Recruitment Process and Tips
Growing a team requires a dedicated effort by team leaders to identify, recruit, and hire the best candidates, and probably a lot more effort than you think.
You need a well-designed recruiting process that channels this effort to yield the results you want: great hires. This blog explains the complete recruitment Process with examples
We’ll explain how to evaluate candidates efficiently and accurately, minimize bias in the recruiting process, and maximize the chance that your new hires will be strong contributors. But first, let’s discuss the principles that form the foundation of any effective recruiting process.
The Recruitment Process
With this overview in place, let’s dive into the details of a typical recruitment process, describe some warning signs that indicate that the process isn’t scaling, and discuss some ideas for how to adjust as you continue to grow.
There are three main sources for new candidates: either a candidate applies directly, is referred by someone, or is sourced by a recruiter.
Arguably the most important method for finding new candidates is through referrals. A referral means that current employees (or other friends of the company, such as advisors, investors, and board members) identify potential candidates from their existing social networks.
Ideally, this is someone the referrer has worked within the past, so the referrer knows the person’s qualifications, talents, and values. Referrals have a lot of advantages over other channels, but also a few caveats you should be mindful of.
The advantages include:
Reduced cost and effort
Although you may pay a referral bonus, which we’ll cover later, you don’t have to pay a recruiter to source the candidate. And the process tends to be much faster than when you hire from other sources.
According to the same study, referred employees stayed longer at the company, and employees who made successful referrals stayed longer than employees who didn’t.
Referred candidates are usually already motivated when entering the recruitment process, as they had already spoken with current employees about the company beforehand.
They come in much better informed about the company than other candidates, and because of this tend to have compatible values, work quality, work style, and a good fit with the work culture.
And perhaps most importantly, people tend to refer people they think will do a good job and are thus hired at a higher rate than other sources.
A high rate of referrals can be a very good indicator of company health. Conversely, a lack of referrals can mean employees are unhappy with their jobs. Tracking referral data can provide insight into the morale of the team. Watch for trends here!
But there are also disadvantages to relying too much on referrals in the hiring process; essentially, groups tend to become groups because they’re relatively alike. White males are likely to know other white males.
So recruitment more diverse team members through referrals alone become extremely difficult Referrals, in other words, can dilute diversity right out of the gate, especially if the founding team itself lacks diversity.
Be careful to avoid creating subgroups comprised of friends who were already friends before they joined. They can end up building their own culture, and then maybe even leaving the company together.
Handling referrals in the recruitment process
Though a referral is a strong sign, it’s important to ensure everybody goes through the same recruitment process. If a candidate gets a softball interview, then the rest of the team may question whether they are truly qualified, which is not a good starting point.
Although all candidates should be treated respectfully during the recruitment process, this is especially true for referrals. A bad recruitment experience can seriously annoy the person who made the referral and discourages them from making any more in the future.
If your recruitment experience needs improvement across the board, consider focusing your efforts on referrals first and expanding from there. And don’t forget to keep the referring employee up to date on the candidate’s status, which will help them feel included and encourage them to make more referrals.
It is amazing how many referrals you can get if you just ask employees for them. Set yourself up to regularly communicate job openings and ask everyone on the team to refer qualified candidates.
This can be handled by the recruiting team or by the manager (who could then use 1-on-1s for referrals), or by putting teams in charge of recruitment, as they will then search for referrals on their own.
You should also decide whether to pay a bonus for successful referrals. Most companies do. It’s a simple approach, and it works well. Consider the following points:
No referral bonus should be paid to managers who refer someone to their own team. recruitment of your own team is part of your job and shouldn’t generate extra pay.
When considering how much to give as a referral fee, consider how much an external recruiter might charge. That dollar amount should be the upper limit. Most companies pay in the $2,000–$5,000 range.
Some companies (such as Amazon) have a progressive scale where the bonus gets larger for each referral generated. This can motivate employees to keep thinking of referrals and not stop after one or two, assuming that they’ve done their part.
Companies that don’t offer bonuses often state that referrals are just part of the job, and employees should refer great colleagues so that they can work with the best people. One can imagine that a bonus might encourage someone to refer to less-qualified colleagues, but hopefully, your interview process is good enough to filter out those who aren’t a good fit.
Applications are one of the most straightforward methods of finding new employees. Candidates simply apply directly to the company, mainly by using a form on the company’s website. This method can be ineffective in the beginning, though, as a new company is unlikely to be known by many qualified applicants.
There are techniques that can help raise awareness of a new company, such as advertising on job boards or getting mentioned in the press. Another way is to publish blog posts about the company’s social values. Besides being a positive thing to do, it attracts like-minded future staff.
The downside of applications is that you can receive a lot of noise—applications that clearly are not a good fit for the advertised position. There is no great remedy for this issue; reading CVs simply takes patience and time.
Sourcing is a proactive recruiting technique, which means you search social networks, GitHub, or other sites for potential candidates and then contact them directly. This can be done internally with dedicated recruiters or recruitment managers, or externally by contractors, often called “headhunters.”
In the beginning, sourcing might be handled by the founders or other senior leaders, with the task of scheduling interviews being handled by the office assistant. This illustrates very nicely the two main roles in recruiting:
A recruiter does the actual sourcing work, approaching candidates through various methods.
A recruitment coordinator is responsible for the organization of the candidate experience—that is, scheduling interviews, welcoming candidates, and making sure interviews happen as planned. It’s easy to underestimate how much work this is.
The recruitment work can also be done by an external recruiter, which can get you access to a large, preexisting candidate pool. External recruiters tend to use one of these three approaches:
Depending on the market, an external recruiter might take 10%–25% of a new hire’s first-year salary as a commission. Usually, no up-front payment is required.
Executive (fixed fee)
An executive recruiter usually works for a fixed fee. They are usually paid in three installments. Executive recruiters charge more than other recruiters, but their fee often gives you access to an exclusive candidate pool.
Alternatively, a recruiter may charge by the effort it takes to find candidates, usually just an hourly rate.
1. Ask your network to refer you to recruiters they’ve used successfully in the past.
2. Check references; ideally, they’ve worked with companies that have a strong recruitment process. A proven track record of unbiased (or less-biased) recruitment is important if you want to get diversity right.
3. Examine how they calibrate with the recruitment manager, as this can tell you how well the recruiter will be able to find appropriate candidates. A recruiter who doesn’t understand what you need will have a hard time finding good people.
For roles with titles held by only one person, such as a VP of Product, it makes sense to hire an external recruiter as there isn’t likely an existing pipeline of candidates.
If that position is relatively senior, consider using an executive recruiter. In other cases, use a recruiter who is working on commission or on an hourly basis. For positions you constantly recruit for, such as a Junior Programmer, we recommend building internal expertise.
Calibration between the recruitment manager and recruiter
The most important aspect of the relationship between a recruiter (external or internal) and the recruitment manager is continuous calibration. This means that the recruiter and the recruitment manager are in regular contact to review the requirements for potential hires.
If these two people are misaligned, you are likely to waste effort interviewing and rejecting candidates that don’t fit the role. You can tell you need to work on calibration if you hear from interviewers that the interviews they are doing are not worth their time, and the quality of candidates is not good enough.
