Talent Management is Crucial for Start-ups, say Investors
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Hiring the right talent for your company is just as crucial as having a great product. A team of talented and hardworking people not only aid the founders in taking their mission of building a successful company forward, but also helps build the right culture for a company, pointed Priya Rajan, managing director, Silicon Valley Bank at the recently held TiE Global Summit 2019.
Related Read: Why Culture is Crucial to Building a Successful Startup
But, finding and retaining good talent is one of the major challenges that organizations face globally. This is especially true in the early stages of building a company. “It is tough to convince good talent that this small idea will be a multi-billion company tomorrow and get them on board,” pointed Akhil Gupta, founder, NoBroker, while speaking at the Summit.
Hiring and Retaining Good Talent Should be Priority
For a start-up, getting the right people on board early on helps build a strong organization in the long run. But, founders de-prioritize this crucial factor while caught up in the day-to-day execution. “It is important that founders lay down their vision for the company early on and hire people who reflect these values,” said Rohit Sood, principal, Bertelsmann India Investments, during the Summit.
Karan Mohla, ED and research head of consumer media and tech, Chiratae Ventures India, speaking from his investor’s experience pointed out that even if founders realize the importance of talent while starting out, they lose focus going forward. “As the company scales, founders de-prioritize building a good team. Not because they don’t think it’s important, but because they have 50 other things to do,” he said.
Define Roles and Hire Candidates for those Positions
Experts say that founders should turn over the reins of some tasks and responsibilities to other employees. “The best founders figure out their strong points and play on those strengths whereas they overcome their weaknesses by hiring the right people,” Mohla said.
Most importantly, define roles and hire candidates specifically for those roles—an advisory board who can help founders with management and retention of talent, and a CEO who can think about organization building and planning.
“It is important to have people for different roles because a founder cannot pull off all the roles no matter how talented he is,” Mohla added.
Companies Getting Role of HR Wrong
Anirudh Damani, managing partner, Artha Venture Fund, said during the Summit that most companies go wrong with the role of a human resources (HR) executive. “Most companies hire an HR and expect them to be everyone’s aunt. That’s a wrong role for the HR because in this case, the manager or a leader of a team passes over his role of connecting with his team to the HR,” he said. To tackle this, companies should have leadership development programmes, Damani suggested.
“The actual function of the HR is to handle administration tasks,” he added.
Saurav Banerjee, partner, Kalaari Capital added that HR directly reporting to finance is another common mistake that most Indian companies commit. “Either HR department should be kept separate or maybe report to the CEO of the company, even if in a small capacity, but making it a part of finance is not a good idea,” he said.
Sood concurred and added that HR invariably remains an underinvestment in Indian start-ups.
Investors Coaching Start-ups on Hiring
Investors can help start-ups by chipping in with tips on governance and talent acquisition.
Damani gets involved with his portfolio companies to guide them on talent hiring and management. “I feel the right way to hire people is for their attitude and not for CV. Founders try to hire more on the basis of CV and end up getting the wrong hire,” said Damani.
Sood chips in by keeping a tab on latest trends and developments around talent management across the globe and guide companies to adopt those trends.
For instance, Esop is increasingly becoming a lucrative way for start-ups to attract and retain employees globally. Sood has coached his portfolio companies to offer Esop plans to their employees.
“Perception around Esops has changed massively in India in the last 24 months due to several big exits. Now, boards and entrepreneurs are creating Esop trusts and providing liquidity even in series B, C and D rounds just to send a message to present and incoming talent that it is a very liquid currency,” said Sood.
Mohla said the Flipkart episode was one of the catalysts for changing perception about Esops. “It is great how senior and mid-level management at companies are finally asking questions around exercise price and terms of Esops,” Mohla said.