How to shape your people strategy before you raise venture funding
We asked Alan Furley, CEO of ISL Recruitment, for his advice on shaping people strategy prior to raising investment. ISL specialises in building teams for high growth SMEs operating within the technology and engineering sectors:
I’ve spent most of my career working with technology companies, helping them grow by finding great people.
Often that growth is driven by VC investment, and every founder I’ve spoken to would nod their head at the line “our people are our greatest asset”. But the most successful ones tend to be those that have a plan for developing that key competitive advantage, rather than waiting for the funds to arrive and only then working out where to invest in their people strategy.
If you’ve got to the stage of seeking venture investment, I’m hoping you have the basics of your hiring process in place, like an agreed interview format, or job description templates. If you don’t and you need advice on this then I’m happy to help, but that isn’t what this is about.
This advice is based on what I’ve seen the best venture stage companies do to find great talent. So here’s what you can do to make an impact before you raise investment funds, rather than panicking when the money has arrived and you don’t know where to start to find the best people.
Be clear on your values
Up until now, you might have assembled a good team because you could rely on trusted people you’ve worked with and some high quality referrals. If you’re looking to scale your business this will probably change, and that means you must articulate to new hires what’s important to you, and them, when it comes to the culture you want.
Whether you’ve had your company values written on the walls from day one, or figured that it’s something that will wait until you have a “proper business”, now is the time to make sure everyone is aligned on the behaviours that will demonstrate the way people work in your business.
Be clear about your company’s values up front and how they translate into what you look for in new hires, and then how that shapes your job spec and interview criteria.
Be practical and specific with your company values. “Honesty” is a nice soundbite, but “we never lie to our customers” is much easier to contextualise.
Develop your future org chart
Like any strategy, you need to work out where you want to go and how you are going to get there.
The best way of doing that is to develop an organisational chart for 12 months and 36 months, to review against your structure today and help you work out where you will need to focus.
Start with roles and functions first, rather than simply mapping your current people. When you look at the requirements, don’t only think about permanent full-time employees. What gaps could be filled by contractors, part time workers, interns, or advisors?
Think about what would trigger those hires. For some, e.g. a VP Sales, you might decide an expected date to recruit, but know that if you found an ideal candidate, the business would benefit from having them on board sooner. For others, like a CFO, you might decide you only need them once you reach a certain milestone.
Once you’ve developed a short and medium term structure, this should help you identify who you can develop and who you’ll need to hire. It will also mean that you don’t jump onto an exciting candidate you come across next week without thinking about where they could fit.
Be comfortable with gaps
The chances are once you’ve planned your future organisational charts you’ll have some pretty substantial and senior gaps. That’s ok, and helps clarify why this is valuable planning to do now rather than leave till later or do reactively.
Investors will be willing to commit even if you don’t have a fully fledged team, but you will need to be able to explain what you need to hire for and, for the key and senior roles in particular, what’s important to you.
One thing I’ve seen work well for the most significant roles is to identify a couple of people currently doing these roles elsewhere. This could be people you’ve worked with previously, or know of by reputation, or have links to within your network. Grab a coffee with them and ask them about their route into the role and what they think has been key to their success.
As a minimum, you’ll learn a lot about how to hire successfully into a role like theirs. As a bonus, you could get some great referrals or even tempt them to join your journey!
Know your numbers
Any plan needs data, and making sure you find and develop great people is no different. Here are some key things to consider:
Salaries – probably a significant use of the funds that you are raising. So, make sure you have scoped what’s required. Have an idea of salary ranges for the roles you need and consider pensions and employee benefits. And don’t make the mistake I saw one company do in forgetting national insurance – that’s a big chunk of cash to have to take from another budget!
Metrics – if you’ve done some recruiting already then use that to help plan your future hires. I’d be looking at things like time to hire, to work out when you need campaigns to kick off. Or interviews per offer accepted, to help estimate the time your team will need to meet with candidates.
Options – most company at this stage will be offering equity to at least some of the people joining them, to improve their opportunity for reward and your confidence in alignment. What amount are you offering per role and how are you helping candidates understand the potential value and timescales to unlock them? One company I worked with offered each new hire 3 potential avenues – high salary / low options, low salary / high options, or somewhere in between. This can help to secure the best talent irrespective of their financial situation.
Shout about your employer brand
When you raise venture funds you’ll show up on many people’s radars; and even before the deal, the story you’re telling to raise investment will start making waves. To maximise your chances of turning that heightened awareness into hires, you need to spend time on your employer brand.
Far too often I see technology companies with careers sections that comprise a list of 3 job titles and an invite to email a generic address. Or worse, nothing on their website that even indicates they are hiring!
Across both your website and your social media, have some content that shows what life is like as an employee of your business. Don’t assume that the amazing technology you have will attract great talent – people want to know about your culture and your values, and what that means for them.
You might not push all this content out pre-raise, but leave time to film some videos, capture images of your team, or plan recruiting events.
Be deliberate about diversity
I’ll assume you know that diverse teams improve the chances of success. But when your early hires have come through friends, family and referrals, it’s unlikely that you will be able to scale this or achieve diversity in hiring without a planned effort.
For attracting diverse talent, you might want to check the language you’re using in your job adverts. Would running it through a gender decoding tool show that it’s full of masculine language and unlikely to appeal to half of the population? Can you engage with your local community to help promote it to underrepresented talent pools?
Once you’ve found the best talent, how do you move on from gut judgement and relying on people you know, to objectively assessing at scale? Reduce unconscious bias by aligning key stakeholders and discussing what good looks like for the capabilities you need, before you meet with people, not after.
These are tactical examples that might not come into play until you need to scale up your hiring plans. But, if you don’t make a plan for them now there’s a real risk that you snatch at the first or most obvious people you see, rather than have a plan for diverse hiring that stands firm and consistent even when pressure builds.
Plan to develop and retain, not just hire
A lot of the advice above relates to bringing new people on board, but clearly you’re not starting from scratch. Every new hire carries risk, and upgrading the capabilities of your current team shouldn’t be overlooked as a way to fill gaps.
Your existing team has got you here and you’ll want the majority to continue helping you on your journey, which means you will need to make a plan for development and retention.
Earlier this year, we produced a retention report for tech scaleups, surveying 250 candidates who had recently moved jobs. The number one reason they left? Poor culture. Closely followed by lack of development and progression. So, addressing these areas will help you retain your best people.
As you secure investment and bring new people on board, it’s undoubtable the look and feel of the organisation will change. That might not please everyone, but it doesn’t mean that it’s not for the better.
As part of your plan to scale the team, include your current team in conversations about the future organisational structure. Getting them involved in the process will distribute and share ownership and responsibility for the chosen approach, making a positive impact on retention
Not everyone will want to lead, and some that do won’t be capable. Talking to and reviewing your current team will help you to identify the gaps they could fill, and where they will need additional support. You’ll be able to plan the right learning resources to develop your employees and maximise their potential and your retention rates.
Be capable of moving quickly
The ability to move swiftly and in the right direction is valuable. My advice above is focused on the things that you can do before raising venture investment, that will enable you to hire quickly when the moment arrives.
Often what distinguishes the companies that create the most value from those that fall behind is their ability to hire and retain great talent at pace. It’s easy to burn runway on bad hires, so get these things right early and you’ll be able to invest confidently in building your greatest asset - your people.