To align the recruitment manager and the recruiter, you can use a calibration exercise, in which the recruiter prepares a list of 10 to 20 hypothetical candidates with different backgrounds, seniority levels, and strengths and weaknesses.
The recruitment manager and the recruiter then spend approximately one hour together, while the recruitment manager screens the CVs and explains to the recruiter why certain CVs are interesting and others are not.
Usually, this helps both sides tremendously; the recruitment manager often gains a clearer understanding of what they are looking for, which helps the recruiter do a better job of searching for and filtering candidates. Executive recruiters commonly use this technique at the beginning of a search to get a clearer understanding of the ideal candidate.
The preparation of the exercise (finding 10–20 candidates with different backgrounds) is a big effort, so in a lot of cases, a weekly review of CVs by the recruiter and the recruitment manager can help a lot.
An alternative is to just have a weekly, in-person review of the latest batch of candidates. Instead of simply saying “yes” or “no” for each candidate, the recruitment manager should try to learn and understand where the recruiter was coming from so the two can better understand what qualities are important and adjust their expectations.
Best is to have the recruiter explain: “I said ‘no’ to this candidate because of X and Y, and I presented you this candidate because I thought this was interesting.” As a result, the recruiter will be able to get a better sense of what’s attractive to the recruitment manager. We recommend taking this approach for every open position.
Recruitment to Scale
Teams that need to hire are trying to bridge the gap between what they can do today and what they need to do in the future. These could be skill gaps, such as the group of hardware engineers who realize their product needs a major software component in order to succeed.
Or they could be capacity gaps, such as when the founding team realizes they are unable to keep up with customer demand for new features and support requests. In either case, what should team leaders do to best fill those gaps and help the team succeed?
Before outlining the full recruiting lifecycle, let’s cover the key principles for hiring.
Hire for talent
It goes without saying that you want to hire the best employees you can. By “best,” we mean the employees that can contribute the most to team success over the long term.
Too often, teams focus too much on specific skill gaps, or simply getting a “warm body” on board who can handle the work that isn’t currently getting done. It’s critical to remember that the hires you make at your current stage will set the tone for hires you make in later stages.
Hire for the team
Every team is different, and in larger companies, so is the organization that surrounds them. The best person for your team may be very different than the best person for your friend’s team at a nearby startup. We often hear the advice that you should only hire “A” players, but we believe that building an “A” team is more important.
A super talented hire who has very different values can pull a team apart rather than bringing it together. We will share insights on how to identify individuals who are genuinely passionate about the product and reinforce the value of being an open, product-focused organization.
A biased interview process is a flawed interview process. Besides the inherent unfairness to the individuals involved, bias reduces the chance of finding the best hire for your team by allowing irrelevant factors such as race, gender, or age to influence the recruitment decision.
This blog explains why diversity matters when building teams, and what simple changes can be made to reduce the impact of hidden bias in the interview process.
Don’t cut corners
A rigorous interview process is analogous to a rigorous code review process. Finding bugs in code review is much less expensive than finding them in production, and similarly, rejecting a candidate that is wrong for your team during the interview process is much less expensive than recruitment them and dealing with the resulting problems later.
This is sometimes described as “optimizing for false negatives.”
Treat candidates with respect
It shouldn’t surprise anyone that candidates talk to their friends, family, and colleagues about their interview experiences. A great experience can enhance your chances of landing the candidate you want. A bad experience can not only lose you a candidate but can prevent their entire network from interviewing with you!
And these days, most candidates do their homework by reading posts about your interview process on sites like Glassdoor and Quora. Your goal should be to have every candidate walk away from the interview wanting to work for your company, whether you decide to make an offer or not.
Word of Mouth
Candidates talk to one another, which can be good or bad for you depending on their recruiting experience. One candidate we were trying to hire, who was really a great fit for my team, decided not to move forward with us as he couldn’t relocate to Europe.
But two weeks later, another engineer from the same company applied, citing the awesome recruitment experience his colleague had gone through. We ended up recruitment that engineer.
Another time, I visited a conference and was very impressed by one of the speakers. I tried to convince her to apply for a position at my company, but she declined, saying that she had actually thought about it a while ago, but had heard from a friend that our recruitment process was very chaotic. She chose to go with a different company.
You more often hear about successful recruitment experiences, and not as often the failures. Know how much risk to take
In times of hyper-growth, you may feel pressure to take risks in order to meet your growth targets. You might take a chance on a borderline candidate or blindly hire a referral because one of your co-founders heard good things about them. But we advise a more cautious path.
There are enough distractions in your organization already without the added disruption of having to terminate the new hire that didn’t work out. Firings will happen regardless, but they happen even more frequently when you take more risk in the recruitment process.
There are certainly arguments for false positives. Do not be afraid of recruitment false positives. Give people chances. Be afraid of missing the 20x employee.” It’s certainly possible to construct a system in which recruitment decisions are made more loosely, relying instead on a more rigorous on-the-job evaluation process that identifies bad hires quickly.
But even when you make a quick decision that someone needs to leave, it takes time and energy to manage those people out, and time and energy are especially precious resources during hyper-growth. This is why our default advice is to not take too much risk.
Listen to your gut
Experienced interviewers often develop a strong gut feeling that kicks in 10 or 15 minutes into an interview. Because gut feelings can be a source of bias, they should not replace a thorough recruitment decision; instead, they are an indicator that you should dig deeper—into the candidate and your own reactions.
Consider the following story from Alex:
At one of my former companies we were recruitment a VP Product and in the recruitment sync, everybody was in favor of the candidate except one product manager, who said that he had a strange feeling that he was a poor collaborator. Because of that, we checked more references and those heavily advised against recruitment that person—so we didn’t.
Recruitment for Diversity
let’s first define what is impacted by bias: team diversity. Some key characteristics of team diversity are race, ethnicity, gender, age, religion, physical ability, and sexual orientation.
Beyond the inherent unfairness to those affected, bias reduces the effectiveness of your recruiting efforts by unnecessarily narrowing the field of qualified candidates. From a purely pragmatic view, excluding certain groups only serves to limit the size of an otherwise huge talent pool.
The result is a less diverse team which is likely to perform worse than more diverse teams, particularly in situations that require creativity and innovation.
And finally, diverse teams are more likely to understand the perspectives of their customers. A homogeneous workforce (typically young, white, heterosexual males in the tech industry) might not question product decisions that put others at harm.
There are plenty of examples we can cite, such as Facebook outing a gay person to their oppressive family by making group memberships public without consent.
In general, the problem when scaling a startup is that you naturally tend to hire people who are similar to one another from the very start, in part because it’s the referral networks of the founding team members that lead to early hires. This intimacy quickly becomes a disadvantage.
If you are two white guys starting a company, you may already be on a path to becoming insular to other demographics. When you hire person number three and person number four, you may be at a disadvantage, because your network mostly includes people similar to yourself. Which means other types of people are less likely to join the company.
Form the founding team and choose early hires based on who shares values and ideas with you, people who are passionate about the mission of the team. If all these people are white and male, so be it. If they are black and female, so be it. After that, however, diversifying the team must be a high priority.
