a B player that will get the job done. Finding the right talent is challenging regardless of your industry, and like most other business activities in startups, will initially fall to the founder.

So, we’ve identified some of the most common challenges in startup hiring that founders face alongside the solutions to avoid the pitfalls and limit the risk of a bad hire.

1. Challenge: sourcing talent from scratch

Founders are entrepreneurs of various sorts. But at the end of the day, they have to be a jack-of-all-trades, which includes a role as a recruiter. Startups experience an additional recruitment challenge because they are brand new identities. That means:

  • They don’t have an established candidate pool.
  • They don’t have a recognizable brand name or employer brand.
  • They can be seen as a risk for some candidates as they feel their job security may not be as stable as working for a well-known brand.

Sourcing talent from scratch is one of the biggest challenges for founders: they’re new to recruiting, no one knows them, and they don’t have any hiring processes in place. As a result, they’re essentially plopped into the middle of an ocean with no idea how to swim. In short, ‘where do I even start?’ is a daunting question when hiring for startups.

Solution: time, early planning, and brand exploration

There’s no quick fix to sourcing talent from scratch.

Building a qualified talent pool takes time. Establishing an employer brand is not done overnight, and building trust in your industry is a long-term goal.

But like many things, early planning pays off in the long run. So here’s how you can plan ahead and create a stable framework to build a solid talent pool:

1. Create your candidate persona.

This will be a profile of your ideal candidates, including key qualities like career history, interests, and personality traits.

As you grow, each role you hire for will have a different candidate persona. But to start making a general one for your best cultural fit.

A candidate persona can guide your outreach efforts and inform your conversations with prospective candidates to evaluate whether they meet your ideal profile, and if so, to what extent.

Your candidate persona will evolve as your company grows, so remember to remain flexible and consistently revisit and edit it.

2. Start thinking about your employer brand.

A strong employer brand is a result of concentrated effort and strategy.

Investing the time in developing your employer brand at the start will help guide you as you grow.

Early starts on this can also help create a more consistent experience across your first hires and your hires to come.

3. Build a talent pool.

Startup hiring can be most difficult because you have to be active in going out to market and finding new recruits.

Make your search a little easier as you grow by building your very own talent pool.

Your talent pool will be a central resource where you keep all your candidates that have applied to your open positions.

Candidates who may not have been suitable for your positions a couple months ago may be eligible now. Maintaining your own talent pools where you segment based on title or skillset can help ease the struggle of an active candidate search.

2. Challenge: lean recruiting models

Startups love to boast about their lean, bootstrapped business models. The pride often lies in the struggle to keep things cheap, flexible, and successful.

When it comes to startup hiring, budgets follow the typical lean principle: don’t spend more than you have to. So how do you hire your A-players on a C-player budget?

Solutions: use an ATS that fits your budget and take advantage of organic reach

Lean recruiting models can be a potential barrier for even the most experienced recruiters. However, there are many ways to save on your recruitment spending in order to be more flexible in your hiring spend.

1. Find an ATS with a suitable (and scalable) pricing plan.

For some startups, particularly at the beginning, an ATS can seem like a nice-to-have.

The reality is: a good ATS will help you establish strong foundations when it comes to hiring processes and help you sustainably scale your business.

Additionally, it can help standardize and track many of your recruiting activities, assisting you in future optimization.

If it seems like an ATS is a good investment at a later stage rather than right now, it’s because it is.

Startups should be as focused on today’s success as well as tomorrow’s. Find an ATS that is affordable at your current budget but that can also grow and scale as your team becomes larger.

2. Try organic reach before paid.

Attracting talent through paid advertisement can be expensive and may not initially show solid results.

For startup hiring, high touch is often required in order to identify candidates who are qualified, passionate, and willing to work on a shoestring budget.

Think about attending meetups where your ideal candidate might go (this is another area where your candidate persona might come in handy).

Try using your extended network to generate interest in working for your company. Of course, if organic outreach doesn’t render good candidates, then look to paid advertisement- but consider organic your first port of call.

3. Challenge: adjusting to the scale-up phase

Some of the biggest hiring pains are experienced, not in the first hires but as your company scales.

First, you hire one person at a time, and then it becomes two or three in one hiring cycle.

