With tens of thousands of layoffs across the technology sector, there seems to be an abundance of new talent, but this doesn’t mean that tech startups can just snap their fingers and get the perfect employee. Navigating the hiring process can be a challenge, even for experienced entrepreneurs.
Tech startups are competing against big companies with bigger budgets, more established networks, and abundant resources. However, startups can be successful in hiring if they take the right steps to streamline and automate their workflows.
In this article, we’ll show you five ways tech startups can navigate hiring challenges.
What Hiring Challenges to Growing Tech Companies Face?
Hiring is hard for startups for several reasons, mostly related to their relatively small size and limited resources. The primary challenges include:
- Limited talent pool: Most tech startups are looking for specialized candidates, but they lack the networks and resources of larger companies, making it difficult to find the right people.
- Unclear job requirements: Smaller teams often struggle with defining job requirements and creating the right kinds of descriptions for more specialized roles. This makes it harder for candidates to understand what they’re getting themselves into and harder for startups to target the right people.
- Convincing candidates to join: Finding job candidates isn’t the only challenge. Startups sometimes have difficulty convincing candidates (especially experienced ones) that they offer something they can’t get elsewhere. Working in a startup requires an entrepreneurial spirit that some candidates don’t have.
- Budget limitations: Budgets are usually tight, which means startups must be very careful in how they approach hiring. Especially if the company receives funding, pushback from private equity investors might be the final nail in the coffin for an otherwise solid employee or team.
- Keeping talent: Whether it’s a budget cut, company realignment, or team dynamics, tech startups often struggle with keeping their new hires for the long haul.
- Undefined company culture: Building a company culture from scratch makes it difficult to find those who fit the culture. It also makes it a challenge to attract those who may not be familiar with the company’s values and mission.
- Shorter recruitment cycles: Smaller companies need things done quickly—a job requisition can’t sit open for several months. At bigger companies, this isn’t as much of an issue.
- Lesser employer brand: Big companies tout their corporate branding, which is why so many people want to work for a Big Four company or other large firms. Newer companies don’t have the same establishment in their respective industries.
Startups face plenty of challenges when it comes to hiring, but that doesn’t mean they can’t find success with the right strategies.
5 Strategies for Navigating Hiring Challenges
Hiring isn’t easy for any size business. The average cost of hiring a new employee is around $4,700, and hiring salespeople, tech executives, and other specialized roles can be even more expensive.
However, with the right strategies, startups can navigate these challenges and find great employees. Here are five strategies growing companies can use to tackle their hiring challenges.
1. Outsource to Contractors
Some roles can’t be outsourced. Salespeople, for example, need to be part of the team and understand the company culture in order to be effective. Without an effective onboarding process and continuous iteration, it is impossible for a new salesperson to find success. Certain roles are well-suited for contract or freelance work including:
- Online marketing: It’s cheaper to hire someone (or an agency) to handle marketing tasks like paid ads, SEO, copywriting, and design.
- Web development: Instead of hiring a full-time developer, many startups opt for contracting. This allows them to hire developers with specific skill sets on an as-needed basis. This software development company has an entire remote development workforce.
- Accounting, payroll, and tax compliance: Most companies don’t need a full-time accountant. According to a 2020 CFO survey, around 90 percent of finance functions might be fully automated by 2025. There are plenty of software solutions that are making it easier and cheaper to get the job done.
Hiring contractors reduces the resources needed upfront, helps keep costs down, and allows startups to find specialized expertise with specific skill sets. It also opens up the potential to hire abroad, which can be a great way to save money.
2. Leverage Technology and Automation
Technology and automation can be used to streamline the recruitment process, such as applicant tracking systems (ATS) for handling job postings, resumes, and applicant data.
There are also tools for pre-employment assessments, such as personality tests and technical skills tests, to help ensure that the right people are hired.
It’s best to use some of these tools with caution; personality tests, for example, have been known to produce biased results. Automated systems can also be used to ensure that candidates have the right skills and qualifications for a particular job.
In addition to using artificial intelligence to automate the recruitment and hiring process, here are a few places you can use technology to streamline your workflow:
- Learning Management Systems (LMS): A learning management system gives employees access to training materials and other resources. This helps them stay up-to-date on new developments in the industry, as well as get acquainted with your company culture.
- Data Analytics: Data analytics can help you track performance and uncover insights about employee engagement. You can use this information to improve training programs, reward top performers, and identify areas of improvement.
- KPI tracking: You can track recruitment, onboarding, and new employee performance KPIs to ensure your hiring process is efficient and effective. Some CRM tools and HR software have built-in KPI tracking capabilities.
- Payroll: Automated payroll systems can help make sure that payments are made on time and accurately. Gusto, for example, is a cloud-based payroll software that can help you manage payroll, taxes, and other HR processes. When it’s time to distribute tax documents, it will generate them instantly and send them automatically.
3. Utilize Referral Programs
Employee referral programs are a great way to tap into your existing workforce for potential new hires. You can save time and money on job postings, recruitment, and onboarding by incentivizing current employees to refer friends and family.
Referrals are generally easier to onboard and tend to have higher success rates since the new hires already know people at the company. And since company culture fit is partially indicative of future success, it’s important to encourage referrals from people with similar values and goals.
You can incentivize employee referrals in one of the following ways:
- Monetary incentives like cash bonuses, and gift cards
- Non-monetary incentives like expenses-paid trips or free meals
- Company benefits like additional vacation time
It’s important to remember that fostering a positive company culture from within is the first step to a successful referral program. Employees need to feel valued and appreciated to be willing to recommend a friend or family member, so make sure you’re providing the support, tools, and resources they need.
4. Focus on Retention
Retaining your employees is just as important as hiring them in the first place. Investing time and energy into employee development can have long-lasting effects on your business, especially in the startup world. You can cultivate a positive company culture by focusing on the following areas:
- Flexible work schedules: Allowing employees to adjust their hours and take time off as needed can help reduce stress, leading to better job satisfaction and higher retention rates.
- Employee development: Investing in employee development is essential for cultivating a successful team. Offer courses, mentorships, and training opportunities to ensure that everyone is up-to-date on the latest industry trends.
- Recognition and rewards: Recognizing employees for their hard work can make them feel valued and appreciated. Consider offering bonuses or other incentives for exceptional performance.
Most employees thrive when they feel supported and appreciated by their company, so it’s important to ensure you are providing a working environment conducive to success.
5. Work With a Staffing Agency
Tech startups have a lot on their plates, from product development to customer acquisition, most don’t have the time to manage the recruitment process.
Working with a staffing agency can take some of the pressure off your shoulders, especially if you’re only making one or two hires. Hiring an IT staffing agency for your tech startup can provide several benefits, including:
- Access to a pool of pre-screened applicants who match your needs.
- Fast turnaround time for hiring as staffing agencies are already connected to potential candidates.
- Specialized expertise in recruiting and onboarding employees.
- The ability to make sense of your unique business needs and goals.
Some recruitment firms cost lots of money for candidate placement, but it’s more than worth the cost. A professional recruiter can make a huge difference, especially when it comes to retention and employee-company fit.
Hiring the right people is essential for any tech startup, but it can be tricky to navigate these challenges.
By utilizing referral programs, focusing on retention and employee development, and leveraging the services of an IT staffing agency, you can ensure that your startup has the right team in place to succeed.
With careful planning and the right resources, you can make sure your tech startup is off to a great start.