Hooked on Hiring for the NOW - Issue 42
"We'll just sort this out later." - the common refrain of many first-time founders.
Without a doubt, your startup isn't just scaling — it's evolving. Not every team member may be equipped or inclined towards a long-term journey with the company. Hiring for the Now isn't about predicting who will advance in your company. Instead, it's about managing leadership titles in startups, balancing immediate needs with future growth, and creating a plan for each team member to help your company reach the next funding milestone - a key benchmark for any startup.
What's going on?
As a startup founder making your first hires, focusing on the present is vital. You need individuals armed with a 'can-do' attitude, eager to dive in and get the right things done. However, this method of team building can sometimes lead to shortsightedness, planting some ticking 'people expansion' time bombs in your startup's path. We've highlighted three scenarios you should stay mindful of as you make your first 10-20 key hires and beyond:
De Facto “Owner” Who Tops Out. You hire individual contributors who are full of energy, ready to tackle any task. These individuals become informal leaders, handling different areas and solving problems efficiently. They are great at what they do but often lack experience in managing an entire function, and you fail to realize they've topped out. Despite their will to succeed, their lack of experience can eventually lead to delays and hinder progress.
“Heads of” Who Can’t Reach VP. You hire your first official "Head of _________" [Engineering, Product, Sales, Marketing, fill in the blank], and they're doing excellent work as the business grows to 10M or even 15M. However, you're starting to see the cracks (assuming you're fortunate enough to have functional knowledge about what high-quality work looks like — sometimes, this can go unnoticed for a long time) and it's becoming more apparent that there's no clear path to a "true" VP role for them. The big issue is, you've never discussed such a scenario with this person or laid the groundwork for what change might look like in the event that they can no longer handle the progression of their job responsibilities.
Title inflation. You can end up handing out big titles (titles are cheap, right? Wrong!), particularly when you haven't spent time identifying the business problems that need solving to hit the next milestone, the reality of the work, your hiring philosophy in assigning titles, or your compensation philosophy. This often happens when hiring your first “head of” or director-level role, and you inflate the title to VP under pressure to secure the hire and/or rationalize compensation. Or perhaps, you haven't recognized the implications of a candidate who demands a big title at an early-stage startup (hint: there may be a motivational misalignment). Consequently, you could end up with someone who doesn’t truly want to do the hands-on work, all the while setting a titling precedent and/or compensation inequity - an action that is difficult to reverse, especially if title inflation has spread across the company haphazardly.
Why does it matter?
Firefighting is not a strategy. You might be thinking, "We're going to outgrow certain people, it's part and parcel of expansion. I'll deal with it when it happens." You already know that some people will fail to scale, so plan for it. There are specific strategies you can employ now to prevent the chaos that arises from title and expectation misalignment. You can avoid future confusion and conflicts through clear communication, precise expectation setting, and honest assessment of outcomes. Granted, these conversations can be difficult and might cause a "rock star" candidate to back out or a great performer to leave prematurely, but a direct approach ensures both parties are aligned and working towards the best possible outcome.
What do others think?
“There’s often friction in the business with the expansion of responsibilities. People either can’t or don’t necessarily want to expand their scope. The company literally starts outgrowing early leaders. In those moments you have to ask who do we need now? People are reapplying for the job in your head and you’re coming to the conclusion that they aren’t a fit for the next milestone.” — Justin Beals, CEO and Founder at StrikeGraph
“If you find yourself saying I’ll will fix it later, that is a major red flag that you need to double-click. This doesn’t mean you’ll never make a calculated risk but how long is your “we’ll fix this later” list? The longer the list, the more debt you’re accumulating and that slows business growth.” — Mikaela Kiner, Founder and CEO at Reverb“Clarity about what the future might bring may scare some people away but it’s the best way to start off the relationship. You’re hiring someone to do the job now and there’s no guarantee that this job will be the best fit for them or for the business as the company scales. If you hire someone who is ambitious and really wants it, have the conversation up front making clear that you’re betting on them, you’ll do all you can to help them grow, but with the understanding that down the line it might work out differently.” — Ted Kummert, Venture Partner at Madrona, former Chief Product Officer at UiPath
What do we think?
Growth isn't always vertical. Many individuals can make deep and meaningful impact as they develop skills horizontally across the business or delve deeper into their area of expertise. Nurturing this type of internal growth is just as important as recruiting your next external leader. It's also crucial to plan for scenarios where, despite the best intentions and efforts, someone may need to move on or move under. When you decide to hire over someone, make sure you're confident in your decision. Contemplate scripting or role-playing the conversation with a trusted peer. A lack of conviction can only lead to second-guessing and "correcting," which creates a slippery slope that is hard to climb back up as a CEO.
Clear communication is key. Your role-titling decisions will never be perfect, and changes will likely be necessary as your business expands. That's where clear and direct communication becomes vital. Raise these issues openly with your team to foster a shared understanding. Ensure everyone knows that titles reflect the company's current stage and can be flexibly adjusted as the company evolves and scales.
What do YOU think?
TAKE ACTION
Hiring for the Now
First principles thinking will keep you and your team accountable and consistent with hiring, compensation, organizational, and titling decisions. Without an articulated point of view, it’s easy to cut corners and tell yourself you’ll fix it later.
