Despite the challenges of the pandemic, start-up businesses are experiencing unprecedented growth. Global venture capital funding hit a record high of $160 billion in the third quarter of 2021.
This will be music to the ears of anyone in the early stages of business growth, but with increased investment comes increased expectation, and with rapid growth comes risk. Scale up too fast, and your company could incur reputational damage because your product lacks its usual quality or your cashflow will not be able to meet demand.
The natural reaction might be to hire more people fast, but this process must be managed carefully. Jason Crawford, founder of now defunct database company Fieldbook, admitted that, despite having successfully hired new starters for years, he was “blindsided” by the difficulty of hiring for a fast-growing tech start-up. Ultimately, the company’s inability to make key hires was its downfall. “At a time when every engineer wanted to work on AI, self-driving cars or cryptocurrencies, a SaaS start-up with modest, sporadic growth wasn’t very attractive,” he said.
Research by analyst company CB Insights into why start-ups fail found that 14% of businesses blamed not having the right team in place, while 7% attributed failure to disharmony among the team. Tech companies face the additional challenge of a tough labour market – according to 2021 research by e-learning company Skillsoft, 75% of IT decision-makers worldwide face skills gaps in their departments, a 145% increase since 2016.
In this environment, tech companies face a dual challenge: they need to both meet investors’ and customers' high expectations and hire the key people to make that happen. Here are five ways to approach workforce planning in a high-growth market.
Build your growth support team
It goes without saying that you will have a long list of programmers and developers on your recruitment wish list, but it is important to consider who will provide business growth behind the scenes.
Many high-growth companies thrive on the energy of an entrepreneurial founder, but also opt to bring in a chief operating officer who will ensure the engine room of the business runs smoothly, for example. Bringing in experienced hires, even on an interim basis, helps find solutions to potential problems and mitigate risk.
Other key roles, if not already in place, should be a head of HR who has experience of talent attraction and acquisition, and an experienced chief financial officer who can make sure investments and revenues are spent effectively.
Embrace new ways of working
As a start-up company, it may not be possible to outbid your competitors when it comes to salaries, so think about what else your business has to offer. The pandemic has demonstrated that many employees can work from anywhere, or at least avoid commuting every single day. Accountancy firm Grant Thornton found that 51% of employees in the US would give up a salary increase for more flexibility in when and where they work. Offering employees some measure of autonomy over how they work could be the differentiator you need to attract the best-qualified people. Furthermore, requiring fewer people to work in a physical office could also lower running costs in those vital first years.
Bring interims on board
Far from a knee-jerk reaction to a shortage of candidates, bringing in temporary specialists can play a central role in a start-up’s workforce planning strategy. Interim experts can bring niche skills to your business and because they move around often, they can offer insights and experience from other businesses. Interim workers can be hired on a project-by-project basis, or for a specified period of time until the company reaches a certain milestone.
But while using interim talent can bring flexibility and the right skills at the right moment, do not neglect the next stage. Think about ways your interim workforce can pass on skills and experience as you build more permanent teams.
Think about how your culture will evolve
When a company grows rapidly, it can be easy for managers to recruit in their own image or rely on their personal networks to build their teams. While this is convenient, it may limit your ability to attract and retain candidates further down the line, particularly as recruits increasingly look for employers who value diversity and inclusion. Embedding inclusion practices from the start avoids the temptation to ‘bolt-on’ diversity initiatives after a culture has already set in.
Fast growth can also mean a dilution of the culture that inspired the success of the business in the first place, particularly if that growth has come through acquisition. Where there have been sudden and major changes, employees can become disillusioned and more likely to leave. Hiring professionals with experience of change management could help your business navigate this storm.
Have one eye on the horizon
It is tempting to focus on just getting to the end of the week when you are in the thick of growth, particularly in the agile and fast-moving world of tech. Strategic workforce planning will help your organisation respond more quickly when new disruptors join the market or you need to launch a product or service at speed. Analytics can help identify any gaps in your recruitment pipeline and pinpoint your skills needs for the future. And working with an engaged recruitment partner will help you respond to those needs.
We have been working with a client over the past 12 months to support multiple business areas after initially supporting their test function. We were not the sole supplier, however, due to unforeseen circumstances the client lost around a third of their contract resource. Due to the relationships we have built over the last year we were asked to back fill 16 roles with immediate effect.
Speed and quality were at the forefront of the requirement to reduce any impact on delivery. A team job spec call was arranged with the hiring managers and five consultants. Due to the level of service we have provided over the last year and to reduce any delays, we were asked to put forward candidates based on recommendations as there wasn’t any time for interviews. Within 48 hours we had submitted 16 candidates across five different IT skill sets and secured them all with an immediate start.
Due to the efficiency and effectiveness of the team, we were able to move at a pace that the client needed to ensure they can continue with the delivery of the project.
The tech sector has seen remarkable levels of investment in the past year, but as financial backers start to look for signs of progress, having the right team and culture in place is more important than ever.
For help finding the right team at the right time, contact us today!