The Talent Hunt

A lot of due diligence goes into choosing the 11+ players for a cricket team. The selection committee makes sure there is a right mix of batsmen, bowlers and all-rounders; right mix of right-handed and left-handed batsmen and bowlers; right mix of people who are good in fielding at specific positions on the ground. We can't have a team full of good batsmen who are poor at bowling or vice-versa. It renders a team redundant and efforts duplicated. A cricket match can be compared to a business: your team's runs are your revenues, the other team's runs, your costs. Batsmen try to push up the revenues while bowlers and fielders try to control costs so that you have sufficient margin for victory.

It's been a while since my last post in which I promised to do a deep-dive into each of the sections of a business. I have been very busy of late and haven't been motivated enough to write until Friday, Jan 22 when the Hyderabad entrepreneurs group had a session with Vijay. Thanks to this meet, I got to meet some very talented individuals with interesting ideas (and for the first time a startup in the healthcare sector). The discussion focused mainly on hiring in startups and the issues in identifying and looping in the right talent. I would like to share my views, ideas and suggestions in this post from a talent point of view.

Most startups taking the plunge don't invest in heavy machinery (capital assets), at least in the beginning. In fact, in this information age, startups (and many established companies) are services-based and not manufacturing-based. Like in a professional services firm, people are the most important assets and it is their time that often directly translates into money. So the performance of a company can be directly tied to the capabilities of individuals who are a part of it. No wonder some VCs insist on a round of introductions before a presentation for raising capital. Talent forms an important component of a company's valuation.

Since we are talking about 'hiring', let us consider a startup with all its partners identified and is looking for resources to build an exhaustive team to run the business. Let us look at the following aspects in detail:

1. The need for resources
2. Identifying the right-fit
3. Sources to look into
4. Mode of employment; Outsourcing Vs. In-housing
5. Employee experience, Learning & Development
6. Incentives
7. Taking HR to the next level

1. Need for resources: By the time the partners come together and plan to set up a business, they pretty much know what to create (product/ service), how to create (most of it) and how to monetize their idea. However, there may be some areas in the process which need specialized expertise outside the domain of the partners' knowledge. Like information technology is a business enabler that may not be in the list of their capabilities. Accounting, legal matters, branding, marketing are some other areas which may need someone who has indepth knowledge. Sometimes we may need resources for general management, leadership and people management (what if Hitler had a great idea! :)) as well. In these cases, the partners need to look for resources to make the company a MECE entity (Mutually Exclusive, Collectively Exhaustive) who can fill the gaps in capabilities without introducing any redundancy to the extent possible. This completes the lean version (fundamental unit) of the company which can produce a single unit of a product/ service as well as market it and sell it to the first customer. (Redundancy at the fundamental level may not bring in extra revenue but will bloat up the S,G&A expense, eating your margin).

We haven't thought of scale yet. Fulfillment of the above needs makes sure the lean version (sometimes treated as the demo) of the company is complete. When we look to scale up the operations, we will need proportionately higher number of resources. (This does not introduce any redundancy).

2. Identifying the right-fit: Let us consider the case of the fundamental unit of the company as discussed above. We need to clearly understand the existing gaps in capabilities so we can search for someone who can fill them up. The right-fit must bring in a new value add to the table and complement the capabilities of the partners. Often he/she will be the one with the missing capability as their core competency. Right-fit can be a firm specializing in the capability as well.

3. Sources to look into: Like word-of-mouth is an unbeatable form of advertising, the first source to be tapped is the direct contacts and networks we have. A lot of startups already do this when they post their requirements on relevant portals. Participation in startup exhibitions might introduce you to firms whose offering is basically your missing capability. Going for freelancers is another good option.

One not-so explored option is the educational institutes segment. Some students may have the capabilities you are looking for and may offer part-time commitment to your company. Structuring the relation into an internship program turns it into a win-win situation where the company doesn't end up paying as much as it might to a freelancer or a firm. If you are looking for specific technology expertise, try looking for contacts in training institutes like NIIT, Aptech etc.

Resource sharing between companies is another option given there is no need for a full-time commitment from the resource to any of the entities. The companies can collectively compensate for the resource bringing down their individual expenses.

(During the meeting with Vijay) It was interesting to see some folks exchanging business cards on hearing from others regarding resources who can be of help to them.

4. Mode of employment: The desired resource can be employed full-time or part time depending on the requirement of the company and the willingness of the resource. Employing freelancers part-time for one-time jobs (like setting up a website) is beneficial to the company as the freelancer doesn't need to be on the payroll to claim for benefits like insurance etc. from the company. There can be savings in real estate as well (if it's a group of resources) as freelancers normally work out of their location. However if the job is critical and not a one-time work, it demands full-time employment of the resource.

The same discussion can be applied to the outsourcing Vs. in-housing debate. Outsourcing to other firms is a good option (has the same benefits of employing freelancers) and also has the added advantage of the firm's reputation being at stake!

