Golden Rules of Startup
Talent Management
How STARTUPS attract and retain talent, and how it's different from
the way traditional companies do it
Startups and jihadis hardly have anything in common. But trust
Vijay Shekhar Shar ma, 36, founder, Paytm to spot the con nections. And some
management lessons.
Think about jihadis like this, reasons the founder of the
Noida-headquartered mobile wallet startup that recently got a $575 million
investment from Chinese ecommerce giant Alibaba. They are solo warriors on a
mission with little in terms of resources and yet have the audacity to take on
the world. The odds are totally stacked against them. “They have only two
options -do or die,“ he says. “You have to be mad to become a jihadi. But yet
they exist and occasionally succeed.“
Sharma calls it the polarisation of pur pose. “Jihadis think
theirs is a pious mission and are so driven that they are ready to stake their
lives for the purpose. The best teams are motivated like that. The best
startups fight like that.“
At Paytm, Sharma is busy creating that polarisation of purpose.
All over his buzz ing and bustling office, lofty statements welcome you. “Go
big or go home,“ says one. “Change is hard at the beginning, messy in the
middle, gorgeous at the end.“ says another. “If you don't like what is being
said, then change the conversation,“ goes yet another.
Sharma's objective is to get his workforce all fired up to become
the largest m-commerce company in India. “If you have a large team you have to
show them the goalpost and then constantly cheer lead them towards it.“ Sharma
is rallying his troops to bring half a billion Indians into the mainstream
economy by helping unbanked Indians use e-commerce through their mobile wallet
service.
To extend Sharma's analogy to the rousing Indian startup scene,
entrepreneurs typically long on ambition and short on resources (Paytm, though,
won't be for some time, courtesy of the Alibaba infusion) are the jihadis who
are out for a kill. And along the way they're resorting to innovative tactics
to survive and succeed in a universe where many traditional rules of business
don't apply. Nowhere is this more visible than in the way they hire, inspire,
retain and reward their employees. Most of them realise that the old rules of
talent management -researched and practised for decades -are not relevant in
their world. By trial and error, they are evolving their own talent management
mantras.
Sharma isn't the only one rewriting the HR manual. Serial
entrepreneur Vishal Gondal of Indiagames fame and now spearheading wearable
fitness startup GOQii prefers it if his employees ask for “forgiveness“ rather
than “permissions“ to foster a risk-taking culture.
As the $1.5-billion online travel company Makemytrip gains size
and scale, co-founder Deep Kalra is finding new ways to keep his startup's
hunger and agility intact.
Another serial entrepreneur K Ganesh, who has founded close to 10
startups and angel-invested in over 25, has learnt plenty of lessons on how,
where and who to hire. Perhaps the first lesson he learned -and followed -was
not to go down the traditional headhunting route. “Startups often operate in
areas where rules of engagement are yet to be defined. Experience is of not
much use. The skills they need don't exist out there. So they need to innovate
and learn,“ says Shankar Maruwada, co-founder of Marketics, a marketing
analytics firm, who has now turned mentor investor to startups.
The Startup Way
As India hurtles headlong into a startup boom, adventurous
executives are quitting their corporate jobs in droves to join startups. They
have become the most sought recruiters in top campuses too. India today ranks
as the third largest startup hub in the world with over 3,100 such ventures,
according to industry body Nasscom. Virtually everything they do -from their
business models to their valuations to their marketing gimmicks -is being
tracked and analysed. But it's on the talent management front that their
experiments and innovations are still under the radar.
Most established companies, with financial and management
bandwidth, lean on a slew of experts for help. Headhunting firms like Egon
Zehnder and Heidrick & Struggles help them in recruitments. HR consulting
firms such as Mercer and Hewitt help them in shaping their compensation and
performance structure. The management consultants (think McKinsey and Bain)
handhold them through different aspects of strategic leadership and talent
issues. And of course there are numerous global management experts and Harvard
case studies that enlighten these companies on talent issues. “Many of those
things may not be relevant in the startup world. Here, it is more like a
Columbus sailing. There is no route and no map. You need to go, explore and see
what works,“ says Ganesh.
Agrees Padmaja Alaganandan, executive director, PwC Consulting.