Also, note that a very important factor in maintaining team diversity is having an inclusive workplace. It doesn’t much help to hire a diverse team if you can’t retain them.
When to hire an internal recruiter
The right time to hire an internal recruiter depends on a couple of factors: how much time recruitment managers are spending on recruitment work, and the overall strategy of how you want to structure your recruitment approach. You’ll know that the time spent on recruiting is a problem if you see warning signs such as:
The process of scheduling interviews, blogging flights, and so on takes so much time that the team office assistant or one department lead spends most of their time arranging these details, and as a result ends up neglecting the tasks they were actually hired to do. Administrative arrangements like these can be delegated to a recruitment coordinator.
The same is valid for the screening calls. At one company, there was only one person in engineering screening CVs and doing the initial calls with candidates. This took more than half of their time. Only after the company hired a recruiter was the original person able to focus on other tasks.
You can delegate these calls to engineers, but without proper calibration, it might not end well. A well-calibrated recruiter, who does most of the screening work, can help here.
One full-time recruiter typically hires one to two candidates each month for companies with rigorous recruitment standards and adequate organizational support for the recruiting effort.
Assuming the same rate applies to a recruitment manager, you can calculate the time it takes for a recruitment manager to be successful in recruiting.
In the first stages of building a recruitment team, it is very important to focus on the quality of the recruiter and to make sure the recruiter and recruitment manager maintain a very close relationship.
The right time to hire a recruitment coordinator depends on how long the team assistant, executive assistant, or recruitment manager can deal with the work associated. The first hire should be fine acting as both a recruiter and a coordinator.
The First Recruiter
Erik Engstrom worked at SoundCloud with Alex and has been a great go-to person for recruitment questions that require deeper thinking. He believes that just as the first engineer/designer/product manager you hire sets the tone for the future of the team, the same is true for the first recruiter. Here is Erik’s view on the preferred qualities of a first recruiter, in order of importance.
Strong emotional intelligence
Recruiting is the face of your company in the talent pool. You want a recruiter who understands people—they should be someone you enjoy talking with, who you can have an interesting conversation with, who puts you at ease, who you look forward to working with. Someone thoughtful.
If you feel that way about someone, it’s very likely that candidates will as well. A recruiter is the only person that many people outside the company will communicate with—they represent your company to many talented and connected people.
The recruiter’s initial note of out-reach may be thoughtful or a carbon-copy. A rejection letter may be constructive or tactless. An offer may be pleasant or tone-deaf. Your first recruiting hire will set the tone for your company’s employer brand.
A promising candidate is more likely to successfully navigate the interview process if your recruiter preps them effectively, rather than leaving them completely in the dark.
And a good deal of your ability to close a candidate, also, will come from your recruiter’s relationship with the candidate (if they’re thinking ahead, they will build one) and a solid understanding of their motivations.
The recruiter should make sure to communicate how your company can fit into that person’s plan, by enabling them to have conversations with the right people at the right time, and by being specific about things like role and compensation.
A weak recruitment manager might be oblivious to all of these factors. But a good recruiter, on the other hand, can be one of the main reasons that candidates join your team. Ask your new hires about their recruiter. Most people join a company despite their recruiter, but you can do better. Look for emotional intelligence first and foremost.
Organized and quick
The first recruiter may be expected to help with Engineering first, but will likely have 10 or more other roles to consider across the company very quickly. Their ability to prioritize and stay on top of communication is key.
Expertise in the recruitment process
In a typical startup, many people will be in roles where they are recruitment for the first time and have no idea what they’re doing. A recruiter should be the subject matter expert.
They should be able to help establish best practices, understand startup equity and the business, know how to effectively present offers, push back on recruitment managers who make candidates sit on the sidelines for months while they interview more and more candidates;
Help set up a comprehensive and unbiased interview process to make clear recruitment decisions, pick an Application Tracking System, help develop criteria for evaluation, understand what motivates candidates and what candidates will say to a recruiter as opposed to a future boss or a founder and more.
Don’t just hire someone who has “experience.” Ask them about their thoughts on all of the above and anything additional that you are wondering about. Finally, don’t base your first hire merely on the idea of someone being metrics-oriented.
Your first recruiter won’t have time for metrics, and you won’t have enough data with one recruiter covering multiple roles to make any sense of it anyway.
Bonus: Ability to screen candidates
It’s a major bonus if the recruiter can reduce work for the initial interviewers by screening the candidates.
Recruiters who can do this usually are not screening for subject matter expertise, but other related predictors of success, such as the person’s ability to talk through a complex project and their process and decisions with regard to business goals and outcomes.
If you can offload the must-have recruitment factors to your recruiter (strategic thinking, communication, etc.), you have a true winner.
Building an Employer Brand
You might think, “There are so many things to do—why should I invest in an employer brand?” But a strong brand can help you tremendously with recruiting. High-quality candidates are often motivated to apply by insightful posts on the company’s blog.
It is also good for retention; when you give your employees the opportunity to promote their work, either through blogs or conference appearances, it helps them build their careers and feel recognized for their work.
If the nature of your business allows you to share internal stories, set up a blog to talk about them. Beyond the points just described, many candidates will read your blog posts to get an impression of your team culture, the technologies and methodologies you use, and so on.
Just make sure you keep up a regular cadence of posts. A stale, outdated blog is a disadvantage when it comes to recruiting.
Meetups are an easy way to connect with local candidates. If your office allows it, consider hosting meetups. The organizers are often very grateful for space and will give you a few minutes to talk about your team and any relevant job openings.
You can also sponsor some interesting ones—the costs of sponsoring meetups are very low compared to conferences and therefore a good way for smaller companies to gain some exposure. Finally, speaking at meetups about interesting things going on at your company can help connect with candidates.
SPEAKING AT CONFERENCES
Speaking at conferences can give you a lot of publicity, assuming you choose the conferences wisely. Preparing a talk requires a lot of time, so letting your employees talk at irrelevant conferences makes no sense. Look for one of these two conditions before approving a conference talk:
Do potential candidates visit the conference, and is the topic of the attendee's talk potentially interesting to them?
Are there talks or speakers the attendee can learn from?
In short, a conference has to be either a recruiting opportunity or a learning opportunity.
OPEN SOURCE CONTRIBUTIONS
A lot of engineers value the ability to be able to contribute to open source software, especially if the company allows them to contribute during work time. But keep in mind the needs of your company’s business before agreeing to open source your team’s work.
A reasonable policy is to encourage contributions during work time for OSS products used internally and to allow engineers to open source technologies that don’t provide a competitive advantage.
But keep in mind that an open source project requires ongoing maintenance and support. Simply dumping some code into a repository and then never updating it or accepting pull requests might end up damaging your engineering brand.
A Pragmatic Approach to Open Source
Kellan Elliott-McCrea is the former CTO of Etsy and a respected writer on engineering practice and culture. As one of the original authors of OAuth, he is passionate about the importance and power of the Open Web. Here is Kellan’s view on how to approach open sourcing your company’s software.
The ongoing maintenance requirements of company-sponsored open source projects are easy to underestimate. Your speed of response to pulling requests becomes part of your public brand, as does the quality of the code, the language it is written in, and other factors.