5. Employee experience, Learning & Development: Offering a great employee experience is pivotal to retaining those resources that you think are going to play a role in the long run. Depending on the worth of the resource, you may want to add to their capabilities through learning and development programs that make them a well rounded part of the team. Often it is a good practice to hold one of the partners (may be the one who took the hiring decision) take lead on the resource by mentoring him, counseling him and tracking his performance on a regular basis.

6. Incentives Programs: Offering attractive incentives is the best way to retain key talent. Let's face it- we can't get the best of talent without paying them proportionately. Look for benchmarks in other similar companies and come up with an incentives package. Depending on the flexibility of the resource, you can talk him/ her into agreeing for payments after a certain time (say after breaking even). For resources that you find exceptional and indispensable, it's worth to offer them a stake in equity so you can tie the performance of the company to someone who is capable.

7. Taking HR to the next level: We can't really live with an informal HR set up for long. As the company grows, we need to put a proper HR organization in place to identify the right talent for the organization as a whole. We need to put metrics in place to evaluate the need for recruiting, financial feasibility and performance of the resources. We need to devise an organization structure that has no place for redundancies and every resource knows his/ her precise roles and responsibilities and whom to report to. Depending on what your startup is, we can come up with the most optimal span of control (number of people reporting to a lead)

Recommended reading: I am personally a fan of how Richard Branson runs his 300+ businesses across the world. In all his books, he emphasizes the role of his employees in Virgin's success at every stage. His principle is to identify the best talent and let them run the show thereafter, in an entrepreneurial setup. He makes sure none of his businesses grows big enough. If the size of a business crosses a certain number, he calls the deputy leads and tells them they are going to start a new business (of the same kind) and they are going to be the leads. He keeps his businesses small and lean and efficient in turn. Especially the first part of 'Business stripped bare' is a good read on people management.

How can I help:

Most of what I wrote above is off the top of my head- things I have been learning as part of my projects, from books like Branson's and other great businessmen. Most of it may sound like an advisory piece of material with no action attached to it. Part of the reason is that I did not want to customize it to a specific company. Each startup has its own intricacies and we need to understand the above points from the company's point of view. Each of the above points can be converted to specific actions, which when undertaken can help you assess your talent needs, identify the right talent as well as retain the best people. I can help you:

1. Figure out the process roadmap for your product/ service,
2. Understand your existing capabilities,
3. Assess if they sufficiently address each step of the process,
4. Bring out the gaps
5. Come up with a profile of the kind of people who can plug the holes
6. Help find the best-fits
7. Assess the best mode of employment (Full-time/ Part time, Freelancers, Outsourcing vs. in-housing)
8. Design an incentives package
9. Put a formal HR setup in place (if the startup is in a position to afford money, time, resources to a separate HR org.)

As always, please feel free to reach out to me if you think I can be of help to your company in any way. Would love to work with you!

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A Little About Myself

I am Vyas, I belong to the strategy & operations group of Deloitte Consulting. I went to IIT Madras for my bachelors in Mechanical Engineering. Like almost everyone on the campus, during the last few days of my four-year stint, I found myself at the sacred Y junction- whether to take up a job or go for higher studies. No offense to those who chose the later (or might choose in future), but by then I was almost tired of the nth root equations, theories that were too ideal to be applied in real situations (if at all we get a chance). If I were to continue in my field of study (I was studying micro-channel heat transfer), I would have found myself in some remote corner of a lab waiting for that eureka moment that might have eluded me for eternity. (A paper/ patent does not qualify as a eureka moment, I believe in business implications and mass application of science and technology which is also cost-effective compared to traditionally available alternatives).

I did not have much idea of what consultants do when I sat for the interview with Deloitte. That I made it through and have been spending the last 2+ years with Deloitte makes me feel that sometimes we just need to let life go the way it likes, without much resistance. My value proposition to the firm when I joined was ‘being good with numbers, good with people’ and some common sense. I got to work on some real cool projects that helped me develop a good sense of business and in the process met some really good people. Working across industries and service lines helped me gain a holistic perspective of the business world and offered me multiple areas to choose from, if I were to consider specializing myself in any area.

