“I don't particularly like this ‘war for talent’ hype that everybody's talking about,” says Kate Zatland, founder of Forme Partners, an executive search firm that specialises in finding top commercial leaders for VC-backed companies. “It's just a time for opportunity. We’ve always faced challenges in hiring top talent, we just need to get more creative now.”
According to many different sources, scaleups often fail because they fail to hire the right talent at the right time. And that’s because hiring is hard; not only is top talent scarce as scaleups require more niche tech talent, but also because competition is huge. As in, Microsoft, Amazon or Google-huge.
So how can a smaller company compete? How can you get the right person in the right place at the right time? And how on earth do you “get more creative” with hiring?
We asked Zatland to share her expertise for all scaleups that might not (yet) be in the position to hire a headhunter — from series A to D.
The candidate is in charge
It’s important to know who holds the reins in this whole process.
Zatland tells us that just 15 years ago, founders and headhunters were pretty much in charge. They’d approach a candidate, tell them about the job and the candidate would most likely flow through the process.
"What has changed is that candidates have become in charge as compared to founders and headhunters. Scaleups can use this opportunity to restructure the recruitment process by making it more candidate-centric,” she says. “The whole process should help reveal what drives the candidates, what story they want to tell, what experience they want to add to their repertoire and if there is a strong fit between their goals and the scaleup’s challenges and objectives."
One way to attract senior talent into the C-suite is by building really reputable boards early. Hiring incredible people to boards for mentoring and leadership coaching is important not only at board level, but also helps attract amazing people.
Your board is your friend
Zatland operates exclusively for companies with over €10m in revenue, and at that level, the board and investors play a major part in hiring for executive roles.
“Sometimes we’ll hear through one of the board directors that we should speak to the founders about a role they think needs to be filled,” she says. This is either because the current executive is underperforming, or because board members believe a new role has to be created to address company needs.
Zatland then speaks to founders, investors and board members to determine exactly what goals they aim to achieve with the hire.
The board is also important to signal quality to potential hires. “One way to attract senior talent into the C-suite is by building really reputable boards early. Hiring incredible people to boards for mentoring and leadership coaching is important not only at board level, but also helps attract amazing people.”
And then there’s the access to talent the board provides. Zatland says that after the scope of the role has been defined, the board can begin referring quality candidates from their own networks, which can be much more efficient than a conventional sourcing process.
It’s not about the title, it’s about the goal
Even if everybody agrees the company needs new hands on deck, it can be challenging to determine exactly what the company needs from the new hire.
“The investor will say it’s brand, the founder will say it’s performance and the board will say it’s an operational or commercial issue,” Zatland says. “You have to get to the root: what are the core problems they've been experiencing or suffering from? What is the component that needs to change most urgently?”
One example, she tells Sifted, was working with a series B+ business in the consumer space: “We came on board 12 months after the business had been searching for this hire, and the board said ‘you need a CMO’. The business then said ‘we need a CCO’, and finally they said ‘we're going to have a COO’... But despite all the titles being thrown around, it was one job that actually needed doing.”
Try to tailor the job to the goal you want to achieve instead of trying to fit a candidate into a title. Be clear about the skill set and what is a must-have versus not.
When you’re up against competition, experience matters
When competing with a big brand name in tech, it’s all about offering a tailored package to the candidate’s personal goals. For top talent, Zatland says, “it's about the experiences you want to have, not just getting another household name on the CV.”
This can give scaleups a leg up, as some talent are more interested in having a hand in growing a business rather than consolidating one. “As a scaleup founder, trying to shift industry dynamics to an extent, you're able to give them that experience,” she says.
An experience of building a business from an earlier stage is very different to going into a business where you know it might just exist with or without you,” she tells Sifted. “The question for candidates is: do you want the more secure option, or do you really want to test yourself?”
With some clients we’re doing monthly or quarterly vesting, which means that candidates can comfortably move on once they feel their job is completed.
In hiring for executive roles, Zatland tells us that salary is not where companies compete. “There's no real difference in salary anymore between a big business and a small business. Everybody just has to offer what they have to offer,” she says.
The opportunity for scaleups comes in areas like equity, where the opportunities are harder for later stage competitors to match.
The chance to acquire a meaningful stake in an earlier-stage business with significant growth prospects is a clear differentiator, as is vesting. “If you look at the average tenure of a C-suite hire, it's around 3.2 years, which makes a four-year vesting schedule less attractive,” Zatland says. “With some clients we’re doing monthly or quarterly vesting, which means that candidates can comfortably move on once they feel their job is completed.”
On top of the starting equity stake, Zatland says it’s possible to create growth paths for prospective hires that offer long-term incentive packages tied to tenure or performance. “The only challenge with refresher grants is that a lot of cap tables are already too complex, and therefore there isn’t always room for flexibility.”
Even if the initial package doesn’t compete with the sums on offer from larger competitors, you can incentivise a new hire with a clear progression path, “so when people join you can give them a picture of what their package will be after the next funding round, or at a certain revenue milestone.”
Look outside your industry
Great talent can come from unlikely places, and getting creative when hiring means scaleups should start to look outside their own industry.
“What we look for is the skill set,” Zatland says. “Even if we bring somebody in from consumer and we put them into B2B, it's about the skill, because anyone can learn the specifics relatively quickly.”
Zatland tells us it doesn’t really matter what industry your experience is in as long as you have the numbers — and the leadership skills — to back up your achievements.
“It's about building the right teams, leading people in the right way, and being focused on results rather than vanity metrics,” she says.
Founders evaluating new leadership hires need to think about the reality of working with them, and you have to be committed to giving them a platform to be successful.
Retaining talent is as important as hiring it in the first place. As a founder, it’s your responsibility to make sure the talent you attract is working to their full potential –– and that takes a lot of time. Zatland says this is something few founders realise when they hire more experienced talent.
“As a founder, you may be used to being the product evangelist, the salesman, the marketer, doing a bit of everything,” she says. “But you also have to accept that others will know more than you. So your challenge is: how do you enable people and give them the space, but work closely alongside them while they’re ramping up in their new environment?”
In the hiring process, it’s key the prospect gets this feeling from the founder as well. Zatland says a good way to test out the relationship is to book in some time and actually work together. You could be tackling a problem that the company has already solved, or one that it’s currently facing, but in general, a collaborative session like this beats board presentations by a mile.
“Founders evaluating new leadership hires need to think about the reality of working with them, and you have to be committed to giving them a platform to be successful.”