San Diego is quickly being recognized as an up-and-coming hub for tech startups, rivaling the long-standing reputation of Silicon Valley as the tech mecca of the US. America’s Finest City was recently listed by Mashable.com as one of 4 emerging tech hubs; it’s broadcasting its new position in the startup community with campaigns such as San Diego Startup Week, which unites entrepreneurs throughout San Diego at a series of events aimed at promoting the local innovation economy. This year, Underground Elephant was proud to sponsor SDSW 2016 (which took place June 13 – June 17), and was involved in activities throughout the week, including a panel discussion on hiring to expand beyond the founding team. If you are a business owner looking to grow your own team, here are a few tips to help you grow in San Diego’s startup culture.
As the founding member of a startup, you may be launching a business for the first time, and likely have not yet acquired all of the business expertise that it takes to operate and grow a company seamlessly. Although increasing the size of your staff may provide you with more resources for increased production, there are countless questions you need to consider as your business begins to scale: What essential skills, knowledge, and abilities are needed to make your business operate more efficiently? What will the hiring process look like? How will new employees be trained? What benefits will you provide? These variables are frequently complicated further by complex state and federal labor regulations, which change frequently and are often ambiguous or difficult to understand.
So what can you and your business, with limited resources, do to mitigate risk as you grow your team? One option is to utilize a business consultant or consulting service to help you navigate some of the legal and logistical challenges that come with hiring. Consultants can help you establish fair and legal hiring practices, manage your payroll and benefits administration, and resolve employee issues, often for a flat fee. Outsourcing your HR can save you from the time and hassle of administrative work, without requiring you to hire, train, and payroll an in-house HR expert. Additionally, using an outsourced HR provider will help you protect your business from risk, and provide you with the expertise needed to manage your HR operations.
Outsourcing HR may be less-expensive than employing a full-time HR staff, but if this option is still too costly, or you prefer to run your HR in-house, you may want to consider using other resources and services for regular or ad-hoc support. For example, CalChamber’s HR California offers members access to a variety of HR resources, including a labor law hotline, forms and templates, training materials, etc., all for an annual membership fee of less than $1,000. Some vendors or brokers may even provide a similar solution for free. For instance, Underground Elephant’s HR team and business owners enjoy complimentary access to a service called ThinkHR, which partners with insurance brokers to provide free or discounted HR compliance solutions to employers. ThinkHR proved to be a great resource to my team and the company in recent months as we grew to over 100 employees, and prepared to face novel challenges as a newly-defined “large employer.”
For every job, there is an ideal candidate who meets all of the must-have, should-have, and nice-to-have criteria, and wants to be paid exactly what the employer is willing to offer. In the recruitment world, we refer to these candidates as “Purple Squirrels” because they are incredibly difficult (if not impossible) to find. Take, for example, the following sample job description: “Seeking seasoned sales professional with 5+ years of sales experience and an MBA for position as Jr. Sales Associate. Will be expected to work 50+ hours a week. Salary is $30,000/year.” Sure, finding an experienced sales professional with a Master’s degree is not an impossible feat. But it is unrealistic to expect you’ll find one to take an entry-level job for $30,000/year at a company they’ve never heard of. You could invest all of your time and resources in pursuit of this candidate, and still walk away empty-handed, having lost out on valuable production time.
Growing businesses with a core team in place should instead establish realistic expectations and focus on finding future leaders. Look for candidates with potential to become core members in the future, rather than spending all of your time trying to “woo” industry leaders away from their established posts. Many candidates who pursue jobs at startup companies have an inherent sense of passion, ownership, ambition, and adaptability, all of which are invaluable to a company on the rise. Don’t ignore these qualities simply because someone doesn’t meet your wishlist to a “T”. You can teach someone to sell a product, to balance a ledger, or even to write code – but you can’t teach them to want to do any of this. By embracing this credo, you can save yourself, your team, and your business from losing countless valuable hours to the recruitment process.
Once you have your core team in place, try engaging or incentivizing the group to bring in personal referrals. Current employees are a great resource for identifying talent. They know what it takes to be successful at the company, and can recommend others from their personal and professional networks who meet those qualifications. Additionally, candidates who are referred by existing employees are more likely than outside applicants to have a realistic understanding of the company, the work environment, and the nature of the job, which results in a higher likelihood of retention for those candidates if hired.
Underground Elephant has successfully engaged many of its employees in the referral process, with positive results. In 2015, 38% of external hires were referred by UE employees. Additionally, the retention rate for these employees is 10% higher than for employees who applied by other means.
When your company reaches 50 or more employees, and you have plans for continued expansion, you may want to consider hiring a dedicated HR professional. Bringing someone in-house to handle all of your HR responsibilities can help you and your startup to make hires more quickly, minimize risk, promote employee development, optimize processes, and unburden executives of administrative HR work.
Starting a business is no easy task, and growing one can be just as difficult. However, if you take advantage of available resources and maintain realistic expectations throughout the hiring process, you can help your business grow from a 2-person startup to a 200-person company in a number of years.