The Phases of a Startup

I once had a phone interview with an applicant that had seen more than his share of start-ups. He heard me talk about our team and was able to accurately describe the open office layout and our office communication style (mostly yelling across the room). He heard where we were with manufacturing our product and with our funding rounds and was able to translate these things into an understanding of the roles of our team, the processes we did and did not have, and where we would need to beef up in our next hiring round. He just seemed to get what start-ups are all about.

I thought about this as I talked with other start-ups. And I began to see more and more commonalities between each of them. They have ups and downs, growths and layoffs, and stages of development. It's official {I'm noting the date and time}, I am now interested in the phases of a start-up.

There are plenty of folks out there describing start-up phases - there are 4 phases here and 3 here and this one is good. However, awhile back Mark Jung, former IGN CEO (Now Vudu CEO) did a presentation at Stanford Technology Ventures Program outlining phases that I find valid and particular pertinent to an HR practitioner at a start-up.

The 5 Phases are:

1. Start-up and inception
2. Growth
3. Unfortunate setback
4. Rejuvenation/Rebirth
5. Transition

I think it's possible to look closely at these stages and use them as a guide. When you see the 'growth' period ahead, you know it's time to put basic workplace policies in place and initiate your hiring plan. How do you best divide up functions and roles as new people come aboard? It would be nice to be prepared for the 'unfortunate setback' and, as best is possible, proactively address employee concerns and problems.

I like this list Mark Jung! Thanks. I wonder if there are characteristics of each phase or indications of a transition to the next phase? How many of these characteristics are common across start-ups? How much can we learn about each phase?

Respond to Job Seekers

With this tanker economy, there's been no shortage of articles and anecdotes about the shabby treatment doled out to job seekers - like here in Terry Frost's blog and this NY Times piece.

There is increased, and valid, criticism about the lack of communication with job seekers, even final stage candidates. I know it can be absolutely overwhelming to find and navigate a candidate through interviewing and onboarding. Responding to every applicant that floods your email on top of that seems undoable. Especially, at a startup where there is more to do than fits in a day - usually without a dedicated HR rep. As we open a new position here at my company I want to do better.

Here are a few strategies I suggest to help:

#1 Add some additional tasks to the job posting, and make it clear you'll only respond to applicants who respond to your additional requests. For example, ask applicants to name their favorite product in your line and why. Perhaps it's just asking them for the last book they read and loved? These additional, and non-traditional, requests can give you clear insight into an applicant's personality. More importantly, they serve as an immediate screening tool to gauge genuine interest. Seekers spamming their resume widely and blindly stand out like a sore thumb - as not being specifically 'into' your opportunity.

You can also use the posting to notify applicants that it might be as long as a week or two before they hear from you while you receive and screen folks.

#2 Be strategic in your posting location. For many positions, craigslist or careerbuilder will bring a barrage of nongermane candidates. Start instead by posting on focused job boards, hopefully yielding more qualified applicants, and fewer of them. For example, if you are looking for a QA Manager, start with devBistro or QAjobs. I also like to narrow down the field with industry specific sites, like CenterNetworks. Startuply should produce applicants more likely to be prepared for a start-up. Most of these niche job boards are free or extremely affordable (read $10).

#3 Develop an applicant triage. Keep the process moving along.

* The 'No' Pile: For those that are clearly don't fit your specifications, log them in a 'no' folder right away. I once had someone with only 1 year gravedigging experience apply for an embedded Linux developer spot. Schedule 30 minutes on your calendar to shoot these people a nice template email informing them it wasn't a match this time.

* The 'Maybe' Pile: If you don't move them to the 'no' pile with a quick hiring panel pow-wow then shoot them a template email asking them to hang on until 'x' date a couple weeks out. Tell them you have numerous candidates and your hiring team needs time to receive all applications and get together to review them.

* The 'Ohh looks good' Pile: Communicate regularly and personally with these folks and let them know where you are in the process. In fact, get to know them and how they react to the real challenges your team faces in the process. If there are too many in this group to correspond with easily, you need to transition more of them to the 'maybe' or 'no' pile. When someone drops from consideration, do your best to tell them why.

