December 03, 2007

WHO DO I HIRE? by Sanjay Anandaram

The young founder-CEO of a young but profitable Rs 30 crore company believed it should capitalize on what it saw as immense market opportunity. He believed his company should and could grow by tem times to Rs 300 crore over the next 5 years. He wanted his company to be recognized as the number one player in its area by far on various parameters. Finance wasn’t a constraint as the company was generating sufficient cash flows with external funding being a viable option as well. The issue lay in getting management talent into a largely unknown company and in motivating them to enough to help generate and manage the incredible growth envisaged by the CEO. The company was now run by young but very bright and talented people.

Would it be able to attract and manage executives that would be senior to them in age and experience? What kind of a person should the CEO hire and what should be offered to such a person? Should an external recruiter be hired to find the talent or should personal connections and networks be leveraged to the maximum extent?

Lots of young and startup companies face these and sundry other challenges relating to recruitment as they have to deal with growth. While there’s no general formula that fits all, it is useful to keep the following in mind:

a) No one can communicate the vision and goal of the company better than the founders. It is their passion, desire, goals and commitment to the business, and its culture and value systems that need communication. Outsourcing this crucial activity to an external agency is a poor substitute. The top hires in all young companies that have gone on to become great companies have been personally recruited by the founders. Usage of personal networks also acts as a natural filter for appropriate candidates to emerge.

b) People who have spent “too much” time in a large corporation are generally “spoiled” from the standpoint of a startup. Functions are clearly defined, roles are unambiguous, budgets are clearly allocated, and processes are defined. The system is designed to ensure high predictability. On the other hand, a startup has none of these. Usually, the founders have built the business largely through common-sense management, entrepreneurial zeal and seat-of-the-pants decision making. But the kind of senior executive who will shine in a startup is one who can straddle both the worlds of entrepreneurial chaos and organizational structure. One who’s comfortable with ambiguity and impromptu decision making but who’s also a catalyst for the needed change towards structure and planning. Someone who will make things happen without being told; Who will forge a road ahead where there’s no clear path. Who will not be dependent on armies of support staff. Someone who believes in the potential of the company and more importantly in his own ability to create value. Someone who’s confident enough to deal with any downside risk that’s inherent in any young company. Not a bureaucrat but someone with an entrepreneurial mindset.

c) Executives who have entrepreneurial mindsets are motivated by the challenge to create their own legacy. To be compensated by a mix of short term and long term pay-offs by way of say, stock price appreciation through the creation of a valuable business. They are not excited by brandishing their company provided credit cards at the local club while sitting on company provided furniture while vacationing on company’s expense. They are people who wish to earn the right to enjoying all this via the sheer thrill of being part of a team. They are not people who enjoy all this through a sense of entitlement.

d) How does the young founder manage older and more experienced executives? Herein lies the mettle of the founder. The ability to let go of certain decisions, of being professional, of not micro-managing, of giving freedom to the executive, of being aware that the organization will change, of managing aspirations of other employees, of using the opportunity to learn while being clear about the non-negotiables such as ethics and customer service. Clear communication and expectations from both parties are critical.

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.

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