Identify the business need in terms of next big milestone. Scope the role. Identify the problem to solve and the work that needs to be done now to solve that problem to ensure you target the right candidate profile (along with an accurate title).
Calibrate. You don’t know what you don’t know. If you’ve never hired a "head of" or VP, it’s important to take the time to calibrate what great looks like in the market. Don’t guess. Leverage your board and advisors to connect you with great leaders who truly operate at this level (or evolved in the past) so you can learn what great looks like. We went deep on this in Issue 25.
Align titles with responsibilities. Assign a title that aligns with the tasks and responsibilities that a team member currently holds. For instance, if you hired someone to oversee social media, the title "Social Media Specialist" would suit better than "Head of Media". The latter title suggests a range of other responsibilities beyond the actual work at hand. Striking a balance between showing recognition and matching with the responsibilities is crucial. Remember, an honest title can cultivate a positive working atmosphere, encouraging your team to grow within their roles.
Transitional titles can be a great solution to acknowledge your team members' place in the startup while keeping the titles grounded in reality. Instead of jumping directly to 'head' titles, consider ones like "Lead," "Senior," or "Manager." These titles are still clearly aligned with leadership responsibilities, but also signal the employee's evolving role as your startup grows.
Be conservative. It’s much easier to promote someone who is killing it 6-12 months in than it is to overshoot and claw-back title or compensation. Unless you know that scale is inevitable (hiring 10s of people+ this year and next and are hitting an inflection point) and are confident that it’s a VP scope, play it conservative and prove it out.
Don't inflate titles to rationalize compensation. Instead of inflating the title or creating gratuitos dotted lines to you as a way to justify a bigger salary range, consider non-monetary motivators. These include greater flexibility with working hours or opportunities for personal growth and education.
Consider being title agnostic in the early stages where every employee simply a "member of staff". This helps to create a versatile and dynamic work environment where everyone pulls their weight, regardless of whether their title is 'Head of' or not. This approach helps keep the focus on delivering results and growing the startup, rather than getting caught up in hierarchical structures or duties based on titles.
Plan for titles to evolve over time. As your startup grows, the roles and responsibilities within your company will expand and change, as should job titles. It's important to establish a culture where change is embraced rather than feared or resisted. Overly focusing on titles can create a rigid environment, which is usually counterproductive in a startup.
Encourage open dialogue about roles and expectations. Communication is key when it comes to conceptions about roles and titles. Encourage an open dialogue around responsibilities, career trajectories, and expectations from the onset. By fostering a candid conversation about these issues, potential misunderstandings or misconceptions can be effectively headed off.
Understand candidate motives. If a candidate is hell-bent on a certain title, dig into what’s driving their motivations early in the process. Sometimes it’s less about title or money, and more about having a seat at the table or validating the value of the role in your organization.
ABC - Always be Closing. Have “pre-closing” conversations with candidates early and often to ensure title, job scope and compensation alignment so you don’t find yourself at offer stage with a bigger problem to unravel.
Managing and Developing
Set expectations; communicate frequently. Once you've hired early “owners” or first leaders, get ahead of growth conversations. It’s important to not crush people’s hopes and dreams but also set the reality. Tell them Yes, you want to see them reach their full potential but if we find ourselves at a place where capabilities can’t meet the needs of the business, you’ll iterate on it together, planfully. This isn’t a one and done talk — ongoing transparency will yield better outcomes by allowing you and them to plan ahead for the direction things are heading. It’s important to set clear goals and not avoid tough conversations that need to happen if/when someone tops out.
Measure performance. No news is good news, right? Wrong, again. When people don't know exactly how or if they are meeting expectations, they may assume everything is going smoothly. An effective way to identify and guide any necessary corrections is by monitoring and discussing outcomes. This method reduces misalignment between your evaluation of a person's performance — along with their potential for promotion — and their perception of the situation.
Give space, but the show must go on. It is a disappointing experience for someone to be hired over. Remember it takes time for someone to transition through an experience. As long as someone isn’t being disruptive to the business, it’s okay. Give it time and check in but also understand that business does go on. If on the other hand unhealthy disruption ensues, do not let the situation fester.
Don’t reorg or placate. When you’ve made the decision to hire over someone, don’t create weird compromises in an effort to “fix” the situation. Things like giving a different title or a dotted line to keep someone part of the leadership team (unless it's a founder/co-founder you are hiring over, which is an entirely different conversation). And don't give this person veto power over who their next boss should be, which means don't put them on decision-making interview loops.
Tools, Resources, Events
To learn more about hiring for the next funding milestone → Hooked on Solving Sales Hiring Mysteries - Issue 41
To learn more about hiring leaders who can scale down to scale up → Startup Series - Hiring Early Leadership Roles, by Audra Aulabaugh
Misalignment is the Root of All Evil in Recruiting - by, John Vlastelica
Hooked on Leadership Role Calibration - Issue 25
About Madrona
Madrona is a venture capital firm that helps entrepreneurs build companies of consequence.
Hooked, by Madrona is a series about startup talent, careers and founder stories, interpreted by a curious and skeptical VC + playbooks, tools and templates…and other stuff company builders need to know about how to hire.
Who creates Hooked?
The Talent Team @ Madrona Venture Group
Shannon Anderson, Executive Talent Networks and Talent Director
Audra Aulabaugh, Company Builder and Talent Manager
Matt Witt, Company Builder and Talent Manager