Getting the right team in place has never been more critical. At a time when the economic environment is uncertain and the capital markets are volatile, building the right team and establishing an organizational culture that fosters innovation and collaboration are critical to a company’s success or failure. But how do you build the right team?
Recently, Spencer Stuart hosted a discussion in Silicon Valley with Matthew Howard, managing partner at Norwest Venture Partners, and Deepak Ahuja, retired CFO of Tesla Motors, to help answer this key question. Based on the involved discussion and the lengthy Q&A that followed, we identified five key lessons that both CEOs and investors can learn from startups in order to build high-performing teams.
Tone is set at the top — and at the very beginning.
- CEOs serve as the company’s moral compass, and leaders are drawn to the mission and culture of a company. One attendee recounted the early days of a company when the CEO would bet that his plane ticket would be cheaper than his team’s.
- The DNA of the first 15 hires of a startup is critical. Push to thoughtfully define and cultivate the organizational culture from the beginning — this will make or break the company.
Hire a “doer,” not a “talker.”
- Executives with strong credentials know it’s a candidate’s market right now. However, it’s vital that organizations go beyond surface appearances and dive deeper. During the interview, ascertain what the candidate truly accomplished (versus what the team achieved) and what unique elements he or she brought to past experiences.
- Look for “finishers” — people who stay and lead through adversity and have demonstrated the ability build something from scratch.
- Job-hopping is common in Silicon Valley and job titles don’t often reflect actual responsibilities. Be a student of the resume and hiring process, focus on the individual and interview diligently.
Compensation isn’t the answer. Neither are perks.
- Since its founding, Tesla has not provided some of the luxurious perks commonly offered at comparable companies, nor did it necessarily pay top dollar to attract talent. Instead, people were drawn to the mission of the organization and the opportunity to do something meaningful.
- With an abundance of interested candidates, the best companies can afford to (and often do) pay less. While important, compensation is rarely the primary reason someone leaves one company to join another. Startups should not try to compete with more established companies when it comes to lavish perks. Startups can’t afford them and, in the end, they do little to drive bottom-line growth.
- Great leaders and capable managers attract the best talent. Hiring well also creates a virtuous cycle: Top talent hires top talent and great leaders spawn more great leaders.
The most successful leaders proactively build their teams rather than reactively hire talent.
- The best CEOs spend 20 percent of their time interviewing for “off-requisite” positions (where there is no immediate or apparent need) as a way to continually assess their teams and talent needs. Doing so helps leaders see beyond the curve.
- At 30 miles per hour, you can’t tell if your wheel is wobbling, but the situation can become dire when you hit higher speeds. Hiring key leaders who can scale through key organizational milestones is difficult, but worth the effort.
- If you do have to make a leadership change, make it early before there is a crisis.
Don’t sacrifice readiness for the sake of speed.
- Embracing the mantra of “fail fast” has been critical to Silicon Valley’s success, but it can be both a blessing and a curse. While this mindset unleashes innovation and enables talent to iterate on designs, it can also cause some companies to prematurely release “beta” products, potentially poisoning the brand perception among key target customers in the process.
- Many of the more frivolous and less well-managed startups will fold. Organizations that focus on breaking even and that prioritize strategy over speed better position themselves for longer-term success.