Hiring for startup roles shouldn't be a gamble. Here's why.

3 Reasons Why Startups Can't Screw Up Their First Hires

Rachel Cwang Aug 23, 2017 7:42:00 AM

If you’re betting $1000 in a game of roulette, you know that one possible consequence is losing that money. It might seem like a lot to lose – and it is – but some gamblers are willing to take the risk because they know they can afford to lose it. It’s usually easy to calculate whether a gambling risk is worth it or not, because there’s only one factor involved: money.

But what happens when you start gambling with your hiring decisions? Do you really know what you’re wagering? Getting the right person into a role at your startup can definitely feel like hitting the jackpot, but I can tell you right now that the stakes are too high to make any sort of risky hiring decisions. Hiring your first employees requires a lot more consideration than even the most intense hands of poker. Here are 3 things that are at stake if you make the wrong choice:

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Money

I don’t want to beat this point to death, but a bad hire is expensive! We’ve calculated some of the costs that come out of your funding when someone leaves your company. Ouch.

Beyond the money wasted on employees that might leave the company, you’ll also have to shell out dough to bring on someone new. And if you don’t have someone new ready to go by the time your ex-employee leaves, you’ll also have to consider the profit you’re losing while you search for a replacement. I don’t need to tell you that your money is tight. All I’m saying is think long and hard before you make that hire – because you might literally not be able to afford to screw it up.

Time

You’re an entrepreneur. You live in a world where everything has to be done yesterday. And with all the chaos, have you ever calculated how long it actually takes to hire someone new and get them up to speed? According to a Glassdoor Research Report “The average overall job interview process takes 22.9 days in the U.S.” And that’s just the average. According to the same report, the interview process for a Software Engineer takes 35 days.

Notice how that report says “interview process?” Onboarding adds even more time to the delay. With so much to do, you really don’t want to waste all that time on someone who isn’t going to work out. Getting the right person into the role you’re hiring for can be the difference between spending a month getting a superstar on board – or 6 months trying to work with an employee who up and leaves.

Pro Tip: Want more tips about how to hire your first employees effectively? Join our August Lunch & Learn!

Reputation

What happens if your new salesperson mouths off to a prospect? What happens if your new developer makes a critical error that completely disrupts your customer’s business? These are things that the public doesn’t quickly forget. And when someone has a negative experience with your company, they’re far more likely to spread the word. The Nielsen Norman Group has a great article about negativity bias and how it related to user experience.

That’s not a good situation to be in. Your reputation not only affects your ability to acquire customers, but also your ability to find new employees, your ability to obtain funding, and a whole lot more. One bad experience can create a ripple effect – so it’s critical to be extra careful in your hiring process. Ensure you’ve got time to identify any warning signs that indicate this person might not be the best fit for this particular startup role. Your brand could depend on it.

Gambling can be fun, but it can also be dangerous. Gambling during the hiring process can be devastating – and the risks of blindly choosing a candidate will always overpower the potential benefits. Entrepreneurs might be willing to deal with a higher-than-average amount of risk, but there are some things that can’t be wagered on – and your employees are one of them.

Topics: Bad Hires, Startup Development

Rachel Cwang

Written by Rachel Cwang

Client Success Manager