The Main Recruitment Challenges Companies Often Face During the Scaling Phase
Many corporations started with a team of a few people — and often in a garage. One of the brightest examples is the first Google office, which was set up in the garage of Susan Wojcicki who is the CEO of YouTube now. The team worked there for four months. Expanding from two to eight people, the startup rented an office in Palo Alto. Amazon headquarters was also once a garage attached to a three-bedroom house. These are prime examples of companies that were born from an idea, and successfully scaled up, and became one of the most recognizable in the world.
Entrepreneur, venture capitalist, and consultant Elad Gil, who worked with Airbnb, Twitter, Google, Stripe, and Square during their transformation from small businesses to global brands, in his High Growth Handbook wrote that one of the biggest challenges a company faces as it scales is overhauling its hiring and onboarding processes. And it doesn’t matter if you’re growing from 50 to 150 people or are at the point where you hire 500 people every year.
CEO and CTO of ITExpert, Stas Shihov, and Nicolas Klestov, have shared all you need to know about what recruitment problems businesses face at the scaling stage. We are also excited to share some tips to help improve recruiting processes. ITExpert has been helping various IT companies and technical departments grow and develop for seven years now. We have helped companies such as Ring, Nextiva, and Raiffeisen Bank expand their team at the scaling stage.
What the Heck Is Business Scaling
Sometimes companies need to scale quickly. For example, after receiving a new round of investments, entering new markets, successfully launching or developing new MVP/product features.
Scaling allows a firm to grow quickly, and the proceeds can be reinvested for even greater scale and profitability. Suppose the sales department in a startup needs to attract new customers. Recruiting five salespeople will indicate the stage of growth. At the same time, the cost of hiring new sales managers can compensate for the income received from new customers (depending on the characteristics of business processes in different companies).
Company life cycle chart:
A Typical Problem in Recruiting at the Stage of Company Scaling
It is at the scaling stage that most startups fail. According to a study by Harvard Business School professor Shikhar Ghosh, the bankruptcy rate of US companies five years after founding is over 50% and reaches over 70% after 10 years. One of the problems why companies close has to do with hiring mistakes.
“The most common case is that a company begins to grow rapidly while underestimating how many resources need to be allocated within the company to hire new specialists. The resources include not only financial one, but also the time of technical specialists required to conduct interviews, and select high-quality resumes. On the one hand, managers must unload internal specialists to participate in the hiring process. On the other hand, the firm is already overloaded with tasks that need to be performed.
Bottom line: the company cannot process the incoming flow of candidates, conduct the required number of interviews and make a decision on the applicants who fit the most. And the IT market is also arranged in such a way that candidates will not wait long.”
“Let’s consider in numbers how many person-hours a company needs to spend on hiring one new specialist. This usually requires:
Conduct 2–3 interviews (and often even more) lasting for an hour. These two interviews will involve 2–3 people. Accordingly, the company’s costs for conducting one full circle of interviews are 3 people, 2–3 hours each.
For successful recruitment, 6 to 8 rounds of interviews should be conducted. 8 cycles = 3 people for 2.5 hours — and so on eight times. Accordingly, companies need to spend 25–75 hours in total to hire one specialist.
If a company needs to hire five people per month, this figure will increase five times accordingly. In addition, the randomness of processes in the company complicates the process and stretches the time of hiring — and the mechanisms, as a rule, have not yet been established in all startups.”
Grow Your HR Brand and Create a Candidate Persona: Key Recruiting Tips for the Scaling Stage
Successful companies need a lot of employees at the stage of rapid growth. It is almost impossible to scale and do something new without increasing the staff. We’ve prepared tips that will help you to improve recruiting processes if you need to hire a lot and in a short time, as well as find strong IT talents.
1. Create a candidate persona
A candidate persona is an image of the ideal employee, including his career history, key technologies, interests, and soft skills. Tip: it must be changed as the company grows.
2. Contact a recruiting agency if you can’t handle the flow of incoming resumes on your own
Recruitment companies have a database of candidates, and knowledge and access to tools and services that will help to hire the right specialists on time and in large numbers at the scaling stage. This can be especially useful when you need to fill highly qualified and/or niche roles (for example, find Enterprise Architect specialists).
