Today I am thrilled to share that Shortlist has acquired Spire Education in a unique merger that we expect to unlock the potential of both companies. Spire, founded in 2013, has been a pioneer in the East African talent development space, working with dozens of companies to equip employees with the skills needed to succeed in diverse workplaces. Shortlist, launched in 2016, helps growing businesses source and screen junior and mid-level talent for a range of role types, and has worked with over 100 companies across India and Kenya.
Now, our combined enterprise can more seamlessly support talent-forward organizations across the spectrum, from recruiting to onboarding to on-the-job training.
We will also, for the first time, be able to engage job-seekers directly with training, job search support, and access to awesome careers. With this acquisition, Spire CEO Jenn Cotter will become Managing Director of Africa for Shortlist/Spire, teaming with Shortlist’s current Kenya Country Director Ariane Fisher and the rest of the Shortlist team, who will continue delivering our core services to our terrific clients.
To put it simply, this is a match made in heaven. Why? Let’s start with what’s most important to us: team and culture. Our teams have been collaborating for months, hosting a series of events for talent-minded executives in Nairobi. From the beginning, we’ve been struck by the similarities of our teams and values. We share a commitment to personal responsibility, openness, adventure, curiosity, and unlocking potential. To put it simply, we wouldn’t have gone forward with this if we didn’t share a cultural foundation and core “why” to our work.
We’re also excited by the possibilities on a strategic level. We are already working with many of the same companies, and this allows us to seamlessly combine our services into a unified offer. Shortlist can help companies build their teams, and Spire can help make sure those teams are equipped with the skills needed to succeed.
Over time, we intend to go even bigger.
Spire brings world-class curriculum and an experienced team of content creators and trainers. We bring technology and a data-driven approach to vetting talent, as well as relationships with over 50,000 local professionals we’ve screened so far. With these assets, we occupy a privileged position to reach professionals directly and help build their skills, discover great opportunities, and access the careers of their dreams. This will enhance our ability to find great hires for our employer clients, and in turn, as we facilitate more hires and track what makes them successful on-the-job, our ability to train and advise professionals on critical skills will get even more focused and effective. We will build a truly exceptional talent flywheel that gets better and better with each hire and each training.
So what happens now?
We will bring our Nairobi-based teams together to work with and learn from each other under the same roof at Daykio Plaza. We‘ll immediately look for ways our combined offers can create value for our existing and prospective customers. Shortlist and Spire will maintain separate brands for now, and Shortlist India will continue business as usual. Over time, we will co-create the bigger vision for how “1+1=3.”
It’s an exciting time for us. We’d like to thank Blue Haven Initiative for their investment and belief in our joint vision and the Mayer Brown team for their generous ongoing legal support.
Shortlist is so grateful to the entire Spire team for joining us on this swashbuckling adventure — Shortlisters unite! And I’m particularly eager to work more closely with Jenn, a truly amazing leader, teacher, and friend. Here’s to the future!
I really enjoyed a recent piece by Daniel Pianko, co-founder and Managing Director at education-focused venture fund University Ventures, one of our investors. In it, he discusses the tricky no-win decision faced by would-be impact investors:
Make the impact argument to potential limited partners (the groups that invest in venture and private equity funds), and risk being pigeon-holed into a tiny fraction of capital reserved for impact investments. Make the case on returns only, and lose out on the small pool of limited partners eager to anchor impact funds.
Instead, Daniel hopes we all can move past the bifurcated lexicon of social vs. commercial enterprise. (And he’s certainly not the only one; see here for another example…) After all, Daniel believes that the companies out there solving the world’s biggest challenges should end up creating above-market returns for funds, regardless of whether they’re called “impact investments” or not. In UV’s case, this means investing to accelerate positive trends in education and employment pathways, and measuring success in terms of metrics like learning and career outcomes.
I think this is right on. This kind of thesis-led investing is the right way to build a fund — and the right way to build a business.
I couldn’t help but recognize a choice similar to Daniel’s when a company like ours decides whether to identify as a “social enterprise” or not. I feel a certain tension, knowing that for many people the term social enterprise has become code for loss making and non-commercial. That sucks!
When I first discovered the concept of social enterprise in law school, working on a startup bank that aspired to double-bottom line returns, I was inspired. At the time, the existence of a band of people and a coterie of companies aspiring to do well while doing good was thrilling and stoked career aspirations to channel the power of business to solve important global problems.
