Recently while chatting with a venture capitalist in NYC, I was asked, what are the two main challenges in Europe? Well the first one – lack of growth (product market fit) funds – is becoming ever more visible. The second challenge is one that I will expound on in this article. It is a lack of ‘growth' talent. In the last few months, after meetings with over 100 EU Founders in either an advisory, tactical capacity, it’s surfaced at one time or the other in at least 80% of them – talent turnover – or what I call The Talent Conundrum.
Hiring and retaining suitable talent is an often forgotten topic. Yet, it’s a make or break one for growing companies. Berlin for example while it’s a magnet for young startups is also quite developmental in this regard. The trend is to hire interns to do what is perceived as ‘non' core jobs. In an early stage startup, the following jobs fall in that category – designers, finance professionals, product managers, operational managers, strategic sales/marketers. While it is arguable that the first two are non-core team roles, the last three are critical. And to this respect, I have seen interns performing these jobs to leave shortly thereafter. This Spoof Article (See Org Chart: No 9) is quite true in Berlin. Understandably, young companies can’t afford to pay top dollar to attract top talent from established companies.
Yet, knowledge is lost for every temporary employee that leaves the company.
Forbes in this article about Gen Y turnover emphasizes that any turnover will affect a business (separation cost, replacement cost, training cost, etc – yet they’re exponential factors when we consider the types of turnover and the impact on the future sustainability of the organization. But perhaps the true problem is finding good talent is not the easiest task. Supply is limited. There's only a pick from a handful of successful tech companies with talent and growth knowledge willing to move and for the right price – most of the seasoned coming from Silicon Valley.
So what are the solutions?
Being creative in hiring staff is a good one. The most successful companies that have been able to scale are those that treat knowledge management very seriously.Instead of interns, they hire seasoned interim managers or independent contractors and incentivize them accordingly. They set a budget and hire and remunerate on a project/outcome driven basis to manage cost barriers.
Local. Looking inside geographic zones to find talent is another solution to knowledge management. This can save tons of costs and onboarding logistics and knowledge stays locally. The most creative firms who must hire outside their geographical boundaries, soak up the knowledge gained from the temporary hire and match an internal core team member with the hire for training/knowledge management purposes.
Finally, this Business Week article on intelligence and baby boomers is relevant for startups. It suggests encouraging people to document and share what they know by inviting, even setting up incentives for, past workers to return to share solutions later when they may recall something they’ve done in the past.