Turning a Hiring Misstep into a Lesson Learned: Tips for Startup Founders
As a startup founder, one of the most critical decisions you’ll make is who to bring onto your team. This is especially true for the people hired into executive roles. Unfortunately, even with the best intentions and a thorough hiring process, sometimes things don’t work out as planned.
Each week, I speak to several startup founders dealing with one of these two painful situations:
- They’ve hit the point of no return and it’s time to part ways with their sales or CS leader
- They’ve recently mis-hired, they feel a lot of pain, they’re back in the weeds, and they’re doing everything in their power to make sure that it doesn’t happen again
Making confident hiring decisions, especially for GTM leadership roles that drive how startups make and keep money is critical.
Yet, many founders I speak to not only lack that confidence, they’re turning to people and advice that only creates more confusion.
And that has everything to do with the turnover crisis we’re in. According to Carta’s State of startup compensation report :
- 50%+ of employees at startups stick around for less than 2 years
- Sales and marketing are the areas where tenure is the lowest
Repeatedly turning over roles that drive how a business makes money is a 7-figure problem:
- The toll it takes on the pipeline
- The toll it takes on the customer. Do we really think they love having our process change every 18 months when a new person who doesn’t understand their business or history comes in with a new plan?
- The toll it takes on the team
But first, let’s break down what goes into that 7-figure problem:
- Compensation already paid
- The time it takes to hire the next leader
- Going back to founder-led sales and having other balls drop
- Leaky pipeline
- Legal fees
- Impact to the prospect and customer + costs of lost business
- Recruiting fees
- Severance
- Diluted equity pool
- Downtime costs
- Team turnover as a result of losing the leader they wanted to work for
- Replacement costs
- Expense account/expenses incurred
- Benefits, insurance, and other perks
- Ramp time and onboarding costs
- Precious runway
Before we get into recovery, let’s talk about prevention. Here are a few tips to prevent a costly mis-hire:
- Use a hiring scorecard (check out my hiring scorecard methodology + free template).
- Develop a quantitative, qualitative hiring process to pinpoint skill, will, and the “lean in” factor while creating a candidate experience that leaves them wanting more.
- Your business, team and customers speak the loudest. Listen to find out what will make this hire successful in your startup, and hire the right people based on what your business needs, not what you read or hear elsewhere. The more specific you can be, the more it will empower you to make the right hiring decisions.
- The key to success is employee engagement and customer engagement. Invest time in understanding your team’s and buyers’ needs and potential blindspots. People will take care of you when you take care of them. This begins with understanding, not assuming.
If you find yourself in the painful situation of realizing you’ve made the wrong hire, don’t panic. These are five steps you can take to minimize the damage and get your startup back on track.
Step 1: Acknowledge the Problem and Act Swiftly
The first step in dealing with a hire that’s not working out is to acknowledge the problem. It’s easy to fall into the trap of hoping things will improve or making excuses for poor performance, but the longer you wait to address the issue, the more damage it can cause to your team, pipeline, customers, and the business.
Once the problem is pinpointed, it’s critical to act swiftly. Don’t shy away from a difficult conversation or let the situation fester. Schedule a meeting with the person to discuss concerns (be specific and avoid assumptions or feelings) and establish a mutual plan of action. Be clear about your expectations, what success looks like, what you’re willing to do to support the situation, and the specific areas where improvement is needed.
Step 2: Evaluate the Situation and Determine the Best Course of Action
Before making any drastic decisions, take the time to evaluate the situation objectively. Ask yourself:
- Is the issue related to skills and competencies, or is it a personality conflict?
- Can the problem be addressed through additional training, coaching, or support?
- Is the person in the wrong role, or is there another position within the company where they might thrive?
- Do you really know what’s going on?
- What part of the problem is in your control?
- Is it an isolated situation or is it a pattern?
If the issue is related to skills or experience, consider whether investing in training or mentorship could help the employee improve. However, if the problem is a fundamental mismatch in values, integrity, work ethic, or putting the business in jeopardy, it’s time to consider an exit plan.
Step 3: Communicate Clearly and Compassionately
If you decide that the best course of action is to part ways, it’s crucial to handle the situation with care and compassion. Remember, this is a human being, not just a “bad hire.” It’s also a big, small world and the last thing you want is to put out a fire like this while trying to put the pieces back together:
Schedule a meeting to discuss your decision. Be clear and direct in your communication, but also be empathetic. Explain the reasons behind your decision, what to expect, and offer support in their job search, if appropriate.
Focus the conversation on the needs of the business versus the person or feelings. Instead of getting stuck on the negative impact, try something like:
“This is hard for me to say and hard for you to hear. We all want to succeed, and we’ve reached a point where that’s difficult to do together. I’m letting you go, let’s talk about what comes next…”
It’s also critical to communicate the change proactively to your team in a way that maintains morale and productivity. Be transparent about the situation, provide as much context as you can, and avoid placing blame or speaking negatively about the departing employee.
A word to the wise, Consider departing employees as future employees and new hires as customers.
The best way to create a successful exit strategy is an open conversation like this. Priceless insights can be gleaned that will help to clarify the future job description, blindspots, key metrics, and a transition plan that gives the team peace of mind while not leaving you scurrying for answers.
Don’t let your frustration or emotions take over while parting ways. As a leader, you set the example, and what you do reflects the company culture and employee engagement. Instead of getting caught up in the blame game, take ownership of the situation and use it as an opportunity to learn and grow.
Your company culture is created and reinforced by the words you use and your actions that back them up.
Step 4: Reflect and Learn from the Experience
Once you’ve addressed the immediate problem, take the time to reflect on what went wrong in the hiring process. Ask yourself:
- Did I use a scorecard?
- Were there red flags that I missed during the interview process?
- Did I rush the decision?
- Did I have a clear understanding of the role and the skills required for success?
Use this experience as an opportunity to refine your hiring process and grow from it to make a better decision next time. Consider implementing a more structured interview process, get close to practice and away from theory, and involve only the right people in the process that will help inform a good decision.
Step 5: Focus on Moving Forward
Finally, don’t let a bad hire derail your startup’s progress. While it’s important to address the problem, it’s equally important to focus on moving forward.
Reassure your team that you’re committed to building a strong, cohesive culture and that you’re taking steps to prevent similar situations in the future. Celebrate your team’s successes and continue to invest in their growth and development.
Remember, every startup faces challenges and setbacks. What sets successful founders apart is their ability to learn from their mistakes, adapt, and keep pushing forward.
Wrapping Up:
Dealing with a bad hire is never easy, but it’s a reality that many startup founders face. By acknowledging the problem, acting swiftly, communicating clearly, and learning from the experience, you can minimize the damage and emerge stronger on the other side.
As you continue to build your team, remember that people are your most valuable asset. You won’t realize the growth that could be. Invest the time and effort to find the right people, create a strong culture, and support your team’s growth and development. The success of our business starts and stops with people.
Mis-hires at startups are unfortunate and painful. However, there are ways to reduce the damage and hire right the next time.
If you’re struggling with hiring or dealing with the fallout of a bad hire, our hotline is on. You got this and we got you!
