What CEOs Should Know About Recruiting Top Talent
OpenView, Work-Bench, Primary Venture Partners, and Lerer Hippeau just hosted the fourth and final session of SaaS Growth Camp—a series for the firms’ portfolio companies tailored to the complex ideas behind SaaS growth and go-to-market strategies. This is a recap of OpenView Talent Partner Steve Melia’s workshop.
Recruiting top talent is the common denominator across all scaling startups. The industry experienced a few slow months last year due to the pandemic, but it’s come back so strong that now there’s not enough talent to go around.
It’s an extremely competitive market filled with hundreds of “hot startups” calling on all of the same candidates. Nine out of 10 founders and CEOs I connect with are involved in recruiting on a weekly, if not daily, basis. Many of them are learning on the fly and trying to juggle being CEO and Chief People Officer/Lead Recruiter/Brand Evangelist all at once. It’s a lot.
After months of wearing multiple hats, they start considering other options for hiring top talent. But a few realities set in:
There are endless options
Most CEOs/hiring managers have zero experience working with an outsourced search firm—and they don’t have an understanding of which firms are relevant to engage. All recruiters promise you the world, so how do you differentiate between them?
Prices are outrageous
Hiring a search firm is not cheap. There are several types of search firms that you can retain, depending on the level of role.
- Contingency firms, most commonly used for mid-level individual contributor recruiting, usually charge 25% of first-year cash compensation for their fee. The fee is paid out upon completion of the search. For example, if you hire a contingency firm to find a full-stack engineer (tough search) and a candidate accepts a $90,000 total cash package to join the team, you owe the contingency firm $22,500. Ouch.
- Retained search firms follow a similar model, charging one-third of first-year cash compensation. The total fee is paid in full within 90 days of launching the search—and it’s not contingent on a successful placement. These firms almost always have a minimum fee agreement that’s $85,000 on average.
Again, this is not cheap for an early-stage company trying to be strategic with every dollar.
Time is valuable
Recruiting is very time-consuming. It can take hours to source, connect with, and interview just one candidate. Now multiply that by 10 candidates per search across eight open roles at the company. Is this time commitment sustainable? Sourcing candidates late into the night can make those search fees look not so steep…
All of this is overwhelming. At times, it may feel like every open role in your company is a top priority to fill ASAP. Yes, getting top talent into your company is absolutely crucial, but you can’t fill every position overnight.
Take a deep breath and look at the big picture. Home in on what functions/roles you truly feel confident recruiting and assessing candidates for. Are you a technical founder who has an eye for engineering talent and a robust network of engineers to call/source from? Great—focus your time there and consider other options for the open searches on the sales and marketing teams.
Paying for a search firm can hurt in the moment, but the sting will go away when you land a rockstar and they hit the ground running in a matter of weeks.
It’s important to understand the “white glove” service that comes with hiring a search firm. The example below lays out the basic phases of a retained search firm process. Most search firms will generally follow this timeline.
Phase 1 (weeks 1–2): Search launch
- Official kickoff call. Deep dive into your company details (product, metrics, culture) so the search team can be an extension of the team in the market.
- Create job description, candidate assessment criteria/scorecard, and internal interview process
- Search team goes into their database/active network of candidates, typically producing a handful of candidates to introduce right away
- They then identify a relevant market map of target companies to source candidates from
Phase 2 (weeks 2–8): Active sourcing and presenting
- Team conducts outreach to candidates and sets up initial screening calls to pitch the company and assess experience
- Weekly update calls to introduce fully assessed, qualified candidates
- 10+ candidates introduced per search (on average)
Phase 3 (~60–90 days): Close search
- Finalist candidates presentation arrangement and closing steps
- Offer creation/negotiation and support
- Team conducts backchannel references and completes provided references
- Ongoing CEO advisory and monthly touchpoints with the hire
If the search firm fees are a non-starter for you, don’t hit the panic button! There are basic things you can implement into your process to get in front of top talent:
1. Post the job on LinkedIn and your website, but don’t rely solely on inbound applications
Postings can be your best friend and your biggest distraction. It’s easy to sift through 200 applications and pick out your top five, but realistically only 10–20% of all inbound applications will be qualified for the role.
According to the Harvard Business Review, most people who accepted new jobs last year weren’t actually looking for one. Balance inbound interest with strategic outbound recruiting.
2. Identify your target ecosystem and get mapping
It’s important to know the other players in your space and adjacent spaces.
Example: You’re a hot company in the developer domain and just launched your first Director of Sales search. The goal is to bring in a player/coach with the ability to close deals from the front and then build a sales team/process over time. What are the key checkboxes for the search? Domain knowledge, enterprise sales DNA, and experience building a team to 10+ people.
Fundamentally, you can run through the same steps as a search firm. Identify 20–40 companies in your target ecosystem and search for the sitting directors and potential “step up” sales managers within those orgs.
Ideally this yields 40+ target candidates to start recruiting. There are plenty of great resources out there to map your ecosystem. OpenView is all about product-led growth (PLG), so we know the players. Other resources like Lumascape, Bessemer Cloud 100, and CB Insights will point you in the right direction as well.
3. Put ego aside and sell the opportunity
We get it: Your company is your baby. But you must realize it’s just another company to a prospective candidate. It’s in your hands to sell the dream and explain why this is an amazing opportunity.
Never reach out to a candidate and expect them to jump through your LinkedIn inbox and into your company in 48 hours—most candidates are passive. So send a personalized note and position it as more of a “networking in the space” message. Get on a call or Zoom and make it feel like a genuine connection, and resist the urge to pepper them with a dozen questions about their role and experience. Talk about your story, the product, new customers, etc.—and then save time to learn more about them, their career/timing, and what will get them excited about a next move.
Save the true interview questions for the follow-up call. There will be plenty of time to assess in the process.
Want to see more from SaaS Growth Camp? Check out recaps of Kyle Poyar’s pricing and packaging workshop, Sam Richard’s five-step framework for building a PLG business, and Cassie Young’s tips for building and scaling SaaS customer success orgs.
Header image by #WOCinTechChat.
Conversations are the foundations of growth. Learn about the important conversations that should be happening in your organization to drive growth right now.
OpenView’s Steve Melia shares how to widen your talent pool, identify sneaky red flags founders commonly overlook, and foster a more diverse C-suite.