Hiring Mistakes that Startups Make and How to Avoid Them 

When establishing a startup, hiring to fill certain roles is an important aspect that significantly determines the success of a startup. Generally, hiring is a critical process for startups: to build a great company, hiring great people who can build great products that attract great customers is essential. Therefore, startups have no luxury of making mistakes when hiring. 

Statistics show 10% of startups fail within the first year. Considering the power of a team, mistakes in hiring could contribute to such failure. For this reason, this post explores hiring mistakes that startups make and how to avoid them.

5 Hiring Mistakes that Startups Make 

1. Founders relying solely on their network

Often, it’s common for startup founders to rely on their network (family members, friends and close acquaintances) to find talents, especially because these are people they know and trust. Besides, they don’t have to spend too much time and money hiring. But how effective is this approach for a startup? The reality is that you’re likely to end up with unqualified candidates. But things can even worsen if it becomes difficult to manage or fire them trying to safeguard personal relationships with such candidates. 

Solution 

First, avoid hiring friends and family unless you’re willing to do unpleasant things, such as firing or laying them off in case things turn out differently. However, if your network has the right fit, ensure clear expectations and communicate the same, just like you’d do with other regular employees. 

Alternatively, startups should consider platforms like LinkedIn, Indeed and Glassdoor to find candidates for different roles. Additionally, they may consider referrals from other industry experts. 

2. Ignoring cultural fit 

It’s common for a startup to focus on hiring candidates with the best technical skills. As a result, they pay less attention to how an employee’s beliefs, values and behaviors align with the company’s beliefs. Statistics show that poor cultural fit s among the reasons why 73% of professionals leave their jobs. Consequently, a startup is likely to experience a high employee turnover even in the first year, ultimately increasing the cost of recruitment and training as they hire new employees. 

Solution 

Identifying the cultural fitness of an employee boils down to asking the right questions, conducting a background check on a candidate, looking for transferable skills and defining your culture. Some of the ideal questions to ask a candidate include:

1. How would you describe an ideal work environment?
2. How would you describe your work style?
3. How do you prefer to receive feedback? 
4. How do you maintain a work-life balance? 

3. Inadequate onboarding process 

A new hire needs to be set up for success as soon as they join a startup, and it’s best done through the onboarding process. However, a poor onboarding process is more likely to lead to reduced employee productivity, low engagement and high turnover. In the long run, a startup will experience some significant negative results in its overall cost and operations. Some onboarding inadequacies include misleading job descriptions, lack of onboarding objectives, lack of pre-boarding activities and poor training. 

Solution 

First, look for a seamless way to onboard new hires. Also, create a comprehensive onboarding strategy that can easily achieve the following: 

• Help new hires to engage with their team members 
• Help in integrating new hires with the company’s culture
• Help collect feedback 
• Increase the possibility for a new hire to be successful 

More importantly, platforms like Workpay offer onboarding capabilities in their HR software that enable you onboard new hires in a streamlined manner. It also entails convenient onboarding tracking. 

4. Not hiring globally 

Often startups tend to restrict themselves to a particular talent pool during the hiring process, which sometimes increases their hiring cost due to the increased cost per hire. Additionally, not hiring globally may limit your brand awareness internationally.  

How can startups hire some of the best talents without breaking the bank? Consider hiring talents globally. Apart from reducing the hiring cost and increasing brand awareness, this approach also helps you build a diverse workforce. 

Solution

The advanced technology in today’s world is a great tool that can help you hire global talent. First, there are reputable job boards where startups can access a large pool of high-quality talents. They can hire them as freelancers or remote workers. 

Startups can also use Employer of Record (EOR) service providers: they help businesses hire employees/remote workers without registering a local entity in another country. For instance, Workpay’s EOR services help businesses of all sizes hire compliantly employees in African countries. In addition, it assists in running international payroll and takes care of legal liability. 

5. Overlooking recruitment compliance 

 Compliance is a critical part of the hiring process in any business. Being recruitment-compliant helps a startup avoid offending (willingly or unwillingly) a candidate or violating their rights in any way during the entire hiring process. However, it’s common for startups to overlook some of the compliance requirements when hiring locally or internationally and end up making mistakes such as: 

• Misclassification of employees 
• Failing to meet global tax obligations
• Having undocumented workers 
• Not offering the right employee benefits 
• Poorly drafted employment agreements 
• Misunderstanding local laws 
• Hiring without doing background checks 

Such mistakes could lead to court cases and fines and increase a business’ liability overall. 

Solution 

Startups need to work with legal professionals who understand labor and employment laws to develop a hiring program and streamline recruitment, interviewing and hiring processes. Such a professional can also help in drafting employment contracts. 

Another effective way startups can avoid breaching compliance requirements is by working with Professional Employer Organization (PEO): some employees’ liability is transferred to the PEO. There are also other crucial benefits of working with a PEO. They include: 

• Getting assistance with employment compliance and risk mitigation.
• Simplified payroll and tax preparation 

Bottom line 

The above-outlined hiring mistakes can be detrimental to startups. However, avoiding them can set a startup up for success by attracting suitable hires from a pool of talented individuals and avoiding legal conflicts and fines. More importantly, it can help streamline the hiring process as a startup builds a strong and sustainable team of employees.

References 

1. https://recruitingdaily.com/8-common-hiring-mistakes-startups-make-and-how-to-avoid-them/
2. https://www.deel.com/blog/startup-hiring-mistakes
3. https://www.linkedin.com/pulse/5-mistakes-avoid-when-hiring-startup-osinachi-ukomadu?trk=pulse-article_more-articles_related-content-card
4. https://gohire.io/blog/13-critical-mistakes-startups-make-when-hiring-people

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