3. Optimize processes and implement ATS
Use specialized software to track the movement of candidates through the hiring funnel and automate recruiting processes (ATS) — for example, for:
- vacancies posting;
- resume screening;
- candidate evaluation;
- communication with candidates;
- interview planning.
17% of companies already use candidate management systems and other recruiting tools, and another 30% intend to implement them in 2022. According to Deloitte, recruiters spend 93% of their time on routine tasks that can be automated.
4. Build a corporate culture
Corporate culture is the unspoken rules in the company, which can be described with the phrase: “They have such a routine.” It is a tool for effective strategic business development and creation of the company’s image, as in the case of the world’s giants: Google, Meta, Apple, Amazon, Adobe. People not only want to buy products from these companies, but they also want to work on their team.
5. Build your HR brand
An HR brand is an image of a company in the minds of the target audience that defines it as an ideal workplace. Recognition of the company is formed from the style of communication, presentation of information, and visual content. The way the HR brand talks about itself makes the candidate understand what awaits him in the company, and whether your values and approaches to work match.
For companies at the scaling stage, it is critically important to work out the HR brand and actively promote it. This improves the quantity and quality/engagement of candidates who agree to consider the job. Otherwise, it will be difficult for the recruiting department to close many vacancies in a short time, as applicants are distrustful of little-known companies.
Tip: Building an HR brand is a long-term job. The first results will be in 6–9 months or even later.
6. Check the soft skills
Research shows that 46% of new hires fail in the workplace. Contrary to popular belief, this happens due to a low level of soft skills, not insufficient technical skills. Learning ability, emotional intelligence, and motivation are critical to success, especially in a rapidly growing company.
7. Embrace a DEI culture
DEI is an abbreviation that consists of the words:
In 2015, McKinsey published Why diversity matters. It said that companies with a more diverse ethnic and racial culture were 35% more productive than those with the national average demographics in the US. And according to a Forbes study, inclusive teams can generate 87% more alternative solutions.
How to Balance Between Hiring “Best of the Best”, Market Limits, and Product Deadlines
Only people turn ideas into successful businesses. Yes, Elon Musk is smart and talented, but he could not promote Tesla and SpaceX Starship alone. His team had cool specialists who helped with this. How to choose candidates who will make your business more successful and understand the limitations of the market, as well as whether compliance with corporate culture matters — the CEO and CTO of ITExpert told us.
“Priorities during scaling are still different. It does not matter what specialists know about complex algorithms, nuances of the framework, and it is not important whether they are “in love” with your product (or accepted a job offer simply because they want to make money).
Your priority is to release a working product on time. In this case, it’s important to hire people who want to develop, quickly acquire skills, offer new solutions and cope with the right tasks. It’s not about hiring leads or top performers that entire departments will look up to, it’s about finding hands that can work consistently and proactively.”
“The talent market isn’t limitless — depending on the role and job requirements, you can generate from 2 to 40 candidates per week. This pace can last for several months. The market, one way or another, after some time will begin to dry up, there will be fewer and fewer candidates.
Specialists of an IT recruiting agency and experienced recruiters will certainly advise you on the potential of the candidate market based on the initial data: how many people need to be hired by the company, in what timeframe, what are the requirements for the vacancy, how competitive is the company in the market and what salary does it offer. It is important to take this data into account during the company’s growth.”
How a Recruitment Agency Can Help at the Scaling Stage
Corporations like Amazon and Google are showing that scaling recruiting is a real scenario. Why, at the stage of rapid growth, is it worth contacting an agency, and not relying on internal resources only?
“In the stages of rapid growth, it is almost impossible to close the need for hiring by internal recruiters. And hiring recruiters for temporary stages of rapid growth is also not a very appropriate decision.
At the same time, a recruiting agency has a large number of recruiters who will take on all hiring tasks to close the required number of vacancies on time.
What’s important: a recruiting agency is not a magic pill. Company executives will still need to participate in the recruitment process. After hiring the right IT specialists, they will onboard newcomers, involve them in work, set tasks and explain the intricacies of work, etc.”