At Shortlist, I feel like we’re doing just that.
We are guided by our mission to unlock professional potential, to create a level playing field where everyone can be considered for opportunities on the basis of merit, not pedigree, and to help companies build the best teams they can. This feels important and worthwhile, and if we succeed with this we think we will also succeed financially in a big way.
So I hate it when labels like “social enterprise” get reduced to an impact vs. commercial dichotomy. Instead, for me, the label social enterprise should signify a values commitment and a thesis on how to build a successful, money-making business.
We want to wear on our sleeve our commitment to mission, not over or instead of profit, but as a multiplying force of our profit.
Why a multiplying force?
Because we believe that our commitment to solve a big problem is what attracts and motivates the best and brightest — and we’re awed by the talented team we’ve assembled.
Because we believe that pursuing a positive vision of what’s possible is the best way to secure a broad base of support that goes beyond pure capitalists to include philanthropists, foundations, and governments.
Because we believe that many of the biggest problems facing humanity are also the hardest and impact the most humans, suggesting that the rewards can be massive for the folks that figure them out.
And because we believe that aiming for impact is the most personally motivating, and after all, Achievement = Talent x Motivation.
So at the end of the day, I believe that whether we call Shortlist a social enterprise will always matter less than our shared vision of the better world we’d like to help create.
Running a social enterprise is hard, particularly when catering to “base of the pyramid” customers. Marketing to low-income customers, infrastructure and distribution challenges, razor-thin margins, raising money from investors — these challenges would test even the hardiest entrepreneur! Then, of course, there’s the major task of talent recruitment.
In other words, hiring and retaining great people. Although this challenge around talent recruitment is typically overlooked, it is probably the greatest factor driving the success or failure of the social enterprises we’ve worked with.
When Village Capital surveyed its portfolio of over 400 entrepreneurs in 2012, they cited talent acquisition and retention as their number one barrier to growth, easily surpassing financing. In 2015, a survey of C-suite executives by Bain & Company for Accion Venture Lab identified human resources as the biggest organisational need across 21 enterprises.
The challenge exists throughout the talent life cycle — from initial recruiting to training, ongoing development and retention — across hierarchies, from junior unskilled workers to senior executives. Unfortunately, it’s not a challenge that can be magically solved with more money.
Why are human capital challenges tougher for social enterprises?
Let’s be honest. Hiring and talent management is a challenge at all companies, but here’s why talent recruitment is far harder for social enterprises:
Mission, not just skills: Beyond finding skills and experience, most social enterprises also need to see a demonstrated passion for the organisation’s mission. For many, this shrinks a small talent pool into a puddle, making it even harder to find a fit.
Unknown brands: Most social enterprises are relatively young, small and little known beyond specialised circles. With less inbound interest in the company, it becomes more of a sales job than an HR one to convince candidates and, sometimes, their families, who might prefer they join more established organisations.
Talent doesn’t come cheap: As revealed by a 2012 Intellecap report, early-stage social enterprises cite low salaries as a key constraint to hiring and retention. Personally, we don’t believe there should be an inherent trade-off in compensation when choosing a career of meaning and impact, and it is encouraging to see this slowly changing. But, for now, social enterprises often pay a fraction of what talented people could be earning elsewhere.
It’s not an easy life: To top it all off, many social enterprises operate in remote areas with few creature comforts. Five-star hotels are traded in for village cots. Express trains and Uber make way for motorbikes and rickety rickshaws. High-speed internet and stable electricity are swapped for molasses-slow Wi-Fi and off-grid living. This is obviously not always the case (and for many this experience can be a draw), but some companies find it challenging to convince senior talent to take the plunge.
So, what do we do about talent recruitment?
Yes, talent recruitment at social enterprises is hard. The good news is there are many ways to make it better:
At a system level
Enmesh impact with education: We need more secondary and tertiary schools and institutions of higher education that present opportunities for students to learn about social enterprise and encourage the pursuit of careers of meaning and impact. This is happening increasingly, particularly at business schools globally, but classes and clubs on these topics at undergraduate universities are just emerging.
Create access to real experience: We must make it easier for students to get access to internships or projects to help ignite a career passion. This could be promoted by colleges, governments, investors or the companies themselves. Global impact investor Acumen Fund, for example, runs a programme to recruit fresh graduates into an apprentice scheme, giving exposure to grads while also reducing the cost and effort of recruiting and training new talent.