A GitHub repository of abandoned projects can be a warning sign for savvy prospective employees, especially if none of the contributors still work at the company.
Consider only open sourcing tools that can be useful to other teams and that you’ve had in production for a significant amount of time. You want to head off the energy that can be spent on designing a tool specifically to be open sourced rather than for your business needs.
Additionally, you can write a much better blog post about a tool that has been produced for a considerable time, including some of the surprising ways it’s failed and helped.
Don’t be afraid to allow engineers to open source projects on their own, unrelated to your company. You should have a process by which engineers notify you of significant side projects, but these side projects should be encouraged and can be a good outlet for interests that would be disruptive at work.
Finally, when thinking about open source consider how you can support key projects that your company uses. While the initial prestige of pitching in on an existing project can be lower, an employee who has the blessing of his company to help improve infrastructure the company relies on will often rise to an influential and prominent role in the project.
Recruitment great people is essential to building a great team. In this blog, we’ve covered the key principles that underlie a scalable recruiting process, and the best ways of getting qualified candidates into your recruiting pipeline.
The next step is to sort through the candidates, evaluate which ones best fit your needs, and make a recruitment decision.
This blog continues our discussion of the recruitment process, focusing on how to select the right new hire from a pool of candidates. These steps include interviewing, decision making (a vastly underrated part of the process), and reference checks.
As your company grows, you may notice these warning signs in your recruitment process:
Your first hint that something is amiss might be negative feedback about the recruitment process from candidates themselves. This can come from candidates who went through the same interview multiple times, encountered unprepared interviewers, or waded through general disorganization.
Closing candidates become more difficult due to delays in the offer process. When the management team doesn’t trust the decision-making process, they may dig into details of the interview feedback and require additional interviews or reference checks before a final decision can be made.
Veteran employees complain that the quality of new employees has decreased. Your team lacks the diversity needed to be successful, and/or your candidate pipeline closely matches the demographics of the existing team members.
Recruitment managers bring on poorly qualified new hires because they are desperate for help. This can further erode the upper management’s trust in the recruitment process. In this section, we’ll examine some useful techniques for solving these issues as you scale up your recruitment process.
Once you’ve found candidates for the positions you’re hoping to fill, the next step is to evaluate them. There are other approaches, such as skipping the challenge step and instead evaluating coding skills during the on-site interview, but what we’ve outlined has worked well for numerous technology companies.
Screening CVs is an imperfect science at best. For every guideline we propose here, we personally know candidates who failed to meet it but who performed well as employees anyway.
Many junior candidates won’t know the right format for a CV. And people switching careers may be coming from a background with different expectations about the right way to present themselves. So, use the guidelines below as suggestions and user feedback and evaluation to develop your instincts over time.
Next, consider how long the candidate stayed at their previous companies. While we have absolutely no problem with people leaving some of their employers after just a short while, leaving every company after just a few months means the chances are slim that their tenure at your company will be any longer.
We once screened a CV that showed the candidate left every company (and there were 10 of them) after exactly 2 years. Look for candidates who don’t merely see the next job as the next career step. You want candidates who choose their next company carefully, who try to find a good fit in the hopes of staying there for quite some time.
Professional activities outside of the workplace demonstrate that a candidate is engaged in the profession.
Check, for example, if the person has any public code contributions available, either on a GitHub profile or any open source platform. Look for past speaking appearances at conferences or Meetups, and online courses the person has taken.
Continuing education (e.g., Coursera) indicates that candidates have an interest in learning new things. These details don’t rule anybody in or out necessarily, but they help inform your perspective.
If the candidate is senior level, look carefully at their previous employers. If the candidate has worked a long time for an employer with a different culture, it might be difficult for them to adopt yours. Somebody who has worked for the last 20 years at a large multinational corporation might have a hard time adapting to startup culture.
THE INITIAL SCREEN
When a person’s CV interests you, the next step is to make sure it’s worth it for both sides to invest the time in an on-site interview. This is obviously more important when the candidate has to be flown in from another location.
The best way to accomplish this goal, assuming the person lives nearby, is to meet them in person. When that’s not possible, the next best option is to hold a screening call. Ideally, this should be a video call.
There are a number of new online tools emerging that attempt to make the screen and practical challenge more impartial by making the screener “blind” to the candidate while maintaining accurate evaluations. No specific approach has emerged as the clear best approach, but readers may want to investigate these options in case one seems right for their team.
Becoming accurate and efficient in this step is critical for scalability. On-site interviews are expensive for your team as well as the applicant. The earlier either side realizes that it might be a bad fit, the more time everyone saves.
During a screening call, it’s important to ask candidates about their timeline: Do they have outstanding offers? How soon do they plan to make a decision?
If they are halfway through another interview process and eager to decide, you’ll want to fast-track them. They won’t always volunteer this info, but you can waste a lot of time or end up in a frenzy if you don’t know what their situation is from the beginning.
Here are some things to watch out for during a screening call.
Did the candidate do any research on your company? Candidates should come prepared. Even if they were approached by a recruiter, preparation on their side is a must. Start a conversation with, “What have you heard about our company so far? Do you have any questions?”
The answers you get can reveal if somebody is truly interested. If the answer is something like, “Yeah, I think everything is good,” it’s a sign that person has not looked at your product and is not really passionate about it, nor motivated enough to do their research.
Look for people who say, “Yeah, this is awesome, but please improve these features because then it will fill this need and these use cases for me.” Or, “I’ve read conversations on this.”
We like it when a candidate tells us about their ideas. That helps us say, “OK, this person is either already passionate about the product, or is using it and can become passionate about it.”
The more experienced a candidate, the more they might be accustomed to other company cultures. Ask about the cultures at their previous employers, and what they liked or didn’t like about it. Reflecting on this is very important. Great candidates who have a luxury of choice will sometimes make it a point to ask proactively about culture and explore the fit from that standpoint.
Also, always ask candidates why they left their previous jobs. Many candidates with a history of short-term positions have well-rehearsed stories about what happened (depending on the emotional intelligence of the screener, this may or may not be apparent, however).
Ask what they’re looking for in their next role. Many people won’t be able to speak specifically about what they’re looking for and don’t expect such a question. You can find out a lot about their interest and what’s currently not working for them by asking this question.
Knowledge and fit
Usually, the first phone call is just to find out if the candidate is likely to be a good fit, culturally or otherwise. Sometimes a single screening call is sufficient, but you can certainly do more.
If the person doing the screening is a subject matter expert, they can ask specific subject matter questions to get a first impression of the candidate’s knowledge.
Besides letting you get more data, this step helps people new to phone screening gain experience without being the sole data point prior to an on-site interview. (Scheduling them back to back, by the way, can simplify scheduling.)
Regardless, continue until both sides have a substantial interest in working together and it is worth the time to do a practical challenge.
Once the screening is complete, the screener can exclude any details about gender, race, or anything else in conversations about the candidate so as to anonymize the person. This process works best if a recruiter handles the screening calls; otherwise, it can be impractical.
What will the candidate be doing all day if they are hired? An engineer, for example, writes code, and you want to see concrete examples of that work. Failure to verify a possible hire’s abilities would be a major oversight in the recruitment process.
