How do you build a high performing team?

15 Nov 2018

By Octopus Ventures

Know thyself

Recruitment demands that you know your own business to the core. Your recruitment briefs should be blueprints of your corporate DNA. Know yourself – your values, your mission, your objectives – inside out and you’ll know exactly what to look for in your next hire.

By your actions…

How you hire is almost as important as who you hire. Every stage of the recruiting process communicates something about your business to the outside world. Building the right team is the goal, but how you go about it speaks volumes as to who you are as a company.

Some golden rules

You never outgrow the use of both external and internal recruiters, no matter your size. You should be clear of your reasons (explained below) of using one over the other.

Just as you evaluate recruiters, recruiters evaluate your company. They produce the best results for the clients who provide an intriguing value proposition for the prospective employee. For example, when a Seed stage company reaches out to a recruiter for an executive role, she may ask herself, “why can’t this company attract good talent at such an early stage?”

Developing great internal recruiting resources is crucial, at any stage. When working with external providers, committing the time, money, and effort towards defining the position you want and how it fits strategically in your company’s plans is essential to getting good results.

“ Every interviewer will bring certain variables and biases, so there have to be a core set of principles and values that the company believes that must be brought into the interview process” – Bec Sankauskas, Bexouce

When should you keep it internal?

The general rule of thumb seems to be: use internal recruiting as much as you possibly can, at every step of the recruiting value chain.

Here’s why:

• Soliciting interviews and designing the recruiting process: Internal recruiters understand your company’s people needs as well as its broader strategic goals. They are committed to these goals every work day, more than any external recruiter can claim. As such, they are best positioned to design an interview process that truly reflects your company’s values and strategy. Equally, they can best assess whether the choice to interview or the language used to describe advertised positions aligns with your company’s values.

• Conducting the interviews and communicating with candidates: Just as crucial is the task of communicating your company’s identity and value to a prospective employee. As Shelly Duong from Mochi HR Consulting said, “internal recruiters best represent the company and the culture [to prospective employees].” A candidate is interviewing your company just as you are interviewing the candidate: using your people, who can best communicate and embody the company’s ethos, can be key.

• Negotiating with potential employees: There is value in having a third-party objectively present to negotiate an offer package. But this value rarely supersedes that of a team member articulating why a candidate should join your team. By removing one link in the negotiation chain, it allows the candidate and the negotiator to flexibly (and inexpensively) respond to counters or adjust the offer package as necessary.

Why else might you choose to use internal capacity?

When internal capacity is not exhausted:

• Rule of Thumb #1: The maximum capacity an internal recruiter can handle is about 10-15 active job descriptions per recruiter (managing recruiting responsibilities full-time). Anything beyond this number typically becomes unwieldy and should therefore be outsourced to external recruiting firms. Failing to do this might risk a drop off in quality of recruiting.

When recruiting for non-senior roles:

• For recruiting senior roles, the demands are such that the process might need to be confidential, technical or demanding beyond the internal team’s competency, or might require access to niche networks of executive candidates. In such cases, relying on external search firms is likely a better course of action.

• Given this point, prioritize using internal capacity to conduct searches for positions other than director or senior executive roles.

In times of slow employee growth (short to medium-term):

• Rule of Thumb #2: Use an internal capacity if you have conservative growth plans in the short to medium term. If your company wishes to increase by greater than 50 employees in a 12 to 18-month period, you would need at least one internal employee dedicated full-time to recruiting, perhaps more.

How should you utilize your internal recruiting team most effectively?

Ideally, everyone in your company should be involved in the recruiting effort in some way:

• Recruiting the best talent is of direct strategic value to any company, especially smaller growing companies. Some teammates can participate directly, others indirectly, such as by recommending candidates, preparing recruiting material, or creating a welcoming interviewing environment.

• The founders/CEO should participate directly on the recruiting effort. At least 10-20% of every founder’s time should be spent on recruiting.

Do not spend too much time burning internal resources before moving to an external recruiter:

• Limit the amount of time you give your team to determine whether it can conduct a successful search internally. Give your staff about 2-3 weeks to search in the market, after which they should determine if they’d need external help.

• If internal capacity is limited, you can pursue a number of hybrid internal-external arrangements:

Alternative 1: Pairing limited internal capacity with the work of research firms that map the market and find a list of candidates based on your criteria. These can be valuable support for a fraction of the price of a recruiter. Some foreign research firms can cost as little as $20/hour.

Alternative 2: Employing a part-time recruiter – many can be hired via agencies – can alleviate the burden.

“ If your employees aren’t inviting their friends and personal networks to apply for open positions, that might be a reflection of their generally negative feelings about your company.” – Sebastyan Zaborowski, Semmle

“ No matter what your stage, about 80% of the roles in your company should be filled by internal capacity… doing something so key or strategic to your company should not be done by someone that doesn’t care about the outcome as much as you would.” – Will Champagne, Ivy Scale

When should you look for external recruiters?

Look to external search firms when recruiting roles of special quality, which fall outside of your internal capabilities. Examples of special qualities might be a role that is senior, technical, difficult to identify candidates for, or that requires a confidential search.

These aren’t always senior roles. For example, Executive Assistant roles can result in an overwhelming amount of resumes, so finding the right candidate might justify using an external recruiter over limited internal capacity.

Who should you choose as an external recruiter?

Choose the recruiter best connected to the type of person you want to recruit. Always ask: Who has the relationships with people you would like to hire? Those people would pick up the phone when the recruiter calls them.

Specialist, region-specific, or industry-specific recruiters are most effective for targeted searches, as they understand the market and the role you are sourcing for. Rely far less on generalist recruiters, most of whom are best at sourcing “generalist” candidates.

3 types of recruiter engagement

Retainer: This involves a fixed fee, time-constrained relationship, wherein the company pays the search firm over three periods of time: at the start of the engagement, after a few candidates have been interviewed, and once a candidate signs an offer letter.

These are best for senior or executive-positions, where there is no sparing expense or, in some cases, little time to get the best candidate.

Contingency: Only one payment is made to the search firm, on the date the candidate sourced by the firm begins her role. These are best for filling junior positions in a company.

Container: A hybrid between a retainer and a contingency engagement. This involves just two payment installments: a deposit to initiate the search and a payment once a candidate signs an offer letter.

This form of engagement is best used with critical mid to senior-level hiring needs that must be completed urgently (in say, 6-8 weeks).

#protip: The best recruiters tend to gravitate towards working at retainer firms, so the choice of type of firm might affect the quality of outcomes you get from your recruiter.

“ As great as hiring a ton of MBAs may sound, we have taken the approach of hiring folks who know the local market really well. This is such a valuable asset.” – Joel Frisch, Prodigy Finance

How do you choose the ideal firm for your search?

References: Seek references on recruiting firms from partners, investors, and other companies—maybe even competitors! Don’t rely on reviews alone.

Individual recruiters: Seek out and develop relationships with individual recruiters within a firm, instead of focusing on reviews of the firm alone.

Long-term understanding: Look for recruiters who understand your company, team, and the role defined, and with whom you can develop a long-term relationship. In many cases, recruiting firms that you have worked with in the past will be best at filling this role, but this may not always be the case.

A full service, executive and non-executive recruiter firm provides the potential for a longer-term relationship across all roles. That said, some exec-only firms also have close relationships with non-exec firms, so developing a relationship with an exec-only firm does not foreclose the possibility of easily connecting with non-exec recruiters.

“National” searches: Understand whether the recruiter you paid for is actually taking the lead on a search in a certain location/region, or whether they are outsourcing the work to another vendor in your target location.