Smart People | Tough Decisions: Startup Hiring During Uncertainty

In the current environment, when access to funding is more limited and growth prospects more uncertain, startups have to make decisions about the number and type of hires they make. This scenario puts smart people in tough positions:

• Which roles should I prioritize now vs. later?
• How do I stretch my budget?
• Can I get away with a mid-level hire vs. a senior one?

The final question is one that has more impact than people may realize–not just on the hiring process or budget, but on the team dynamic and long-term prospects for success.

Here’s why:

• When a company down-levels a role, it doesn’t impact the actual work to be done. For example, the original perspective that this position should be director-level most likely remains true. What has changed is the expectations for their eventual hire. They now hope that a manager-level team member–with less experience and expertise–will somehow live up to the performance and productivity outcomes of a director. This puts the new hire in a challenging, uphill position and they don’t even realize it
• The change to this particular role is not isolated. It impacts every other person, cross-functional project, and business goal connected to this position. For example, tasks that could have been delegated from a VP to a director now have to stay on that VP’s to-do list. Momentum that would pick up with someone who has done this type of thing 3-4x is slowed because they’ve only done it once or twice before, and more onboarding, training and context is necessary for this hire to be successful, pulling others away from their own goals

It’s important to think through the costs of a hire beyond just their salary and benefits. If you’re faced with a decision about whether or not to hire a more senior/higher salary person or a more junior/lower salary individual, I have a few recommendations below.

Hire the more senior person when:

• The new hire would report into a founder or senior exec. These folks are already stretched too thin and often don’t have the capacity (or even the ability or expertise) to flex down to support junior team members. They need team members who are mostly autonomous, who bring years of experience and expertise, and who will drive results with less frequent intervention
• The hiring manager already has 5+ direct reports. This is about leverage. Most often startup people managers are “doer-leaders” carrying both a personal workload as well as management responsibilities. Few people manage many people well. Adding to an individual’s manager responsibilities delays and distracts them from their own job, which could impact their results, engagement, and job satisfaction

Move forward with a more junior person when:

• The hiring manager has both the capacity and capability to provide the new hire with more support, feedback, and context. This investment and attention has the potential to yield great results if they have the patience, awareness, and flexibility to adapt along the way
• A more senior person can hold onto some of the responsibilities that this new hire won’t be ready to take on
• Tasks that are more complex can be delayed until the new hire develops the ability to fulfill them or until a different hire can take them on

What else should you consider if you’ve down-leveled a role?

• Org design is a dynamic process–every hire shifts the shape of a team. Managers and leaders should keep an open mind about how to evolve the work and the hiring plan
• Transparency earns trust–share the change in direction and tradeoffs you made while highlighting the fact that this means there is room for the new hire to grow and expand in the position
• An investment in the new hire’s development–allocate a few thousand dollars toward their professional development in the stretch or new capabilities. This demonstrates a concrete commitment to their growth, which can increase engagement and help them gain new, valuable skills toward the original scope of the role over time