Make mid-career transitions possible: Support more programmes that help talented mid-career professionals transition from mainstream to impact, like Impact Business Leaders.
At a social enterprise level
Start early: Even when you’re not actively hiring, be on the lookout for great talent, particularly inbound inquiries from people acutely drawn to your mission and impact. Keep your talent recruitment pipeline of candidates warm and engaged so that when the time comes to bring on new folks, you already have a pool to start from.
Invest in employee referrals: Actively engage your existing team to probe their networks and bring in great people. Having employees who are brand ambassadors can be particularly effective for lower-level jobs that require community and local language knowledge.
Build a strong brand: Not only does having a strong employer brand increase the visibility of the social enterprise, it aids in employee retention. By strategically building strong credibility in the health sector, Aravind Eye Hospital routinely receives job applications from all over the world, despite the organisation’s strict policy of not advertising for job placements.
Mentorship and training: Your employees are your future leaders. Create effective training and mentorship programmes that can target specific skill development. A RippleWorks survey found that entrepreneurs as well as employees reported higher degrees of satisfaction with increased and frequent engagement with mentors.
So where does this leave us? While money will always be a concern, human capital is often more important. Luckily, we believe there’s something to be done at all levels to drive talent recruitment and help bring that talent to the social enterprise space while supporting job seekers in finding dream jobs at impact businesses.
Perhaps social enterprises have the most to gain or lose in solving this, and we hope to see more social enterprises recognise the importance of getting their team and talent equation right.
We’ve seen many times at companies globally that to create something persuasive and extraordinary in the marketplace, one must often first create something persuasive and extraordinary in the workplace. This principle may hold even more strongly for social enterprises, who must create a unique kind of mission-driven soil to attract and grow a talent foundation for scale and impact. If we get this right, the chain reaction of impact will extend beyond the enterprise to customers, employees, and the world at large.
Co-author Shloka Nath is Director, Development and Publishing, Jnanapravaha Mumbai, India’s premier Cultural Institute for the Arts. Prior to this, Shloka co-founded and was Managing Partner, Sankhya Women Impact Funds.
Why Human Capital May Matter More than Money, and What Investors Can Do About It
Impact investing, in the words of Mugatu, is “so hot right now.” More than $15 billion a year is flowing into impact investment, fueled by a growing appreciation for the ways business and market-based mechanisms can drive positive change in the world. This is great news! I’ve been working in the social enterprise world for more than a decade, from my early days as a wannabe begging for an unpaid internship in India, through stints at a fast-growing microfinance institution and a seed impact fund, and now co-founder of a social enterprise of my own. But money is not enough for impact businesses to succeed; they desperately need an answer to their human capital challenges to unlock their world-changing potential.
As an investor, I saw firsthand how deeply companies struggle to recruit and retain the best talent, cultivate senior leaders and define the right culture and values. This cross-cutting challenge is not confined to one sector, and deserves much broader attention and action, in a similar way that multiple sectors unified and rallied around impact investing over a decade ago.
There is definitely some great work underway in worlds beyond impact investment, with myriad funders, nonprofits and even companies dedicated to human capital issues around the world. Firms specialize in delivering leadership training, running fellowship programs as social enterprise on-ramps, providing all varieties of up-skilling to in-market talent, and promoting talent management best practices. But while impact investors have at times mobilized around cross-cutting ecosystem factors like capital markets, regulatory frameworks and distribution infrastructure (which is great!), most relegate talent topics to side conversations and suppose portfolio companies will figure it out on their own.
I hope impact investors can start to understand the many ways that human capital issues are worthy of more attention, lest all this money flowing into the space will not be leveraged to its fullest potential.
Why does human capital matter?
How do we dimension this human capital problem, and why should the impact investing world care?
Bottleneck to growth and impact
Entrepreneurs and managers consistently cite variations on “not finding the right people” as one of the biggest challenges and constraints to scale, ranked on par with or sometimes even higher than funding. One study recently found that once they’ve raised capital, 75 percent of early-stage entrepreneurs believe that the inability to attract and retain talent is a critical impediment to scaling. McKinsey has found that over half of companies the world over cannot find qualified candidates for entry-level roles. During my time at Accion Venture Lab, we surveyed 35 financial inclusion CEOs around the world and found that talent was the top issue facing their organizations and the single most important issue to them personally (above funding).