Several approaches exist for verifying abilities:
Send candidates a challenge they can work on at home. This mirrors the normal working conditions; the candidate can perform research through searches or pull from other sources.
We recommend establishing a time limit; you’ll receive fewer replies when there is no time limit. Also, consider pairing with candidates during on-site interviews to confirm they actually did the challenge, and to find out how they react to constructive critique.
Tests can also be done on-site. The advantage is that it’s easier to verify that they completed the challenge on their own, and you can evaluate their ability to collaborate with another engineer.
If some public contributions are available (in the case of an engineer, open source code, for example), you can skip the practice tests and look over the code and how they communicate in issues and pull requests yourself. For a designer, you might look at products they designed that are publicly accessible.
Reduce bias by having reviewers evaluate the practical challenge either without a CV or with an anonymized CV. Recruiters can help anonymize a CV and make sure that the recruitment process contains as little bias as possible.
[Note: You can free download the complete Office 365 and Office 2019 com setup Guide.]
Advice on Challenges
how to approach practical challenges in your interview process. If you give a practical challenge, make sure you communicate expectations that the effort the candidate spends on it will be time-bounded (e.g., “Don’t spend more than four hours on this”).
Explain why you choose this challenge (e.g., “This is a simplified version of a key scaling challenge we have,” or, “We think this challenge allows us to evaluate candidates on the key skills we use every day, including X”).
Make the criteria clear: don’t tell candidates that they can choose any language and then mark them down for not choosing your preferred language. If you tell them it must be language X, don’t mark them down for not writing idiomatic X, unless that’s what you value in your company and you don’t think you can teach it.
If you’re going to evaluate whether the challenge comes with tests, then tell the candidate that.
Finally, asking a candidate to commit to doing a challenge means you are committing as the interviewing company to evaluating the work they produce. Great candidates who choose to do the challenge will want to talk to people about their solution and will be disappointed if no one is interested in talking about it.
According to Google, using too many interviewers in the recruitment process leads to diminishing returns. Google’s research found that, after the fourth interview, each additional interview only increased the “decision accuracy” by a mere one percent:
“In other words, after four interviews the incremental cost of conducting additional interviews outweighs the value the additional feedback contributes to the ultimate recruitment decision.”1 This research is applicable to your company if you already have well-structured interviews.
The risk, though, of having “only” four to five interviews is that it can lead other employees to feel excluded from recruitment decisions. A lunch session with more team members can increase inclusion at a lower cost, but this can also cause more stress for the candidate.
Another option for including more people is to interview candidates in pairs, but this strategy can also add stress to the process for the interviewee.
Personal involvement by senior leaders
During times of hyper-growth, senior leaders such as founders or department heads can easily spend 50% of their time on recruiting. The time investment is usually worth it gave the importance of recruitment the right people for the team.
So, in the beginning, it’s quite appropriate to personally interview every candidate so you can get an overview of the whole recruitment process, make sure the right people are being hired, and figure out who among your reports are the best interviewers. But your ultimate goal should be to create a recruitment process that could work without you.
Choosing the interview panel
Usually, you can identify good interviewers during recruitment syncs, meetings in which you discuss feedback and coordinate expectation. You may be surprised to find that there are people who say “thumbs up” or “thumbs down” to every candidate.
Others give only superficial feedback. It won’t take long to identify those who give thorough feedback and understand the situation the candidate is in while continuing to hold a high bar.
To make sure you have a breadth of perspectives when interviewing, choose interviewers at different levels of seniority, who come from different teams. This is especially important in engineering departments where engineers usually switch teams often and therefore hires need to fit the whole department and not just a specific team.
To strengthen diversity, make sure that the interview panel is as diverse as possible (but beware of burnout; if you only have one woman on staff, for example, she could end up on a lot of panels).
Choose one of the decision-making processes we outline later in this blog. Make sure to revisit the recruitment syncs from time to time, in order to make sure everything works well.
But once you feel things are running smoothly, you should be able to leave the job of reinforcing the process to recruiters and members of your organization.
In the end, you should only have to interview managers and senior candidates. If your company grows slowly, the approach we’ve outlined can be introduced slowly as well.
Ensuring interviews are complete
To avoid the “same interview five times” feedback and make sure all necessary topics are covered in interviews, define which areas are the most important ones for your organization and assign these to specific interviewers in each panel. This step should be the responsibility of the recruitment manager, though an experienced recruiter can help out if needed.
To ensure interviewers have sufficient context to evaluate candidates and there is no duplication of focus areas, consider having recruitment managers hold a “pre-brief” before each interview.
This is particularly helpful at the beginning of rapid growth when team members are less familiar with the recruitment process. For small teams, this preparation step could be part of a regular staff meeting or standup. For larger teams, an email to the interview panel is more efficient.
The typical structure of the pre-brief consists of context on the candidate (how you found the person), what role and seniority level you are trying to fill, and the assignment of specific areas of focus for each interviewer.
Here is a (far from complete) list of potential topics and questions. Obviously, you should customize this to the requirements of the role you’re trying to fill.
For engineering candidates and those with specific technical skills:
Computer Science 101 (data structures, algorithms, the order of complexity, etc.)
Architecture (availability, horizontal versus vertical scaling, etc.)
Problem-solving (approach to problem diagnosis and resolution)
For design candidates:
Taste/eye (influences, aesthetics)
Product thinking (process, problem-solving, prioritization, working against goals, success metrics, etc.)
Team (collaboration with Engineering and Product)
For everyone, communication skills and values fit:
When pairing on a practical challenge, see how candidates respond to critique
Ask, “What would you do differently if could do project X again?”
Ask, “What was your favorite project/least favorite project so far, and why?”
The recommended process for recruitment managers shares many core elements with the process for ICs, but there are a few subtle differences.
Making a recruitment Decision
Do you hire for the company or for a single team? recruitment is undoubtedly one of the most important things a manager does to build a team and an organization.
At the end of any recruitment process, a decision has to be made, and how it is made can make or break the whole process. There are several well-known approaches, each of which has pros and cons. An effective recruitment process satisfies the following objectives:
Confirms that a candidate’s skill set is a fit
Ensures that a candidate is a culture and values match
Gathers thorough feedback to create a comprehensive view of each candidate
Ensures that everyone involved in the recruitment process is heard
Avoids recruitment out of desperation
The ultimate goal of any recruitment process is to maximize the probability that a new hire will be a successful, long-term contributor to the team. In the following sections, we describe some advantages and disadvantages to common approaches to the recruitment decision process.
Recruitment manager Tips
In this model, the recruitment manager makes the final recruitment decision and is fully accountable for it. Although the recruitment manager takes interviewers’ feedback into consideration, they can veto a majority vote.
The advantage of a recruitment manager is that accountability for the recruitment decision is clear. If the interviewers inconsistently vet a candidate’s qualifications, the recruitment manager can eliminate feedback that is based on irrelevant recruitment criteria and hires anyway.
When many people are involved in the interviewing process, the recruitment manager can break the tie to make a quick decision.
Experienced managers who feel strongly about a candidate for some reason (perhaps a trusted referral, their gut instinct, or strong qualifications), or who simply want to take on a “flyer,” have the flexibility to override the panel, knowing that they are on the hook for the success or failure of the candidate.