To preserve the sanctity of the post’s title (and stop boring you further), let me get to the point. I believe in the ‘What’s in it for me’ attitude when it comes to allotting our time to anything. So here it goes for those who are still reading:

Like I developed a passion for business and consulting, I have recently been developing a keen interest in entrepreneurship. The startup momentum in India has risen to never seen before levels and is expected to transform the Indian business scene like it has been happening in the US for a long while now (US economy is largely dependent on small & medium scale businesses, we will talk about it later). Though I am not an entrepreneur myself (I have a hundred ideas but none convincing enough to yield a good NPV or let’s just say, none better than my job for now), I would like to involve myself in this movement. I don’t think I am qualified enough to call myself a mentor (and there are better people to be called so- I will post about them soon) but I can help startups by using my business consulting skills, providing an outsider’s perspective, asking the right questions and possibly providing some insights into unanswered questions. What’s my offering to the entrepreneurs’ market is going to be my next post. Coming to the ‘What’s in it for me’ thing from my side, I

1. Would be happy I’m able to put my consulting skills to use for a great cause

2. I believe startups offer great learning – there is some business beauty in startups that one cannot savor through consulting for behemoth corporations – this is going to be one of my next posts

3. Last (and the least), I can spend my weekends effectively

I am well aware of how costly it would be for one to follow a wrong advice (especially so in the case of entrepreneurs). I do keep this in mind when I suggest something, and it is only a suggestion, to be implemented only if it makes sense to the whole stakeholder group. Having said something about myself, about my intention in writing this blog, let me take a leave for now until I come up with my second post (within a week). Cheers !

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Ask the right questions

28.57% of time is all a typical corporate professional longs for, during the rest of his/ her time. Yes, we are talking about those 2 precious days in a week, the weekend. Every Friday, we at Deloitte get a ‘weekend fun’ mailer with info on events happening in the city over the weekend. (It’s a huge business for some companies like buzzintown.com. I can’t help but muse at their copyright reservation; they cannot even figure out when their so-called copyrights have been infringed. We will talk about digital copyrights and their fragility in a separate post). Thanks to my friend who sends the mail, a couple of weeks back there was a mention of a startup exhibition in the city. Now, Hyderabad is not (yet) a hot-spot for entrepreneurship and events such as this, are like circus-in-town for the passionate. Contrary to my regular Saturday wake-up time, I got up earlier (9am) and made my way to the circus, err, the exhibition.

The venue was buzzing with crowd (I later realized that each startup brought with them 5 people on an average, who formed most part of the crowd). Each team was given a kiosk, good enough to display the product or banners/ brochures if it’s a service. Startups included a budding social networking site, a corporate skills training-for-students firm, an online interview platform, a niche consulting firm, a firm that makes edible cutlery (substitutes plastic), recruitment based firms, an online veggie bazaar among many others. These exhibitions are great platforms for entrepreneurs to showcase their innovation to VCs and the media, attract potential customers and talk to potential suppliers. If done effectively, they make great first steps for your go-to-market strategy. Not disappointing the expectations, the owners were very passionate about their ventures, explained in detail how it all began, how they managed to gather a team, what kind of challenges they faced and how they are doing currently.

Being a member of the business consulting fraternity, I could communicate with the entrepreneurs in their own language and assess their product/ service, business model and understand their challenges and future expectations. For the pitfalls I pointed out, some of them were intelligent enough to come up with a resolution scheme, some good ones lent their ears to understand possible corrections and solutions and a few were either defensive or unwilling to admit any loopholes. The presentations to the VCs went really well (some of them were epitomes of confidence). In the end, one of the VCs (who is an NRI returning to India to start his VC firm) mentioned that he found nothing innovative, some ideas too complicated to be practical and some startups did not do their market research before they took their plunge (it may be his money at stake after all!).

Based on this exhibition and my many other encounters with startups and entrepreneurs, I felt that the chemistry in a startup is not different from that of a typical company. The same business principles a management consultant uses to assess a regular company can be slightly tweaked and applied to a startup. Moreover, you can find ‘pure business’ in a startup. Before things settle and the company stabilizes, the focus is on the core revenue generating component rather than other components like managing huge volumes of data or optimizing your customer service operations, as an example.

A startup goes through few critical phases before it blooms into a sustainable business (many don’t). In my understanding, the beginning phases of a typical startup are characterized by the features, challenges depicted in the pic.

At every stage, the owners need to ask themselves some questions to understand if they are going in the direction they initially envisaged. I have put together a set of questions (which are by no way collectively exhaustive) knowing the answers to which is very critical for an entrepreneur to make sure he/ she has a perspective of what's happening with the venture. These questions spread across the phases of the startup and serve as a checklist to ensure the venture is moving towards sustainability.

The first set (Core business) is like your front office- the part of your business that earns you money. The remaining parts are those that cost you but essential in running your business.

As promised in my previous post, here is my value proposition to startups: As a consultant, I would like to help startups in answering the above questions and also trying to improve the answers. I am no Ram Charan to present a panacea to all your issues and immediately uplift your top-line and bottom-line but can use my consulting skills to help you make decisions that are most appropriate for your business. More importantly, I bring an outsider perspective to your business from someone who has no stake and hence no reason to be biased in any way. While I have experience in some of the above areas, I am sure I can add value in any required area by doing the required due-diligence as a typical consultant would do.

I would be doing this over weekends as pro-bono. So if you think I can be of any help to you, please feel to reach out to me. I will be happy to talk to you. Cheers!

P.S: My future posts will be deep-dives of the above areas, one by one.

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