by Colleen Watford, Director, Executive Search, Digital Health

This article was originally published on LinkedIn[View original post]

Are you a founder of a startup or early stage company? Have you used a recruiter to find talent?

I’ve learned from my conversations with your peers that many founders have not. They may have become familiar with recruiters as a candidate during a previous life, but they haven’t used them for hiring. Although they may have a high level understanding of what recruiters do, that doesn’t translate to knowing when – and when not – to use a recruiter for hiring.

Most founders and CEOs I meet are running fast-paced VC/PE backed companies with pressure to grow rapidly while keeping costs down. So, the decision to use a recruiter – to hire, for that matter – strikes at a balancing act: growth vs. protecting the till.

Why Use a Recruiter

Recruiters are generally used if there’s a well-understood need to:

• Drive growth,

• Plan for future growth, or

• Replace someone on staff who has recently departed

More specifically, you should consider using a recruiter when you are ready to hire for a critical position, perhaps after a funding round. The first few critical hires are typically department heads that will help build out those functions (e.g., Sales or Product). Given the pressure to hit lofty goals, and knowing that time is money, you can’t afford to get these hires wrong.

Another reason to use a recruiter is that you simply don’t have the network or bandwidth to find the right person on your own. The same may go for your HR person/department or internal recruiter, if you have one.

Maybe the best reason, though, is that it enables you to focus on what you do best and what delivers the most value to the company. The most effective leaders learn what to do themselves and what to delegate or outsource. For instance, as CEO you have the ability to learn QuickBooks and do your company’s bookkeeping, but you probably don’t. You let someone else do it because there are better uses of your time. The same goes for recruiting. It’s a function that’s best outsourced to an expert.

A good example of that expertise is hiring your first sales executive. For a company with high growth expectations, sales is critical to the company’s success…or disappointment (see my colleague’s article, Avoiding the Stall). Most founders who have not run sales teams struggle with sales hires. They’re tricky: sales candidates all interview well and know how to sell themselves; some were in the right place at the right time; some take credit for deals that belong to others; and, in digital health especially, some short stays were not due to the salesperson’s abilities…but some were.

Tricky stuff indeed. Yet, a recruiter that knows your domain and is skilled at recruiting sales talent can cut through the smoke and aggressively screen the candidate.

And that’s only one example.

When NOT to Use a Recruiter

You don’t want to engage a recruiter prematurely. Doing so risks all sorts of wasted time and wrong messages sent to the candidate field.

If you aren’t completely committed to filling the role, hold off until you are.

If you’re not comfortable that you have the budget to bring the person(s) on at market rates, also hold off.

Caution: do not try to hire someone at sub-par compensation, regardless of the strength of your story or your ability to sell the position to a candidate. You might fill the position, since there are candidates at every price range, but you and the candidate will likely end up frustrated at the mismatch in expectations and the candidate’s ability to perform. In the four quadrants of win-win, win-lose, lose-win, and lose-lose, this often leads to lose-lose. You get disappointed with the candidate’s performance, and he gets disappointed with having settled for sub-market compensation. (Of course, if the candidate doesn’t feel this way because the compensation is a true reflection of his capabilities, your frustration about performance may grow even more intense more quickly.)

When you have a specific person in mind for a role, but you are not yet sure it’s the best fit, I suggest either of two approaches:

1. Qualify that person in or out before engaging a recruiter.

2. Better yet, assuming this is a critical role, do a search. That will tell you either of two things: she really is the best candidate out there, or, as good as she is, there are better people available. Either realization increases your odds of success and gives you peace of mind.

Given the impact – good or bad – a key hire will have on your business, resist the temptation to think of a search as a waste of precious funds. Rather, consider it some of the best money you can spend. As one of our clients put it, “I had no idea these kinds of candidates were out there.”

By the way, you may have to convince your Board to authorize a search, since some Board members, especially investors, like to recycle executives that have delivered in the past…even though this may be a different market, value proposition, and time. Sometimes they just like to save money by avoiding a search fee. It’s worth the effort to win this argument – too much is riding on this hire. And a search fee is always less than the cost of a bad hire or an empty chair.

In my next installment, I’ll cover the types of searches and how to best work with a recruiter.

Leave a Reply