This is the second post in my Scylla and Charybdis series on why startups are quite so hard. Up today: hiring. Here you can go wrong by hiring too fast but also by hiring too slow.
The first problem of hiring too fast is fairly obvious. You wind up spending money too quickly. For most Internet startups payroll is the biggest fixed expense and it is far easier to hire than to fire, which winds up being a problem if raising money turns out to be harder than expected. But there are also more subtle problems with hiring too fast. In particular, companies that hire too fast tend to do so by dropping their quality standards which means they wind up with teams that are not as effective as they could be. Even worse is when companies hire too fast by not paying attention to company culture or hiring “mercenaries.” Teams built that way tend to have a poor work environment with high turnover show very little resilience when encountering a speed bump.
But what about hiring too slow? At first glance that seems like it would cause fewer problems. But for startups that have fast growing services not building up their teams is dangerous. First, customer service or uptime can deteriorate quickly if teams are overwhelmed. And if you fall behind it can take a lot of time to get back on top of things. Second, when organizations go into fire fighting mode strategic thinking gets harder if not impossible. Companies can miss big opportunities if they are just hanging on. Third, solving the hiring problem gets harder the more behind you get because everyone is so busy that taking the time to find and interview candidates seems impossible. Finally, hiring too slow then often flips into hiring too fast as companies over correct.
So how do you find the right pace of hiring? It all starts by being honest with yourself about the growth of your service. If you are overly optimistic you will hire too fast. Conversely if you are growing really fast make sure to take the time to project into the future so you know what scale your team will have to support in six months time. Having a solid hiring plan that’s tied to company growth and revisiting it frequently is critical.