“Mature organisations think long term and plan,“ she says. They have the
historical data to base their decisions and look at talent management. Startups
do not have the data. So how do they evolve their talent management practices?
“They are a lot about experiments and iterations as they go along,“ she says.
Startups also do a good job of learning from their peers. Born in a networked
age, sharing and exchanging notes comes more easily and naturally to them. At
91springboard, a co-working hub in Gurgaon that hosts many young startups,
entrepreneurs are routinely invited to exchange experiences and best practices.
Kapil Gupta, founder of OMLogic Consulting, a social media analytics firm, says
he overhauled his employee onboarding process inspired by the initiatives of
OSS Cube, another startup.
Evolution of a Startup
Startups go through different phases and each phase has its own
distinct talent needs.In the early stage, when the startup is small and money
is scarce, hiring is a big chal lenge. And the focus is on innovation to build
a better product or service. “People who come on board at that stage are very
driven and are there for a larger purpose,“ says Mekin Maheshwari, director
(HR), Flipkart. Working as a small team, often operating out of a one-room
office, it's a tightly knit democratic and flat setup where communication and
transparency are high and people work like a family. The emphasis is on getting
technical talent.
In the second phase, the focus shifts from innovation to market
penetration. Needed are people who understand customers well.“The culture
evolves from creativity and innovation to a sales push,“ says Rajan Srikanth, a
former president (Asia) at Mercer Consulting and now chairman and managing
director of SmartKapital, a firm that handholds startup CEOs. As funding and
business take off, hiring gains momentum.
But as the business scales and staff size reaches a critical mass
-think of the eightyear-old Flipkart with 8,000 employees and 33,000 contract
staff -a startup begins to resemble a traditional organisation with structures
and processes to make things more manageable. “This is the stage of profit
extraction. So, the thrust shifts to making operations efficient,“ says Srikanth.
Hiring and funding become easier even as foundersinvestors prepare for exits.
While technically the start up is no longer a startup, it is still different
from a normal organisation as the extent of creation is high, says Flipkart's
Mekin. “Every stage has its own organisational hardware and software
configuration,“ adds Srikanth. And both must evolve in tandem to enable a
smooth transition into different phases.
The Hiring Question
Understandably, recruitment is one area where startups are
experimenting a lot. Almost all entrepreneurs that ET Magazine spoke to said
they hire for attitude and learnability of the candidate and not so much for
degrees or experience. Never presume that a manager who can run and grow an
established business very well will also do the same in a startup, cautions
Ganesh. “In established companies, structure, processes, KRAs, business
environment are more defined. In a startup everything is changing,“ he says.
Ganesh remembers hiring a COO for one of his startups TutorVista (which
was eventually sold to British publishing and education company Pearson in
2006-07). He knew the executive well. Though he was very good in his previous
stint, which was also at a startup, at TutorVista “he was a complete failure“,
recalls Ganesh. Later, he figured that the context in which the two startups
operated was so different that his past experience was not relevant. His
advice: startups must be slow in hir ing as they cannot afford to make talent
mistakes. But if it is not working out they should fire quickly. Ganesh hires
IIT and IIM graduates with two-four years' corporate stints “who are not
clouded by experience“. He puts them in the second level of management and
grooms them for bigger roles.
Sharma of Paytm says he never hires people who have been there and
done that in bigger companies. “Take a risk. Get a guy with fire in his belly.
Hire two notches below and give him a promotion. It has worked great for me,“
he advises.
To zero in on talent, especially scarce technical ones, startups are
leaning on online recruitment platforms like MyRefers and TalentPad. “They
pre-filter high quality talent and amplify your reach,“ says Umang Kumar, CEO,
Gaadi.com, a car portal. Lalit Bhagia, founder, MyRefers, says they help
startups find experts like data scientists, mobile technology experts and the
like. While he started out catering to established companies, today most of his
25 clients are online startups including real estate portal PropTiger, online
fashion firm Yepme and Gaadi.
Ganesh almost always uses word of mouth -tapping into his network
-when making critical hires and rarely goes through headhunters. To be sure,
startups use referral hiring big time.They are also far more flexible about a
recruit's location and employment contracts. For example, the chief marketing
officer at Ganesh's growthstory.in, an angel investing and incubator firm, is
based out of Silicon Valley. “This was the only way I could get a top talent
for the role,“ says Ganesh.
