Start-Up: How to hire the right superstar to grow your start-up

Start-Up! is weekly column on entrepreneurship, start-ups, technology and innovation, powered by the Adams Hub for Innovation.

Perhaps the single most important and consequential decision you will make as an entrepreneur is who you hire to help you build your business. Studies have found that the first three people a start-up hires set the tone, culture, precedent and path to success more than the next ten hires.

More often than not, these early employee hires either make or break a start-up. So, as an entrepreneur in the exciting position of needing to actually start hiring employees, how do you go about filling key positions and identifying the best personalities, people and fit you need to take your start-up to the next level?

One gigantic mistake I have seen frequently is that start-ups underestimate the value and importance of the people they hire as their initial employees, even in non-leadership roles. It is critically important to understand that every employee is a leader and every employee is a salesperson. It does not matter what their title is (Director, Manager, Supervisor, Customer Service, Assistant, Intern, etc.), if they ever come in contact with your customers, they need to be able to sell the value proposition of your company. If they are great to work with, helpful, and positive, they will help drive customer loyalty, without ever being a sales person. And as is typical with virtually every start-up, early employees must not only effectively execute their job requirements, but also act as a jack-of-all trades, doing whatever it takes to help the business grow and thrive. This means that their attitude to take on a myriad of disparate projects, change what they are working on at the drop of a dime, perhaps work irregular, or extended hours, all set the tempo and culture at a young start-up.

If you hire these absolutely critical employees poorly, you will end up regretting it, and the business will suffer because of it. I have seen it over and over again: the businesses with the best employees are the businesses that succeed. This rule applies to investors as well. They look first at the people and secondly at the business itself when determining to invest in a start-up. This is the same strategy used by every single angel investor and venture capitalist, period. So treat your business as an investor looking to put $100,000 into it would, and do not just hire the first person that applies or meets the general criteria for your open position.

The first decision you probably have to make is cost based. Typically, the skill set required and the supply and demand for that skill set will producetwo choices: hire the veteran or hire the rookie.This is where the two paths diverge greatly and so can your business. With the veteran, hopefully you are getting a seasoned professional who can make a significant and immediate impact. This is also the person who is going to cost you more. The rookie will be a smaller hit to your budget but will most likely require much more training and handholding to get them up to speed. Ideally, this should be a classic “you get what you pay for scenario”. There are distinct advantages and disadvantages in each scenario. The veteran may be the “rainmaker” you need, but there may also be baggage from previous experience that may negatively impact performance. The rookie, on the other hand, will be cheaper yet their inexperience will require more training time and effort that you may not feel you have. The value proposition is whether the time invested in training the rookie and the funds saved in compensation will pay off over the expected length of time the new employee is with the company.

Whether you hire the veteran or the rookie, it is key to find out what their level of commitment will be to the business: you need to know how much you can rely on the prospective employee/partner/evangelist/Batman, especially if they are ever going to be in direct contact with your customer. While other positions in the company are generally more important to the operation of the company, you can make an unbelievable impact by hiring the right people for customer contact positions. This is where the image and culture of your start-up will be in contact with the outside world. This is where your style as the CEO will be reflected and duplicated for your customers. Many companies require personality testing when looking for customer-contact employees. While I’m not a big fan of categorizing people into neat psychological cubbyholes, this is one area where I would consider making an exception. During the interview process, you want to hear phrases like, “I love working with people,” “I’m calm under fire” and “I like to help others in developing solutions.” A few key recommendations to take into account when hiring employee number 1, 2, and 3:

• Hire smart, not fast.
• Hire complimentary personality types to yours as the founder/CEO.
• Hire applicants comfortable with flexible job descriptions.
• Hire the rookie if you are too tight on compensation to compete in the job market for more expensive, experienced veterans.
• Hire the veteran if they are an excellent fit with your specific needs, and they have the passion to work for a start-up (many veterans do not, find this out before you hire!).
• Offer equity in the company to make up for less financial compensation and more upside if the business succeeds (make sure this is earned out on a monthly basis over two years, after an initial 90 day probation period).
• If they touch the customer, they are your brand. Make sure they are a fit with the company culture.
• If they are not the fit you need, move on quickly and find another person that will help your business thrive.

Never forget that while products and services are sold to generate revenue, it’s the people that make it happen!

Michael Salogga is Business Development Manager for Carson City as well as the Business Counselor for the Nevada Small Business Development Center. He can be reached at MSalogga@carson.org