A new survey says there’s almost a one in four chance your management team will end up cratering your startup through sheer lack of relevant abilities. That ought to chill the bones of every startup CEO.
CB Insights surveyed 156 companies to find the Top 20 reasons why startups failed. The top two reasons were no surprise — the new companies got the product wrong product or were undercapitalized and ran out of cash.
But, No. 3 on the list was hiring the wrong team. Having a mismatch of skills with what the market demands from a new entrant caused 23 percent of the startups surveyed to fail.
That can mean anything from hiring an under-motivated team to individuals with the wrong skills. It can even mean that those team members weren’t willing or able to get on the same page with the founder’s vision.
However it’s interpreted, company builders need to put process over personal style and follow 10 steps to hire the right team:
Work with a recruiter.
Good recruiters typically charge 25 percent of first year salary for the candidate hired, but their experience is especially helpful for start-ups not used to hiring key personnel. Encourage your recruiter to spend time in your office, soaking up the culture of your team to understand the right professional and cultural fit. That will give them a great gut feeling for who will best succeed.
Hire a diverse team.
When hiring staff, it’s crucial to ensure diversity. It’s not only the right thing to do, it boosts profits too. Research from McKinsey & Company reveals that firms in the top quartile for racial diversity are 35 percent likelier to have better financial results while those in the top quartile for gender diversity are 15 percent likelier to have stronger performance compared to average companies. Hiring people like yourself can be more comfortable but a diverse team will be more productive.
Hire for domain expertise.
Having staff with a deep understanding of a particular industry or a certain technology is vital. For example, if you’re building a fintech company that wants to disrupt retail banking, hire an expert who has worked extensively in that field. Someone with 20 years of specialized experience can help challenge assumptions and shore up any shortcomings among company founders. Use an advisor, investor or recruiter who can ask the right questions to hire people in areas outside your area of expertise.
Ask candidates about their secondary expertise.
Startups lack the deep bench of talent that larger firms have, so secondary skills matter. Consider candidates with multiple degrees, certificates in another field or experience working in a variety of settings. Startups need…