8 Hiring Mistakes IT Startups Make

by Osama Natto, January 15, 2013

Many budding IT companies struggle with hiring new people at the startup stage. If you’re in this position, you may also be debating how you want to handle hiring. What kind of employees do you want? Should you get full-timers, part-timers, or consultants? Where do you find them? What kind of expertise do you need, anyway?

Hiring missteps at the vitally-important start-up stage can have long-lasting consequences, so it’s important to avoid hiring the wrong types of people for your venture. In this article, we will cover the 8 common hiring mistakes that IT startup companies make, with tips from Saudi business owner Osama Natto, head of Innovative Business Solutions. Plus, we will cover how you can avoid these mistakes to make sure your IT startup reaches its potential.

1. Picking up part-timers.

Hiring part-timers and flex workers has proven to be a good strategy in many different business environments, but that doesn’t mean it’s right for IT startups.

“I don’t believe it’s a good idea to hire part-timers at the startup stage,” said Natto. “The startup stage is very difficult. You are trying to get the company off the ground, you’re hustling, and you’re short on money. There are a lot of commitments, so you stay overnight and you stay on weekends. That’s not the kind of environment most part-timers fit into.”

Natto also pointed out that hiring part-timers poses special challenges in his home country of Saudi Arabia for a variety of reasons, including infrastructure and attitude.

Without a proper public transportation system, just getting to and from work can be a major problem for the part-timer who either doesn’t have a car or doesn’t drive. This is usually less of an issue for full-timers, especially if they have stable schedules or can choose their own hours. For example, if most people in the company work from 8 to 5, those who don’t have a car or don’t drive can carpool with those who do. Full-time workers who don’t have to arrive at or leave the office also have an easier time arranging rides with friends, scheduling drivers to transport them, and using cabs. It’s harder for part-timers with unstable hours or tighter schedules to make these arrangements.

Attitude is also another issue, both in terms of commitment and continuity. Most part-timers are not primarily interested in money, but experience. The typical example is the student looking for a job to list on their CV or the career-changer who needs experience in their new field. Because of this, part-time workers will generally not be as committed to a specific job as full-time workers.

Related to the commitment issue is the continuity issue. How do you guarantee that part-timers are going to be with your company for the long-haul? Most part-timers are interested in short-term options, and for a startup company, you need people who will commit to you for 6 months to a year. The average part-timer will not stay with your company for this long.

“I think that the concept of using part-time workers has failed in Saudi Arabia, and I have been running a business in this country for 8 years now,” said Natto. “Now, it has been a successful model in a lot of other countries, including many cities in the Middle East, like Dubai. When I was in Dubai, we used to with flex workers often. But there are too many barriers to successfully working with part-timers in Saudi Arabia.”

Natto does think that hiring part-timers is a great idea for the pre-startup phase, meaning before the actual business is launched and the doors are open to the public. However, at this cash-strapped stage, part-timers generally need to be paid with equity. Although big paychecks aren’t yet available, the idea of creating something new or becoming an owner in something can serve as a great motivator for the right type of worker.

2. Only hiring locally.

With the Internet providing opportunities for global collaboration, there’s no need to only hire workers from one’s city.

According to Natto, hiring international employees is a great alternative for IT startups who don’t have the budget to hire local full-timers.

“There are many sites and tools you can use to hire part-timers from all over the world on an hourly basis,” said Natto. “I think that’s a very successful model. Only if you know how to manage the working relationship”

Such websites include:

3. Hiring managers without business-creation experience.

At the startup stage, you need creators, not managers.

“I’ve hired managers before, even some from multinational corporations, and they have failed to operate in startup environments,” said Natto. “Be careful who you hire as a full-timer.”

The problem with managers is that, being experts on how to take care of an existing business, the majority don’t know how to go about the process of creating a new business, and this is the crucial skill needed to drive growth in a startup.

4. Motivating employees primarily with money.

In the long-term, money is not the best motivator. If a startup employee is only in it for the money, they will abandon ship as soon as another attractive offer comes along.

It’s important to pay employees competitively, but motivate them with the glory of creating a new business, not just next month’s paycheck. To this end, make sure that the personal interests of each new hire are aligned with the startup’s interests, culture, and vision.

5. Underpaying employees.

Underpaying employees can be just as disastrous as throwing money at the wrong types of employees. As an IT startup company, you need to hire the best of the best to survive, and yes, the best are expensive. To start with, you need to accept the idea of paying people more than you take home yourself.

“I have people with special expertise who get paid more than I do, and I am the founder of my company,” revealed Natto. “However, they are worth every penny. I have people working with me who created 6 companies before they joined my team, and they certainly deserve their paychecks.”

When hiring full-timers, look for seasoned experts, ideally those with 15 to 20 years of business experience. This should include not just management experience, but business-creation experience as well.

6. Carrying loafers.

During the startup stage of an IT company, you need people who are willing to work 24/7. Of course, you can offer regular working hours and weekends, but the point is that your employees need to have the internal drive to work until the job is done.

You can often tell which employees are hard workers by how they manage their time. A well-motivated employee doesn’t need to be at the office from 8 a.m. to 5 p.m. or 9 a.m. to 6 p.m.; they will get the work done at their own most productive times.

If you see that a few of your employees are just focused on punching in and punching out, it is better to let them go than keep them in an environment where they will not excel.

7. Neglecting networking as a hiring tool.

The best way to find talented employees for the long haul is networking, so if you’re not leveraging this tool, you’re missing out.

For example, if you already know someone who you think might be a good candidate to join your IT startup, don’t be shy about inviting them out for coffee or lunch. Another great option is to invite them to the office and show them what your team does. If they seem interested, this is the perfect opportunity to make a job offer. Otherwise, you can just ask them whether they know anyone who would want to join your team. If they’re interested, they might make you an offer. Even if they don’t want to work with you at the moment, talented IT people often know one another, so there’s a good chance they can recommend a good employee to you.

What if you don’t know any entrepreneurial people from the IT industry? Well, go out and meet some!

You can do this by attending IT events, such as:

  • Exhibitions
  • Seminars
  • Conventions
  • Education programs
  • Conferences
  • Interest groups

“At IT events, you are bound to meet like-minded people,” said Natto. “You’ll actually be surprised—once you talk about your company, people come and send you their CVs. That happens to me all the time. I come back to my office and I find all these e-mails with CVs from people who I met at the last event I went to.”

8. Signing long-term agreements with consultants.

If you need someone with a specific expertise, then hiring a consultant with the type of knowledge and experience you need is a better option than hiring a full-timer, but you have to handle consultants right.

Don’t hire long-term consultants, even if you find someone you want to work with over a long period of time. It can take time to find the right consultants to handle your IT startup’s specific needs, so avoid rushing into long-term agreements. Instead, test consultants by hiring them on a project basis. Make sure you clarify the scope, deliverables, and schedule you want them to stick to. Once they deliver, if you’re comfortable with their performance, you can always keep working with them.

“I have been working with some consultants for 6 years, but others come and go in a very short period of time,” said Natto. “That’s why I always recommend using short-term agreements when working with consultants.”

Have you made any of these hiring decisions in your startup? Were the results negative or positive for you? What are some hiring tips you would give other entrepreneurs in the startup phase of their company?

Let us know by leaving a reply below.

Disclaimer: this article was first published on OsamaNatto.com (link).

 
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