Being involved in more than one hiring process can become messy if not managed correctly.

For the inexperienced hirers, you may spend too much time tracking down CVs, coordinating your email communication, and finding agreed details. As your company scales, these pain points will only intensify.

Solution: organization is key

We cannot stress this enough: if you allow this to snowball, it’ll be exceedingly difficult to manage. Furthermore, as your company grows, so will your need to hire. As such, there’s an obvious solution to avoid the dreaded snowball:

1. Track all of your candidate data in one place.

Emails, CVs, notes, and interviews should all be kept in one centralized location.

Without centralized data, your team may fall victim to data silos that create a poor candidate experience, delay hiring, and ultimately lose valuable candidates.

With an organized system for keeping your data centralized, your company will be better positioned to grow from two to three hires per cycle to ten to twenty

4. Challenge: inexperienced hiring parties

Founders must be entrepreneurs with a diverse skill set, but hiring is not always their best or most vital ability.  

What’s more is when a startup grows without a dedicated recruiter, the employees tasked with recruitment are often inexperienced when it comes to hiring. It can be a challenge to grow without the skills necessary to build a team.

Solution: collaborative hiring and professional development

Inexperience is easily remedied with experience itself. That said, inexperience can lead to errors, which may negatively impact your business. Luckily, these two solutions will help you minimize the risk of a poor hire.

1. Invest early in collaborative hiring.

Collaborative hiring is a great recruitment strategy for growing companies. However, it requires that everyone is relatively informed about the recruitment process and how to hire.

Collaborative hiring will remove the burden of hiring on one person and spread it among your team.

2. Professional development will prove a solid ROI.

If you have an inexperienced hiring team, investing early in basic recruitment training or a hiring workshop can pay off in the long run

5. Challenge: developing hiring processes

Starting from scratch is particularly difficult when it comes to creating a hiring strategy and establishing processes.

While you may be passionate about your startup’s industry, creating the systems for your future recruitment can be less exciting.

Solution: planning, early-on development, critical documents

This is an area where good planning pays off.

Developing hiring processes like structured interviews, pre-screening questionnaires, phone screening questions, trial day formats, or onboarding plans can help guide even your earliest hires.  Here are a few areas you may want to develop early on:

1. Candidate journey.

Your candidate journey will outline the most common steps your candidates go through on their path to becoming a hire.
This can help inform your hiring process and outline your standard hiring process.

2. Questionnaires.
Draft any questionnaires you may want to use throughout your hiring process.
This can help save time in gathering the required information from candidates and provide extra touchpoints.

3. Structured interviews.
Structured interviews can help create a uniform system of interviewing candidates and help mitigate any team’s bias.

4. Onboarding plans.
Good onboarding can improve the retention rates of employees.

Make sure you’re not wasting all your recruitment legwork after you’ve made the hire.

Create your basic onboarding plan ahead of your first hires, and you’ll be able to build a team that can get off the ground and running in no time.

5. Cultural fit.

This goes alongside creating a candidate persona, but you should have a good idea of what you’d like your company culture to be and what kind of person fits into this culture.

Having specific questions worked into your structured interviews to determine cultural fit can help when they are set from the beginning.

Make startup hiring simple.

As a founder, there are a million things you’re worried about. Startup hiring can fall near the bottom of the list. But hiring skills and good recruitment are crucial to building the team you need to help your new company succeed.

There are a few challenges most founders will face when it comes to seeking out, securing, and keeping the people they need:

  • starting their hiring from scratch,
  • balancing quality hires with a lean recruiting model,
  • adjusting to hiring for a scale-up,
  • working with a team that doesn’t have the recruitment know-how,
  • and developing new hiring processes.

Hiring is another hurdle every founder must overcome. Our solutions to make your hiring simple?

  • Build a network of prospective employees early, using talent pools.
  • Take cultural fit seriously and make sure this is built into your hiring.
  • Use collaborative hiring to increase employee engagement and combat bias and lack of experience.
  • Invest early in an ATS that can scale and innovate with you as you grow.
  • Plan ahead. The key lies in organization. Without this, you’ll find your hiring process snowballs, and it can be tough to get on top of it.

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