For companies, vacant positions stall growth and cause quarterly targets to slip. Making the wrong hire can be even more costly than none at all, given the amount of time and money invested in new employees. A recent global study found that 69 percent of employers reported that a bad hiring decision put a strain on their company, and other data reveals that up to 50 percent of hiring decisions were considered a mistake. Even further, if a company can’t effectively develop its team, the failure of employees to realize their potential directly impedes the company’s growth and impact potential.
Fixing a rigged opportunity marketplace
Beyond measures of enterprise-level underperformance, impact investors should care about fostering more fair and transparent job marketplaces as ends in themselves. More than just income, work for most people shapes identity, self-worth and personal fulfillment.
Unfortunately, today’s labor marketplace is rigged. Job opportunities are determined far more often by factors like pedigree, connections and bias than genuine ability and merit. Researchers from the University of Chicago and MIT have found that white-sounding names had a 50 percent better chance of being called for an interview than African-American sounding names, and similar biases exist globally around race, gender, religion and more. Further, in emerging markets, where access to opportunity is more often determined by “birth lottery” (the initial conditions into which someone is born) than ability, mindset and hard work, impact businesses need a better way to identify competencies and match talent to opportunity. We need to shift the recruiting paradigm from pedigree to potential.
This isn’t charity, it’s just about leveling the playing field and giving talented people the chance to be considered for life-changing opportunities on the basis of what matters, rather than what doesn’t.
Why is human capital being under-supported by impact investors?
If focusing on talent is such a big opportunity, why wouldn’t impact investors be all over this? How can we account for this apparent “impact market failure”? Without belaboring the point, there are a few issues that might explain the minimal attention:
· No owner: Most funders are issue- or sector-specific, and because human capital doesn’t “belong” to a single sector, it often slips through the cracks.
· No comfort zone: When all you have is a hammer, everything looks like a nail — and at present, most impact investors come from financial backgrounds and are more comfortable talking money than people.
· No easy answers: Human capital is a many-headed beast, implicating structural issues like local education systems and globalization; individual differences in personality, circumstances and abilities; firm-level differences in organizational context and culture; and so on. It touches everything and resists easy fixes.
· No success stories: Most sectors become “a sector” when a successful new model shows potential. Microfinance’s rise gave birth to “financial inclusion” and solar pioneers gave birth to “access to energy” as fields with dedicated funding pools, in-depth research and dedicated convenings. There haven’t been human capital posterchildren yet, but I’m hoping the rise of impact-oriented talent players like RippleWorks, Omidyar Network’s human capital team, African Leadership Network, Spire, African Management Initiative, and my company Shortlist can start to change that.
· No convening body: Financial inclusion has CGAP (and others), solar lighting has GOGLA, cookstoves has the Global Alliance for Clean Cookstoves — and, of course, impact investing has the Global Impact Investing Network (GIIN). Unfortunately, the GIIN of human capital just hasn’t been created yet.
What can we do about it?
I hope more funders start to recognize the critical importance of human capital as the foundation for the success of the impact enterprises and initiatives we’re all supporting. A number of groups have started doing research and a small but growing body of literature is emerging on talent and human capital. But we need more to further diagnose the problem, understand the ecosystem, contextualize issues and ideas to local markets, and make recommendations for action (at both an ecosystem and firm level).
We also need more pioneering investors to see this as an area of great opportunity. Omidyar Network has been a leader here, setting up an in-house “human capital” team to help their investees attract, develop and retain top talent — but I’m not aware of other impact investors who have shown such commitment. Organizations like Argidius Foundation, Blue Haven Initiative and AHL Venture Partners (all funders of ours) have made human capital a focus area, but they are the exceptions (unless the broad bucket of “education” or “edtech” counts). At Shortlist, we just went through a fundraising process and heard a similar refrain from many impact investors: “Human capital is not within scope or is not a mandate fit,” or “human capital only counts as ‘impact’ if focused on people making less than $2 a day.” I’m hoping more investors and funders start to see this as an important issue with the promise of system-level impact, up and down the salary scale.
Even for investors who don’t start investing in human capital companies, I hope they can focus more actively on human capital issues within portfolio companies. When making an investment, go deeper than assessing the co-founder biographies: Spend time understanding the organizational structure, staffing plans, recruitment strategies, training programs and the company’s values. I’ve seen impact investors spend weeks digging through financial models, formation documents and board minutes, but not ask a single question about the culture and sub-C-suite team. If investors cared more about people, so would entrepreneurs — you can help entrepreneurs prioritize people just by asking about them.
