June 29, 2015
In this series, we’ve discussed characteristics of thriving social entrepreneurs. First, we looked at the need to be a good problem solver: if you’re building a business that creates social impact, you need to start by identifying the problem you want to solve. Second, we talked about the need to be a good sponge — able to absorb the achievements and failures of others who have sought to solve similar problems or taken similar approaches to save you significant time and effort.
But brilliant ideas for a breakthrough solution to a big problem and the ability to learn from others will only get you so far. The single biggest mistake I’ve observed is when young leaders or young organizations are reluctant to “hire up” — either because they think someone smarter or with more experience at a large firm would not be willing to consider joining a new, young enterprise, or they feel intimidated and worry about their own leadership or power status if they populate their teams with really strong players. So what can you do to avoid these mistakes? Here are some ways to prepare yourself to hire smarter.
“A small company depends on great people much more than a big company.” -Steve Jobs
If you talk to founders of successful companies, they will tell you that the most important role for a leader is to focus on assembling a strong team. But they’ll also talk about the importance of aiming high — ensuring that you are passionate about hiring only the best and the brightest. This is important for any startup, but for social enterprises that want to thrive, bringing in talented people who have passion and experience in addressing the social challenge you’re working to solve, and who understand how to build a company, is crucial.
Although talent is often drawn to “proven,” more established companies, Steve Jobs argued it is more important to attract the best talent early in a company’s life cycle: “When you’re in a start-up, the first ten people will determine whether the company succeeds or not. Each is ten percent of the company. So why wouldn’t you take as much time as necessary to find all the A players? If three were not so great, why would you want a company where 30 percent of your people are not so great? A small company depends on great people much more than a big company does.”
A talented, experienced executive can save you precious time and money by simply applying lessons he or she has already learned but that a less experienced person would not know. Simply put, by hiring people early on who have more experience than you or more knowledge in a given area, you can benefit from many mistakes others have made before you without having to make them yourself.
Ross Baird, the founder and CEO of Village Capital, which incubates and invests in social enterprises worldwide, supports this when he has said, “You don’t have much margin for error if you want to build a sustainable, profitable business that also has great impact. If you hire people who love the mission, but can’t do a world-class job — or people who are hired guns that can’t sell the mission outside or build the culture inside — you won’t be successful. This likely means spending 10x more attention on hiring and recruiting people than you think you need to.”
Know Yourself First.
“Know yourself. Don’t accept your dog’s admiration as conclusive evidence that you are wonderful.” -Ann Landers
The key to good hiring is a realistic self-assessment of your own strengths and weaknesses. To get started, be intentional by making a checklist of your skills, your experience and your knowledge areas in one column. Then be brutally honest with yourself and fill the second column with skills, experience and knowledge you personally lack, or that are lacking on your team, but you know you’ll need while building your new company.
Now add a third column for the “dream team” list. For each area of weakness you have, what are the companies that excel in those areas, and who are some of their key players? What do you suspect is the highest and earliest priority in hiring? Who do you know to help you get access to this type of talent? There are online resources and formal networks to assist you in this, but this is where your board, your mentors and your networks can be of help.
Or another option is checking out a local incubator or accelerator, where you’ll find entrepreneurs just like you who want to build great companies. Perhaps you’ll find someone who is ready to lock arms and build a company together if there is a similar vision or passion area. If you have friends or angels who’ve funded your company, ask who they might know that could be great. A local academic institution might also be a great “go to” resource as you are building your young team. The key is to know that there are great people out there that complement you and making it your mission to find them.
Don’t be Penny Wise and Pound Foolish.
“Never hire someone who knows less than you do about what he’s hired to do.” -Malcolm Forbes
The thing about talented people is that they are usually in high demand. Social entrepreneurs need to be prepared to offer a premium package to someone they think could be great. A common mistake young founders make is allowing great employees to slip away because they don’t think creatively about how to make a compensation package work for in-demand talent.
Cash is usually precious in the early days, so think about other ways you could make a role attractive, starting with the most obvious: stock options. Building an early stock option plan for your team has multiple benefits– it can align and incentivize action toward strategic goals; it can play a role in retention because of the time it takes for options to vest; and perhaps most importantly, it creates a sense that everyone in the company in it together.
Another way to compete against offers you can’t match is to articulate non-monetary benefits. Many of the world’s best and brightest are attracted to the opportunity to put a dent into some of the world’s biggest challenges, so you should use your position as a social enterprise to your advantage. Other non-monetary benefits to consider is whether you are family-friendly, offer flexible schedules, or a culture that encourages risk-taking and autonomy. While some of these benefits may seem counter to a hard-driving startup mode, studies have shown that productivity and retention soar when teams are given freedom, flexibility and autonomy in their respective roles.
It’s important not to be to “penny wise” if you have the right person to the table — ask any leader and they will tell you great talent can provide an exponential return on investments you make in them.
Don’t Hire Your Friends
“Friends don’t let friends hire (or promote) friends.” -Eric Schmidt
Chances are you have a lot of great friends. Chances are they are smart and capable. Chances are they are NOT the best talent you can find for your young company. Right at the top of the “big mistake” category reported by CEOs is when they hire their friends or people within their circle because they really don’t know how to find the very best in the market. They do so because it is easy, fast or comfortable. Eric Schmidt felt so compelled to address this topic that he dedicated a chapter to it in his book, How Google Works. He wrote that the primary criterion for hiring someone is to be driven only by the question, “What is best for the company?”
Make Sure You’re Not the Smartest One in the Room
“I have no special talent. I am only passionately curious.” -Albert Einstein
Once you’ve assembled a team of stars, you may first be a little uncomfortable with the idea that you aren’t the smartest, most experienced person in the room. But remember that members of your team are the most valuable assets you can deploy in your business. They can see around corners that you can’t, and deploy their network and skill sets against opportunities and challenges you simply don’t have time for. Great talent doesn’t diminish power — it enhances it. As a leader, one of your most important jobs is as a coach and cheerleader for the team. As a CEO, nothing makes me feel better about my leadership than those moments when the brilliance of our team is on display.
So, in the earliest stages of building your social enterprise, make sure you focus on building a great team around you — and don’t be afraid to hire up. Remember, if you are out to change the world, a passionate focus on attracting world-class talent is an important first step.
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