Salaries & Promotions
Unlike traditional companies, startups -especially in the initial
phases -offer lower salaries but go big on stock options. For example at
furniture e-tailer Pepperfry, the entire direct workforce is part of a stock
option plan. “We wanted to share wealth creation with everybody,“ says founder
Ambareesh Murty.
Marketics' Maruwada suggests that even if a startup is able to
afford a recruit, it should do a small salary test.“Those who join for money
also leave for money. So offering a lower salary is a good test on a
candidate's seriousness,“ he says. One surefire reason for working with a
startup is to grab allround exposure in a short span. Meteoric career growth is
another hook. Amod Malviya, CTO of Flipkart, is a great example. Flipkart hired
the engineer as a manager in 2010. “We are such a performance-driven setup that
we can make that happen,“ says Mekin.
Growth at startups need not always be vertical. Most are big on
lateral movements to give them exposure and growth. Mekin, who himself was a
techie when he joined five years back, says almost all senior executives have
done stints in different verticals. Agrees Paytm's Sharma: “We pride ourselves
in lateral movements. What do you want to do next is our annual conversation.“
Sharma shares an additional tip. When someone joins Paytm, even at
a senior level, he is given a small assignment before moving on to a bigger
one. “Early wins help him feel comfortable and settle down well, which is a
great morale booster,“ he says.
Zing at the Workplace
Dealing with odds constantly, startups work hard to celebrate big
and small wins, thereby keeping spirits high. For example, at Zomato, there are
spontaneous shout-outs across the table for a job well done, says Upasana Nath,
chief recruitment officer. At OSS Cube, employees break into an impromptu flash
jig to celebrate every small and big milestone, says co-founder Vineet Agrawal.
At e-grocer BigBasket, which at last count had a workforce of
1,500, recognition and reward have turned into a ritual. Earlier it was done
every month but as the company expands, it is being done quarterly. The firm
gets the whole team in one place and gives out awards to the best pickers,
packers, delivery boys and the like. Co-founder Hari Menon, with a bunch of
chocolates in hand, conducts a quick quiz, asking questions on 10 basic
numbers, from average order value to number of vans the company operates. “This
helps every body know about the basic business operations,“ says Menon. Like
Menon, almost all entrepreneurs espouse constant, transparent and honest communication
with team members.
Agrawal at OSS Cube, which has won awards for the best workplace,
does a few fun things to keep the staff excited. The company, for instance,
organises coding workshops for children of the staff and social media workshops
for their parents. During the Christmas season, it sends out Santa Clauses to
their home and gives gifts to their children.
Ecommerce giant Snapdeal has an initiative called Monday Blues
where snacks -from burgers to chaat and cakes -are on the house. Saurabh Nigam,
vice-president (HR), says their initiative to have a Snapdeal radio which
broadcasts every alternate day for two hours is a huge hit, with an over 80%
listening rate.
Clearly, at startups paypackets alone as a lure don't work. The
workforce needs to feel special. At OSS Cube, they have found an interesting
way. Whenever they send their employees as speakers at conferences or webinars,
instead of projecting them as OSS executive, the emphasis is on projecting them
as experts in specific areas so that the employees can build their own brand in
the industry.“We try to make our staff the hero. It is a big morale booster,“
says Agrawal.
Entrepreneurs are also putting a lot of effort to encourage an
-what else -entrepreneurial culture where employees have the courage to take
risks and face failures. Makemytrip's Kalra says: “If you don't give them the
latitude to think big, sustaining a hyper-growth strategy will be difficult.“
There are a few things he has learnt about taking risks and
dealing with failures. Set aside the corpus (the risk capital for a project),
get an entrepreneurial staff to lead it and take the business to another level.
“Typically the person would take a pay cut to do this but if he succeeds, the
upside could be big for him,“ adds Kalra.His three mantras when embarking on
such a journey: do the best-case, worstcase scenario beforehand. Pick a leader
with entrepreneurial instincts. And finally, in case of a setback don't label
it as failure but a learning. “And make it [the failure] a collective one.“
Malini
Goyal
ET15MAR15
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