Hiring and Firing in a Startup (and Understanding Why Staff Quits)

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There’s this old idea in Silicon Valley that says: “hire slow, fire fast”. However, this idea doesn’t work with a startup. You would need as many good hands as possible to keep your ship from sinking. So instead of hiring less people and firing more, you need to “hire fast, fire fast”.

As much as possible, retain all your good employees and weed out the bad ones, which could heavily affect productivity. Instead of firing someone, what you need to do is screen your potential employees before signing their work contract.

What to look for in a potential employee

In an interview, every person you shake hands with seems to be a pretty good candidate for the job. You would want to hire everyone that comes through that door (if you have the budget for it, why not?). Interviewees might have experience, but they might not have long-term commitments nor willingness to adapt to your work environment or the demands of the industry. What you need is an employee that has 5 or more of these traits to help man your startup:

  • Drive

Startups need manpower that would help the company move forward. Even if it is outside the job description, this employee should display a great drive to help the company in every way possible.

  • Creativity

In a startup, creating your own path is necessary, instead of following the ones that are laid out for you by your bosses and colleagues.

As Collective[i] VP of Talent and Performance Management Francesca Romano says, “great thinkers are not always the person with the highest GPA or the best SAT score or the most impressive advanced degree. Rather, it’s the person who asks why, and to what end, and how can I do this better.”

  • Humility

Startups will significantly slingshot an employee’s learning curve and career in a lot of ways, but mistakes will always be common. Find an employee who knows humility, acknowledges these mistakes, and recovers instantly with optimism, ease, and new ideas to solve the problem.

  • Flexibility

A startup needs skilled employees. More importantly, it needs individuals that can do more than just one thing. Having multi-skilled staff is like hitting two birds with one stone; you have a single individual who can do more than what his/her job description says. Tie it with the next one, and you would come up with the best pool of employees you could ever have on your startup.

  • Willingness to learn

A flexible employee with a passion is someone that startups need. To keep your startup ship from sailing, it takes good and passionate hands to keep it afloat. Having a jack of all trades with a passion of learning is better than a master of one.

When to fire an employee

Firing someone is a hard but necessary step in any startup. While most entrepreneurs dread the thought of handing somebody the pink slip, it should be done and be done soon. An unproductive and under-performing individual has no place in a rapidly-evolving environment. Even after coaching, additional training, and a significant amount of time, more often than not, these employees don’t get better. The longer you retain bad employees, the more unproductive they’re going to be. Worse, it could send unhealthy vibes to your other employees. Moreover, it’s going to cost you time and money – something that startups value the most.

“As a founder, you have to trust your intuition.” – Cheryl Yeoh, Malaysian Global Innovation and Creativity Centre

In a fast-paced environment, you’re required to be tough as nails, especially in reprimanding people for unsatisfactory work. You have to be honest about giving these employees constructive feedback about their failing performance. Give them specifics on where they can improve on, or what you can do to help out. Call them out on their poor performance and do what you need to do to keep the ship running.

What to do when an employee quits

It might not be such a big hit if an employee or two quit a company with 20 or 100 employees. But if you only have 4 (including you) in your startup, one resignation accounts for 25% of the productivity lost in 24 hours. If a large company loses 25% of their employees, it would probably make the Wall Street Journal front page. Losing employees is not something that can be predicted. It just happens, whether in small startups or fortune 500 companies.

As a founder, you put your passion in your work, sacrificing time, money, and effort in pursuit of success. However, you cannot expect employees to do the same for your company. While many are passionate about their job, they work to be better for themselves – just like what you’re doing for the company, and there’s nothing you can do about it.

When an employee hands over his or her resignation, don’t take it as a personal slight. In an ideal setting, you would want what’s best for everyone and support them in any way you can. But you can’t provide 100% satisfaction to everyone. Sometimes, employees outgrow the roles that you give them, so it’s natural for them to take the next step in their career.

Your job is make your team love their jobs. Once you’re handed a resignation letter, ask them what their thoughts are, and what they would like to accomplish in the coming months or years. The next thing that you should do is listen carefully to what they say, and help them achieve their goals with or without you.

Why good employees quit

More often than not, good employees quit because of reasons other than growing in a career path. Some good employees quit because they are unhappy either with your work environment, their managers, or oftentimes, their salaries. So what pushes good employees to quit their jobs?

  • Bad management

Good employees don’t leave good companies – they leave their managers. As a founder or co-founder, you have to keep an eye out for your managers and how they treat their underlings. Though it doesn’t affect the financial aspect of your company, it does greatly affect employee morale which can trigger a domino effect on others.

  • No space to be creative

When employees have the space to be creative, they feel more empowered. Empowered employees have the freedom and confidence to make great suggestions, and decisions which could help your startup in many ways possible.

  • Limited opportunities to develop skills

Passionate employees always have a willingness to learn and develop new skills aside from the ones that got them hired in the first place. If you have talented employees, it’s your job to keep up and find areas in which they can expand their skill set and provide honest feedback.

Talented employees tend to get bored easily, like a German shepherd in an enclosed apartment or cage. Once they get bored, they start wrecking things and exploring new ways to grow, even if it means leaving the company.

  • Unappreciated contributions

Nothing feels better than a pat on the back for a job well done at work. For startups, founders need to communicate with their employees to find out what makes them feel good whether it’s a raise, bonus or any financial reward, or public recognition. With the increase of work load and demand, startups should take another look at compensation packages that would benefit their employees and make them feel appreciated.

Running a company isn’t always easy, especially if you have employees that look up to you to guide them. Hiring is always a great indication that your company is steadily growing, but along the way, losing employees is inevitable. Whether they are moving on to the next career path, or simply losing productivity, a startup is no place for anyone who doesn’t have the guts to manage employees well.

As a founder, you need to trust your instincts, be professional, show respect and appreciation, and be transparent to your employees.


This post is written by MJ Mendoza and contributed by Ben Sim for the iPrice Group.


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