Startup Lessons

Two tried and tested ways to recruit all-star teams

2560 1280 Shortlist
Imagine you’re the coach of a basketball team (a dream that my high school self imagined all the time). How would you run your try-outs? Would you look at the list of other teams the athletes have played for, or awards they’ve received, or ask them about their aspirations to play professional basketball? Would you have them talk about a time they missed a shot and needed to bounce back?

Probably not. Most likely, you’d put them on the court and see how they play.

Sure, past experience and accolades matter, but resumes (in sports as in life) are rarely as good a predictor of performance as good old “show me what you can do.” The idea of selecting someone without gauging her or his performance seems nonsensical, but in the absence of a different framework, and with limited time to make decisions, this is actually how many small and growing businesses (SGBs) approach talent acquisition.

Hiring is hard

Startups around the world struggle with human capital. In fact, when Village Capital surveyed its portfolio of over 400 entrepreneurs, the respondents cited talent acquisition and retention as their number one barrier to growth, even higher than financing. And without following best practices, it can also be incredibly time-consuming: a report we published this year with FSD Kenya shows that for a single mid-level hire, Kenyan SMEs are spending around 18 hours screening CVs, and then 19 additional hours interviewing candidates — and if anything this number feels low!

I saw this dilemma firsthand while investing in fintech startups for Accion Venture Lab: Many organizations are so focused on raising financial capital that they are blindsided by the difficulty of running effective hiring processes, a necessity for scaling successfully. They would spend hours screening hundreds of CVs, interview some of the candidates (often selected based on university, brand name company experience, or personal connections), and make a decision based on who they liked the most. Not only is this method rife with bias, but it does little to predict who will perform best on the job.

What’s an SGB to do?

At Shortlist, we use competency-based assessments and structured interviews to hire high-performing, best-fit candidates for our clients (and also to build our own team). Aside from being tried and tested through our work with over 100 organizations, these methods are also backed up by countless studies, including this meta-analysis of over 80 years of research. Let’s take a closer look at these two approaches and how you can adopt them in your organization:

Assign work sample or competency-based assessments to test candidate ability: There are two ways to go about this: 1) Give candidates a sample assignment that mimics what they would do on the job (e.g., Excel exercise or social media drafts), and score their performance. Or, 2) Identify the core competencies needed to perform on the job (whether hard or soft skills) and create exercises that test them (e.g., present a fictional situation around reaching deadlines and ask applicants to prioritize actions, to assess for project management skills). At Shortlist, we use a mix of the two.

Here are some tips for implementing assessments at your organization:

  • Avoid making an exhaustive list of competencies and skills your ideal applicant would possess — instead, hone in on the top 3–4 that are absolutely critical.
  • Make sure you can objectively measure assessment performance — make a grading rubric, or create multiple-choice questions that have one right answer.
  • Implement this step (or at least part of this step) before an interview, not after. That way you’ll only spend valuable in-person time on pre-vetted candidates.

Start doing structured interviews: Studies show that judgments made in the first 20 seconds of a job interview can predict the outcome; interviewers often spend the rest of the meeting asking leading questions and interpreting answers in a way that confirms their initial hypothesis about the candidates. A great way to overcome these subconscious biases is the structured interview method, which keeps interviews consistent, predictive, and fair. These are the key elements of a structured interview:

  • Every candidate who is interviewed is asked the same set of questions, regardless of the interviewer, and interviewers agree in advance what they are looking for in a good answer.
  • Questions are explicitly linked to key competencies required to do the job, avoiding common “getting to know you” questions that perpetuate biases.
  • A standard rating scale is used by interviewers to grade candidate answers.

Why does this matter?

Getting hiring right is important for all organizations, but is especially true for SGBs. Let’s go back to the basketball example. With only five team members on the court at once, every player counts. Similarly, in a startup or small organization, every new hire is critical to building on your momentum and solidifying your team culture. On a macro level, looking past pedigree and refocusing on potential is the first step towards a world where everyone gets a shot at fulfilling professional experiences.

I hope this was a helpful starting point for you to reframe your hiring practices and find your next all-star! For more hiring tips and resources, visit our blog and follow us on Twitter.

Paul Breloff is the CEO and co-founder of Shortlist, which helps growing enterprises in India and East Africa hire based on skills and potential, rather than pedigree.

Past blogs in this series on hiring:

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

 

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

 

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

Upcoming blogs:

  • Martha D. Karimi and Manuela Müller, Founders, Edge Consulting — Onboarding, setting up for success in a resource constrained environment
  • Lyndsey Vandament, Kerry Nasidai and Sarah Ngima, Head of Talent Practice, Open Capital Advisors — Where do you want to be in 5 years? Leveraging SGB-tailored talent tools.
  • Rebecca Harrison, CEO and Co-Founder, African Management Initiative — Moving from entrepreneur and hustler to manager and leader: How to embed the management practices that will support your business at scale
  • Caroline Gertsch, Director, Amani Institute— Is your team performing to the best of its potential?
  • Ayla Schlosser, CEO and Co-Founder, Resonate — How can you use storytelling to drive results?

To Be or Not To Be (a Social Enterprise)

1494 800 Paul Breloff

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.