But there are disadvantages to this approach. Sometimes the needs of the manager and the organization are misaligned, leading them to hire a candidate for the wrong reasons. This might occur, for example, when the manager is a recent hire, or when the manager is under extreme pressure to expand the team.
Worst of all, when recruitment managers override their interviewers, they are basically saying they don’t trust the panel’s decision making, which is a message the interviewers carry with them to the rest of their jobs.
Additionally, it is possible for the recruitment manager to make a decision out of desperation, which is more likely for an individual than it is for a group.
There is a pattern we’ve seen in quite a few companies where, say, the VP of Engineering hires all the engineers and then assigns them to different groups— basically, one person does all the recruitment, but the hired candidates then report to other managers.
The process can be really fast, as only one person is responsible for making a recruitment decision, and it can be done after just one interview.
But the recruitment manager may not understand the actual needs, skill pool, and culture of the team for which they are recruiting. The actual manager faces unnecessary surprises that can negatively affect resource planning and cause tension within the team.
This can indicate trust issues—a person thinks they’re the only one qualified to hire new people and cannot delegate, so they just hire people and assign them to teams.
This is a flawed approach. If the recruitment manager does not understand the culture of the team for which they’re recruitment, the team may be really surprised by their new candidate’s working style. We have seen a manager come to work and say, “Hey, here’s your new hire from yesterday’s interviews.”
It’s very difficult for a candidate to report to a person who didn’t hire them, as the candidate has no established relationship with their new manager, and can end up feeling pretty detached from what their new team is actually doing.
The interview panel, which includes the recruitment manager and any technical experts, reaches an agreement; the interviewers, either unanimously or by the majority, agree to the recruitment decision.
The advantage is that the recruitment decision is agreed on by multiple people and there is common agreement. For example, sometimes an individual who is unconvinced that someone is a good fit will trust their coworkers’ decision regardless.
Several of the candidate’s future peers get to meet the candidate before they join the team, so there are no surprises. This strategy allows the team to self-manage. By following this approach, the team better understands its own needs, as opposed to having someone impose things upon them.
There are disadvantages to the consensus approach. If one or more interviewers are unsure about what kind of talent the organization is looking for, the feedback criteria are inconsistent.
It can be difficult to come to an agreement if a lot of interviews take place. When compared to other strategies, there is a higher probability that politics and personal relationships will adversely affect a decision to hire or to not hire a candidate.
Google is the company perhaps most responsible for spreading the recruitment committee model. This is how Google explains their approach: “An independent committee of Googlers review[s] feedback from all of the interviewers. This committee is responsible for ensuring our recruitment process is fair and that we’re holding true to our ‘good for Google’ standards as we grow.”
What is the difference between this strategy and one where the interviewers reach an agreement by the majority? Most significantly, the recruitment committee does not interview the candidate.
Instead, it relies on written feedback from the panel and provides feedback to the interviewers if the written feedback is not clear enough to make a decision or is otherwise flawed in their judgment.
Don Dodge (a Developer Advocate at Google) explains: “recruitment decisions are made by recruitment committees. This means that no single recruitment manager can make a potentially bad decision by themselves. This doesn’t guarantee a 100% success, but it does reduce bad decisions.
There must be a consensus that the candidate is a great hire. Doesn’t this slow down the process? Not really, in fact, the process ensures that candidate status is reviewed by the committee every week. There is no opportunity for the recruitment decision to get delayed by personal deadlines for other work.
The consensus approach avoids ‘blind spots’ or biases by an individual recruitment manager, and results in better recruitment decisions. Candidates are compared across several groups to make sure the acceptance criteria remain high.”
Google employee Piaw Na writes anecdotally, “when the committee found feedback on recruitment to be ambiguous, it would assign another interview to an engineer well-known to be decisive [...] many people dislike rejecting people, and occasionally, someone would write feedback that wasn’t really informative enough.”
The advantage of a recruitment committee is that the chance of a single person making a poor recruitment decision is eliminated or significantly reduced.
Through the fact that a recruitment committee is responsible for a lot of groups, the acceptance criteria for recruitment a candidate applies to multiple groups.
The recruitment committee can send feedback to the panel members with regard to their interview questions and write-ups, hopefully improving them over time.
But there are also disadvantages to this approach. The members of the recruitment committee rely only on written feedback, which can be incomplete or misleading and the candidate’s future team is not in control of the recruitment process, and thus cannot ensure that there is a cultural fit with the candidate.
A recruitment committee can also introduce a delay as the decision can’t be made until the next recruitment committee review.
Amazon uses what they call bar raisers in the recruitment process. Bar raisers play a special role in the recruiting process to help ensure that good recruitment decision are made.
As the article states, “The bar raisers had generally been at Amazon long enough to know what the corporate values and culture [were] like, and generally were the best employees in terms of productivity, inventiveness, and technical acumen.
And they were authorized to spend up to 25% of their time on recruiting. [...] Amazon felt that making good recruitment decisions was the most important thing the company needed to do successfully. Every employee hired was required to interview with a bar raiser from another team. And recruitment decisions had to be unanimous.”
Including a bar raiser in the process has the advantage that someone who knows the requirements of the organization is always part of the recruitment decision. Chosen wisely, bar raisers have a proven track record of making good recruitment decisions.
There is one concern about having bar raisers and that is top-performing employees can end up committing a sizeable percentage of their time participating in interviews (like the 25% Amazon allowed) rather than working on projects. In the long term, the benefits gained by such a rigorous vetting process can be positive for the team and the company.
In the short term, however, this can be really burdensome. This can become worse if the same few people remain involved in interviews for a sustained period as the company continues to grow. The time commitment is worth considering.
Choosing a Process That Works for You
There are a lot of different approaches to recruitment and interviewing, and no clear-cut winner for every organization.
There is pretty convincing data that having more people involved in the decision-making process results in better hires, but we haven’t seen any data indicating that total agreement between the interviewers is better or worse than recruitment by committee.
While other departments tend to have a clear-cut recruitment manager, for engineering departments, for example, this isn’t always true. In one former situation, one of our goals was to find a common approach to engineering/design/product and other departments alike.
We agreed on the following core concepts (which is basically the “interviewers reach agreement” approach combined with the bar raiser):
Interviewers are all either decision makers or advisors. The decision makers’ votes have to be unanimous, and any single decision maker can veto a hire. Advisors are heard but have no veto ability.
The bar raiser is always a decision maker and is usually a senior employee from a group not directly involved in recruitment the candidate. Usually, everybody is a decision maker. The exceptions are employees doing their first interviews, and people in positions requiring so many interviewers that consensus is nearly impossible.
How you make a recruitment decision can seriously impact your organization. This wise principle applies: as a senior leader, rather than make every recruitment decision, install a process that ensures good decisions are made.
HOW TO GET AND DISCUSS FEEDBACK
There is a common problem in interview feedback rounds: the highest-ranking interviewers speak first, and their opinions can influence the feedback of other people. Not everybody is comfortable disagreeing with their boss openly. To avoid letting people influence one another, follow these two suggestions:
Get written feedback about a candidate first, as this lets everyone gather their own thoughts before discussing them openly (make sure that nobody reads anyone else’s feedback before giving their feedback)
Let the highest-ranking interviewer speak last, so that person’s authority isn’t a factor in anyone’s feelings about the candidate
Set up recruitment sync in which the interviewers discuss that feedback and make a decision. This approach lets people learn how a more experienced interviewer approaches an interview.
