In an overheated hiring environment, different companies compete with each other to attract the best talent. They need capable employees to take their million-dollar ideas and turn them into billion-dollar businesses. But it’s not easy as it seems and there are many roadblocks along the way. This is especially true for startups, who have little to no history to fall back on.
In this blog, let’s explore the recruiting challenges startups face and solutions to those.
Hiring Challenges For Startups
1. Tough Competition with Other Companies
Since most startups are brand new, there’s not much to help them stand out from other similar companies. That results in stiff competition between different companies that are at the same level. Additionally, there are several established and successful companies that are also on the lookout for the best hires in the market. It’s exceedingly difficult to match up to those companies and stand apart from the rest when you’ve just entered the game.
Another way competition is a challenge is when a smaller brand is looking for talent in a city where a large company is already present. In such a scenario, there is a limited number of talented professionals in that geographical region. They’ll be more disposed to work for the more established company. Unless the smaller company is willing to hire remote workers, they can find it tough to compete with a larger company for the best professionals in the area.
2. Deflecting Candidates
Usually, candidates look at more than one company at a time when they’re looking to get hired. They keep several proposals on the table and hold out for the best offer. That leads to many companies believing they’ve locked down a good worker for their role, only to be left high and dry later on. That makes it difficult for startups to close certain positions. It also consumes their resources as they have to relentlessly chase multiple candidates for the same position.
If the candidate you’re interviewing is especially talented at their job, there will be many other companies trying to hire them as well. That can make it difficult to keep your candidate interested in you, especially if you don’t have much to attract and retain them. Some other candidates will use your startup’s offer to get better deals from other companies. All these behaviours are difficult to prevent and are demotivating for startups initially. Frustration can even lead to making questionable hires.
3. Substandard Candidates
In an environment where many companies are fighting for the top recruits, those who can’t hold their own with the more aggressive companies will end up making poor hiring choices in the pressure of filling positions. You may hire people without the right expertise, experience, or skills. You could end up choosing those who don’t have the relevant skills, formal education, or workplace competencies. That could be a blow to your startup and hamper your growth in the long run.
It’s extremely important to understand the role you’re hiring for thoroughly. You must also be patient and cool-headed. Ensure your HR department is equipped with the knowledge and tools needed to effectively evaluate candidates. If you’re unable to find someone suitable, it’s better to wait until you come across the right person. Otherwise, your hiring choice would lead to opportunity costs for the company and lower morale in general.
4. High Salaries
Top candidates will normally seek a hefty raise when they’re joining a new company. There’s also a general idea that startups are flush with funding and can afford expensive hires. But many startups find it difficult to pay large amounts of money, especially initially. That’s true even when they have access to external funding. Many startups would rather invest in the quality of their products or other factors that would directly help increase their sales and propel them into a situation where they can hire big guns.
Larger companies tend to have bigger budgets and can afford to pay steep salaries. Smaller companies are left to come up with creative ways to compensate their employees. It’s still an ongoing debate as to what startup companies should offer potential employees to attract them. Benefits and other non-cash incentives, such as ESOPs, can surely persuade candidates to work for a company if they think it’s worth their time in the long run. Candidates will be willing to invest their time and talent into a company they feel will help them reap the most rewards.
5. Brand Reputation
The most obvious challenge is that smaller companies don’t have much in the way of brand recall or prestige. Therefore, they can find it difficult to compete with other brands that have bigger employer brands. It can be difficult to compete with brands that have famous investors backing them, or well-known CEOs, or people endorsing their products. That can hamper many new companies in the initial stages and keep them confused as to how to attract talent.
This can be a hiring impediment even if you’re offering better work conditions and more challenging work. Candidates may be attracted to the prospect of having a famous name on their resumes. That would make future projects easier for them to access. Thus, startups have to find an attractive enough way to convince candidates that choosing your company would be more beneficial for them than anything else. Something that looks good in the bigger picture would help.
1. Be Open To Hiring Remote Teams
Hiring remotely can help defeat the problem of heavy local competition. It’ll also widen your hiring pool which will increase your chances of finding a good candidate. Today, there is ample infrastructure available to make remote hiring a practical solution. Many companies are adopting a hybrid model so that they have access to talented people across the globe. That will also help you understand your industry on a larger scale, which can be helpful for the future.
2. Understand The Position Your Hiring For
To avoid bad hires and increase your reputation as a hub of top talent, ensure you completely understand the positions you’re hiring for. Gain a deeper understanding of their requirements, both in terms of soft skills and technical abilities. Then ensure you hire people who fit-in your requirements and have both the skills and competencies needed to do the job well. If you have a powerful team, other candidates will be drawn to you as they would want to work with and learn from the brightest minds in the industry.
3. Highlight What Makes Your Company Special
Does your company have a great culture? Are your products innovative or potentially path-breaking? Whatever your USP is, make sure you spell it out as much as possible. Whether it’s in your hiring advertisements, JDs on various websites, or even in your introductory speech during an interview. Mention what sets you apart from your competitors. That will make your candidate want to be a part of your culture. Ensure you make your startup sound warm and welcoming, as well as special.
4. Create A Robust ESOP Strategy
Finally, you must create a well-thought-out and expertly planned ESOP strategy. ESOPs are one of the most attractive benefits for candidates today. It makes them feel like their efforts will be remunerated beyond their salaries. They’ll want to do their very best in their work as they will directly benefit from them. It gives them a sense of ownership and accountability. ESOPs are a great way to tell your candidates that you’re a company that values them and wants them to feel right at home, as they too will have stakes in the growth of the company.
By understanding these challenges and solving them with the above tips, you should be able to be a magnet for the best minds out there. Talk to us today to know how ESOPs can help you hire, engage, and retain the talent you need.