We also have an opportunity to learn from mainstream global trends around the future of work and the evolving higher education landscape. It’s a heady time with many calling for the unbundling and disruption of higher education, the digitization of economic opportunity, and new tools to help companies find, recruit, manage and train talent. Let’s learn from the best and bring these new practices and technologies into our markets and investments.
Finally, let’s turn this into a sector, shall we? I, for one, would love to see a dedicated resource center focused on “talent for impact” that could bring together the best research, resources, brains and energy around the world to help impact investors and social enterprises alike. That’s a conference I’d show up for, and bring my friends.
While India adds a million people to its job market every month and Africa is set to add more people to its workforce by 2020 than the rest of the world combined, over half of emerging market companies still can’t fill the roles they have open. Startups consistently rank talent acquisition as a top barrier to growth. What gives?
I saw this dilemma firsthand while investing in financial technology startups around the world for the last five years, as the founder of seed venture fund Accion Venture Lab. Once an investment was closed and cash was in the bank, the company’s problem shifted from not having financial capital to not having the human capital they needed to be successful.
The picture is even bleaker on the jobseeker’s side. Even skilled professionals often can’t get hired because they didn’t go to the “right” school, didn’t work at the “right” company, don’t know the “right” people, or fall victim to unfair biases during the application process. They are left lobbing their CV into job board black holes, never able to show potential employers what they can do.
This needs to change. We believe that talent is equally distributed, but opportunity is not. What often appears to be a lack of talent supply in markets is more often a failure of not knowing where to look or what to look for. At Shortlist, we want to level the job search playing field, shifting the recruiting paradigm from one based on pedigree and prejudice to a new version grounded in competency and potential.
How are we doing it?
1. Bringing intelligence to technology
Technology has burst on the scene to flatten access to job opportunities and broaden candidate pools (thank you LinkedIn and Monster). But without intelligent intermediation, more tech creates more noise, more decision fatigue, more work, and more despair for companies and jobseekers — not better outcomes. Just ask any of our employers who have received 2,000+ applications to a single job posting.
We combine a chatbot questionnaire with online assessments and phone screens to help us decide who is most likely to be great in a job. This filtering layer combines technology, data, and a human touch to ensure that talented candidates don’t slip through the cracks, particularly those who risk being overlooked based on CV alone.
2. Creating signals beyond the CV
Most companies have been hiring the same way for centuries (seriously): source and skim a lot of CVs, speak with some of the candidates, then make a decision — and regret those decisions more often than they would like. Not only is it hard to discern genuine ability and fit through a CV and unstructured interview alone, but this mode of decision-making is also often riddled with bias and prejudice.
Companies often do this not because they think it’s best, but because, frankly, there’s nothing else to go on. It’s like the joke about the economist looking for his keys under a streetlamp, not because that’s where he lost his keys, but because that’s where the light is better. At Shortlist, we engage candidates digitally to user-generate more accurate signals. We screen not only for basic experience fit but layer on additional data points for cognitive ability, competencies, and motivation. To be Shortlisted for a job, it’s more important to show us what you can do, not just tell us what you’ve done.
3. Refocusing on what matters
Let’s be clear: many people who went to great schools and worked at impressive companies are great and impressive. But for the vast majority of job-seekers, particularly in emerging markets like India and Kenya (where we work), prior experience paints an incomplete and often misleading picture of a candidate’s capabilities.
Schooling and subsequent corporate experience is — in all countries — more often determined by “birth lottery” than by merit. And we all hold biases, positive or negative, about certain schools or corporate brands. Looking past pedigree and refocusing on potential is the first step towards a world where everyone gets a shot at fulfilling professional experiences. Further, reconceiving the nature and focus of talent screening matters not only for hiring fairness, but also for hiring effectiveness. Building a team based on merit and performance instead of connections and pedigree is not only the right thing to do — it’s good for the bottom line.
The Shortlist mission
At Shortlist, we are on a mission to unlock professional potential and help great companies succeed in building great teams. We’re starting with a new way to match talent with opportunity, but we’re just getting started.
We want to level the talent playing field, but we can’t do it alone! We want to learn from each of you about what you think works to find and understand great talent, and what makes a great team. Visit our website, email us, or tweet at us — we’d love to talk with you about how we can help you hire. We’ll be using this blog as one of the ways we share the ideas behind what we do and how we do it, so stay tuned…