Photo: iStock
Photo: iStock

Opinion | How to hire a new team for a growing startup without rattling the old

Hiring and assimilating laterals is a key success factor for a venture to scale smoothly

One of the big questions that startups face as they begin to scale is whether they should promote their own employees up to new roles or hire laterally. How should they hire these leaders? What traits should they look for? How should they manage the inevitable tensions between the newcomers and the home-grown rock stars? How does this impact the culture of the company?

Hiring and assimilating laterals is a key success factor for a startup to scale smoothly. Typically, a startup begins to refresh talent after the product-market fit has been established and the founders see an opportunity to scale. By the time they reach this point in their journey, founders would have often recognized the inadequacies in the leadership team that could be an obstacle to further growth. While the early team is great at hustling and getting things done, its members often lack the ability to put in place systems to keep the ship stable as the organization scales. I will touch upon two separate but interrelated aspects of hiring and assimilating laterals.

The right strategy

To start with, there is a tendency to be impressed by those who have the experience of scale and managing large teams. But there is a world of difference between those who have managed in a scale environment and those that can build for scale. It is important to differentiate the two and hire those who can build for scale. They have two traits that the former don’t have: a) ability to roll up their sleeves and get things done even without support structures, and b) ability to solve problems ground up.

I can think of two cases where I was involved in making the wrong call. In one case, we were hiring a global head of sales and in the other, a chief operating officer (COO). In both cases, we ended up hiring individuals who were managing scale but had lost the ability to be hands on. In both cases, there were red flags all along—in the demands they made, the questions they asked, the way they steered the discussion to avoid deeper probing—but none of the individuals who interviewed the candidates raised their fears for the simple reason that there was tremendous pressure from the board to close the positions quickly. This created a false consensus of sorts because the candidates seemed so right in every other way and we made the wrong decision. Both individuals had to be let go eventually and this set back the growth journey by more than six months in each case.

The second aspect is about assimilating lateral hires. There is likely to be some tension between the lateral hires and the old rock stars who report to them. The old-timers will have a tendency to test and undermine the new so that they can say “we told you so" to the founders. Part of the responsibility for winning over these rebels is with the lateral hires. It is important for them to quickly demonstrate that they have not lost their ability to hustle, and that they bring a certain set of valuable skills that the old team doesn’t have. If they do both these well, they quickly earn the respect of these rebellious rock stars. Part of the responsibility for their assimilation is also with the founders whose job it is to facilitate a seamless transition.

In one startup I worked with, most of those we brought in laterally failed and had to move on. The failure was due to a combination of hiring errors as well as inadequate support during the assimilation period. There was also the problem of the founders blindly listening to the rebellious rock stars with who they maintained a deep connect. I have been at four other startups where assimilation was smooth. In all these cases, it was successful because the founders made it clear to the existing employees why and how they were bringing in new people, provided support to the newcomers, and listened to genuine grievances of the old-timers without letting them be disruptive to the company’s growth.

Hiring and assimilating lateral hires as a startup hits scale is the single most important success factor for subsequent growth. This is important even in the context of an acquisition where assimilating the founders of the acquired company is important in delivering the intended outcomes of the acquisition. An inability to do this well has been the undoing of many startups that failed to scale or many acquisitions that failed to deliver.

T.N. Hari is head of human resources at Bigbasket.com and adviser to several venture capital firms and startups.

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