By discussing candidates, you can align the team’s expectations and approaches. This also enables the recruitment manager to see who is a good interviewer. And knowing their feedback will be read or heard by their peers encourages interviewers to do a thorough job.
Making an Offer
Preparing and presenting an offer is one of the most critical yet subtle steps in the recruitment process. You are asking someone to make a major change in their life, and therefore they will likely scrutinize every detail of the offer and how it was presented before making a final decision.
To that point, it’s quite important who actually tenders the job offer. A common anti-pattern is having a recruitment manager contact candidates and leads them through the recruitment process, but then have somebody else, often the recruiter or someone in HR, make the offer. This can be a strange experience for candidates.
At a very crucial moment, after lengthy discussions with the recruitment manager about their next career move, somebody else takes over the process—a person they don’t know who might not be aware of all the conversations the recruitment manager previously had with the candidate.
In our experience, the closing rate is much higher when the same person leads a candidate all the way through the process. Likewise, when a recruiter leads a candidate through the process, the recruiter should at least be part of the offer process.
In the beginning, the founders/early employees can explain the technical and financial aspects to candidates, but when growing an organization, it’s less likely that different people will be able to explain both. So, in general, whoever leads the candidate through the recruitment process should also make the offer.
Look at the acceptance rate of your offers; if the rate goes down, it might be a sign that something is broken in your offer stage. It could be that you pay below market or that (as mentioned before) you do have too many or the wrong people involved in the closing process.
Full Cycle Recruiting
Note: This story from Erik Engstrom only applies when you have a recruiter on staff.
Full cycle recruiting is a process that starts with sourcing a candidate, screening, leading them through the interview process, and making the offer. The idea behind it is that the more time you spend with a candidate, the more trust you can develop, and the more you know about what that person is looking for in terms of their next step.
The key thing here is to avoid handing the candidate off from one person to the next, as information and trust can be lost in the process. Usually, a recruiter should lead the candidate all the way through the process, including making the offer.
The recruitment manager can certainly be involved, but while the recruitment manager can explain the concrete role and the technical challenges better, a recruiter understands the soft aspects of an offer better.
Quite a lot of offers have been rejected because the hiring manager struggled to explain the equity part of an offer, or was too busy to spend enough time with the candidate to ask about competing for offers, make a case against them.
Find out what the person was looking for in their next role (specific types of projects, better work-life balance, a great team, leadership possibilities, etc.), explain the company culture and vision and benefits, walk through monetization strategy, and so on.
One additional aspect here is that a tough salary negotiation with the recruitment manager might be a bad start to their relationship.
Especially with regard to compensation or other soft factors (work-life balance, working remotely, better work hours to accommodate young families), candidates are instinctively more conservative with their future boss about bringing up what was lacking in their past role and what they hope will be different in their new role, for fear that they’ll look less passionate or dedicated.
Recruitment managers, typically, should not be involved in compensation negotiations, for several reasons. They may know less about negotiation. They may not have visibility into salaries on other teams, which can cause them to throw off compensation for similar roles across the company, something that can have disastrous consequences very quickly.
With regard to cash, a new hire will often be compensated equally or less than their direct reports at certain stages of growth if they joined a small team early (low salary, high equity, high responsibility).
This is because new hires receive much less equity and, in certain cases, more cash, so their offers remain competitive in the market.
HR should have a compensation specialist looking into compensation across the company, establishing standards and adjusting them quarterly to maintain internal equity among employees at the company, as well as to stay competitive in the market.
A recruitment manager’s instinct is to use their own salary as the upper limit for their own team’s compensation, which may not necessarily be the best point of reference depending on when and for what they were hired. Compensation standards, then, should be set by someone else.
You can safely assume that once you find a great candidate and are about to make an offer that there will be competing offers from other companies. Here’s some advice on how to make sure that the candidate actually accepts your offer.
Start by getting to know the candidate during the interview; what do they care most about (manager, team, cash compensation, equity, title, or something else)? Design the offer according to those priorities.
Be ready to adjust the offer if needed (within reason). And you must move quickly: Some candidates can be lost when they have time to talk to other companies.
Other candidates are in a hurry, maybe because of a competing offer that’s about to expire; keep informed of such factors (ask the candidate!), and accelerate the process if needed. Make it a point to stay in touch. Recency bias definitely exists, and candidates are more likely to accept an offer from their most recent interview.
Be aware of consistency, and don’t hand the candidate from person to person, except to escalate. And follow up quickly after escalation by specifically asking, “How did your conversation with the CEO go?”
Of course, one of the most significant parts of the offer are the compensation numbers. Although many companies are cash-sensitive, especially early on, we don’t recommend trying to lowball the candidate. Make the first offer a fair one, and communicate this, along with your thought process that went into the numbers.
Don’t rely on the possibility of additional requests to up the offer—a substantial percentage of candidates don’t like to negotiate, and for them, the first offer is the final one.
If they do negotiate, try to avoid a lengthy back-and-forth process by asking them to provide you with the numbers that they will definitely sign. You may not be able to match them, but better to know this sooner rather than later.
Especially important during this process is to create meaning. Often a meaningful job with a lower salary will be chosen over a less meaningful job with a higher salary. Your effort to get to know the candidate earlier in the process will help you know what is meaningful to them. It could be potential career progression, challenging work, wider impact, or something else.
Outline how the role can progress through the company (only if you know it actually can). What challenges will the role be tackling? How does the company as a whole, and that role, in particular, make a difference in the world? These are all aspects of a role that convince a candidate to choose your offer over others.
Finally, make the offer clear and understandable. Try to be as open as possible about the financial aspects of the offer—equity in the form of stock options or stock units, in particular, are often poorly explained. The company e-shares has a fantastic offer letter.
Later, as more layers of management are introduced, there are two additional things you’ll need to do: educate recruitment managers on techniques to use in closing, and establish guidelines on how to escalate to senior leaders when needed. There’s a saying in sales: “Always Be Closing.” It’s relevant to recruitment, as well.
Every step of the process should be geared toward increasing the candidate’s desire to work for your company, whether you decide to make an offer or not. Even a candidate you decide not to hire may still refer their colleagues to your company—but only if they had a positive recruiting experience.
Lastly, please have a look at the section “???” in ??? to make sure you make a fair offer and minimize bias.
Another way to hire more people is acqui-hire. In many cases, this is the only method to achieve significant growth in a short time, though it can be both costly and risky.
In a normal acquisition, you buy a company for its products and/or services. In an acqui-hire, it’s to recruit its employees, but not to continue the operation of its product.
There have been many successful acquire-hires, but failures are also common. A frequent failure pattern occurs when companies don’t pay attention to whether the culture of the acquired company fits.
Let’s say BigCo decides it wants to acqui-hire SmallCo. BigCo has a clear business model and its employees are focused on delivering business value within that model. The SmallCo team, on the other hand, is driven more by a passion for their product than by business sense.