There are free open source Applicant Tracking Systems out there. OpenCATS might do the trick by helping you store applicant info and see where you are in the communication process. You can use a spreadsheet or even manila folders.

We can do this. Leaving job seekers in the lurch is not only unprofessional, but it severs a potentially powerful network of future friends, contributors, partners, and customers. I've built relationships with rejected candidates, one who later referred a perfect match for an open position and another who turned into a major customer. If someone applies to your company, it's likely they have related interests and connections you don't want to lose. Communicating with applicants is representative of your company as a whole - it's basic branding, and its basic courtesy.

Fast Growth Factors

Companies with the fastest revenue growth (we're talking 1,007% over the past two years) list key HR functions as their top two most important factors for success. Oh yeah!

Measuring HR's value is difficult, so it's very nice to have some 'hard' evidence. Well, yes I know, it is a fairly small survey and it's from Canada :-), but nonetheless yesterday's newswire release dished out some sweet candy for HR, especially HR fast growth start-ups.

The survey identified The Profit Hot 50. "These firms are young, tech-savvy and hungry - and hold lessons for entrepreneurial firms of all ages". The leaders identified the top most important factors in their fast growth. We'd expect to see the importance of the business generating capital, the need for industry experience, and having strategic sales.

But give it up for the top two factors on their list <drum roll please>:

1.) Retaining good staff

2.) Recruiting good staff

It makes sense, right? Yeah! It's very nice to see examples of real success backing up what I already view as key. Use this 1,007% growth to help others see the value, to guide investments of time and money, and to prioritize in retaining and recruiting!

Come With A Solution

My first real job was at a small boutique HR consulting firm here in New York. By many accounts, I was thrown into the deep end and I love being forced to learn a lot quickly.

One pearl of wisdom I learned at this time has helped me in my professional career a great deal - and I feel it has particular relevance at a start-up. It's a simple concept: Come with a solution.

Employees should be expected to take initiative. They should be given responsibility, they should work on meaningful projects, and have tools and mentors at their disposal. Naturally, questions, dilemmas and problems are par for the course - but every employee should think through possible outcomes and present them, along with a proposed solution.

If your team isn't doing this, ask them to. It will help you quickly navigate the tons of decisions that need to be made and more importantly it will empower employees and help them grow professionally.

Think of your Salary Structure Now

I saw a recent workforce.com article talking about the key compensation issues facing small private companies.

Revenues, market capitalization and net income for companies going public are at their highest levels in years. Now more than ever when preparing for a public offering, companies need to ensure their compensation programs are consistent with public-company standards.

It made me think of HR's role in shaping a start-up that is primed for a public offering, starting with basic salary planning.

Many start-ups shoot from the hip when they bring in someone new. They rush to fill an immediate need and pay varies widely as salaries are based on what's needed to recruit. Stand back and it looks sloppy. It's not ready for prime time. What's needed to be more together?

Well, I'm glad you asked. To start with, you should have basic job specifications (even when employees do multiple jobs), salary ranges, and a plan for bonus and increases.

Once you've detailed the job, you need a market-competitive salary range. Use info from similar companies, craigslist, salary.com, professional salary surveys, etc... There is lots of free information out there. Consider your location (New York pays more than North Carolina), the amount of equity offered, the whole benefits package, your competition and desired retention rates. Some companies have a strategy to pay a bit under market and are comfortable with more turnover and increased recruiting efforts.

Without discussing employees who regularly performs multiple roles, are senior or junior players, or other strategic factors - here is a sample salary range. I propose once you nail down your midpoint target, you go 20%-30% on each side to complete the range. There are more complexities here, I know. For example, there might be a situation where you go a bit above or below the range. Maybe there is more than one range per position/function.

Certainly, I'm not saying you can't still be creative and flexible when compensating. But if your exit plan has the possibility of going public, you need to consider a proper pay foundation. You don't have to publicize this info, but you need to use it to drive your decisions and have it in place when you are building your organization.