Despite the mismatch, the deal went through, but integrating the teams together proved difficult. One year later, most of the staff of SmallCo had left, only making it that long thanks to a retention bonus. The rest of the team left pretty quickly after that.
The most important concerns in an acqui-hire are actually the same as when hiring the normal way. Do you have to ask: Are the potential employees motivated to work in your company? And are they a good fit in terms of talents, skills, culture, and values?
When an acquisition like this fails, it’s often because these basic assumptions were not carefully considered. Leaders at acquiring a company may have been too focused on closing a deal, or investors in the acquired company were overly eager to facilitate a “face-saving” exit.
Here we list a few anti-patterns we have seen so far:
Interviewing only the founders
By not putting all the acquired employees through your standard interview process (assuming you acquire the company for more than just one or two specific people), you risk bringing on employees that don’t match your team’s talent standards.
This will lead to costly performance and moral issues down the line, undermining the value of the acquisition.
A comprehensive interview process can also confirm that the acquired team (beyond the founders) actually wants to work within your company and make sure that the values and cultures of the two teams are compatible.
When a large company acquires a much smaller one there are often many cultural differences, but if the teams share the same values you have a much higher chance that the acquired team can adjust to the new culture. For a deeper discussion of values and culture, see ???.
Assuming founder retention
It’s very common for the founders of an acquired company to leave as soon as they reasonably can. Entrepreneurs often don’t like being employees and are eager to start working on their next venture.
So if the founders are a key reason for making the acquisition, make sure you consider the best way to retain them, whether through vesting cliffs, retention bonuses, or a motivating work assignment.
Bait and switch
You or someone in corporate development paint an unrealistic picture of life at the new company (“We will absolutely use your technology!”), leading to morale hit after on-boarding. This happens when an acquisition is presented as a products-and-services acquisition but is, in reality, an acqui-hire. Don’t oversell the new situation.
Dispersing the acquired team without announcement
The acquired team, which is accustomed to working together and expects to remain that way, instead gets distributed without preparation into many existing teams of the acquiring company. This means new jobs for every-one—potentially jobs they did not interview for. This creates a high likelihood of turnover.
None of these are guaranteed to lead to failure, but in our experience, they increase the chance that the acqui-hire will not provide the desired growth in staff or productivity.
MAKING AN ACQUI-HIRE THE RIGHT WAY
Here are the steps to take to ensure you’re making hires the right way:
Interview all the employees so you can get a good impression of the complete team. To make the acquisition worth it, a large majority of the team should make it through the standard interview process you use for individual candidates.
Get an impression of whether or not your company is interesting to the other company’s team. Talk about the upcoming projects and the new challenges and see if they are excited.
Discuss how the existing products and services of the acquired company will be handled. The acquirer wants to minimize the effort required, but it is often hard to simply revoke support or turn off services without angering customers or partners. This could harm the reputation of the acquirer and the morale of the acquired team.
Find a good balance between keeping the team together versus distributing them all over the company.
The real work starts after the acquisition
We have seen many acquisitions where people high-fived each other after the deal was done and then thought the work was finished. In reality, most of the work happens after the paperwork is signed. It’s important to onboard the acquired employees the same as those you hire through normal channels.
Assign buddies who can help them get accustomed to the new company. And make sure you don’t discourage the acquired employees from maintaining their sense of “our team,” even if they have been dispersed into different groups.
You don’t need to encourage it, either, just recognize that this is a big transition, so it’s natural for them to stick close to the people they know. Over time, if there is a good fit, their sense of “our team” will shift from the acquired one to their new ones.
In 2009, Nokia acquired a company called bit-side. The acquisition was successful, presumably because bit-side was a professional service and software company. Nearly half of their staff already supported projects at Nokia and liked the work they were doing there.
So for nearly 50% of their employees, it was already clear that they’d like the company culture and the actual work. Acquiring the company was a straightforward move.
Evaluating Your Recruitment Process
An important technique in building a scalable recruitment process is to use data to understand how well it is working. Many companies rely on just a few simplistic metrics, like the median time to fill an open position. Because the process can break down at any stage and the underlying reasons may not be obvious, you need to take a more detailed look, such as:
The median time between first contact and offer, and for each stage of the process in between
Most common reasons were given for not accepting an offer
Percentage of new hires by source (referral, organic, recruiter)
Percentage of candidates that make it through each stage of the pipeline, particularly the percentage of on-sites that receive offers (since this is such an expensive step)
And because new hires that don’t stay at the company are so costly, we recommend taking a holistic view and analyzing the full lifecycle of the employee:
Surveys of new hires about their candidate experience.
Performance data on how new hires are doing 6 and/or 12 months after their start date.
Percentage of employees who refer candidates, and a median number of referrals.
Regretted vs. non-regretted attrition. At larger companies, break this down by the source of the candidate and their tenure at the company to look for trends.
Attrition data is particularly important, and there is quite a bit of data about turnover rates in various industries. The rule of thumb (which matches our experience) is that a turnover rate of 10% per year is fairly healthy. When your company is growing quickly and your recruitment process is struggling to scale, not every hire will be a perfect fit.
As with all metrics, it’s important to look at the underlying data from time to time. You could have a turnover rate of 10% and think everything is fine, but then notice that it’s only your top performers who are leaving.
That is definitely not healthy. You need to look at everybody who leaves and decide whether it was regretted attrition (a solid performer that you wanted to keep) or non-regretted attrition (a failed hire or someone who did not scale with the company).
High rates of non-regretted attrition often indicate a problem in your recruitment process. Because bad hires can be so costly, it’s worth investigating whether this is the case. But there could be other explanations.
For example, someone who does a very good job for three years and then leaves the company doesn’t necessarily mean your recruitment process has flaws—it could just mean the company isn’t the right place for them anymore.
MANAGING PEOPLE WITHOUT MANAGERS
People management functions are crucial during growth, but it is often necessary to perform them without a dedicated manager. Small teams may not have the funds necessary to hire a dedicated person.
Or once they decide to do so, it may take many months to find the right person. In the meantime, team leaders may need to get creative to ensure that management functions get done and not simply ignored.
Here are some ways to survive without a dedicated people manager:
Establish a technical management role. Some companies give their “tech leads” responsibility for technical decisions on the team rather than rely on the team’s manager.
Formalize a Product Manager or Program/Project Manager role. Identify someone who can own the product roadmap and/or help the team break it down into milestones or sprints.
Clearly define the development process (peer reviews, testing strategies, etc.). This allows ICs to better self-manage in these areas.
Encourage healthy peer feedback and train the team on how to do it well.
Invest in communication within and between teams. ??? covers a variety of ways to improve information flow without overwhelming the team with noise.
Optimize the skill balance on the team. Sometimes the perceived need for management is actually caused by a skill gap; for example, the team keeps missing its milestones because the team members are not good at debugging or task estimation.
It’s also possible to move ICs around to get more self-managing units—for example, a more junior team may need to borrow someone from a more senior team.
These approaches can help delay the costs and risks of adding formal management, when necessary. But again, if you see any of the warning signs we described in the previous section, then delaying this process is probably the wrong thing to do, especially as management debt continues to accumulate.