Ep. 13 - How to Evolve Your Hiring at 50, 100, and 500+ Employees

It’s the universal law for startups: what works when you have 20 employees will not work when you have 200 – and it will cripple you at 2,000.

Paul Graham’s advice to do things that don’t scale is sage wisdom for early-stage companies, but it does not apply as your company scales. As headcount increases, new demands emerge as you try to support growth while not collapsing under your startup’s weight.

In other words, as your startup scales, its processes must evolve.

That goes for everything from sales and marketing to today’s episode: hiring.

Hiring and recruiting are critical topics for startups because many fail to evolve their recruitment processes as they grow. This leads to inefficiencies, bad hires, and ultimately, expensive mistakes that could stunt your growth – or worse.

Why Your Hiring Practices Need to Evolve as You Grow

As you’ve heard me say in previous episodes, hiring is often a haphazard process at many companies. But what worked when you were 20 people simply won’t cut it when you’re 200 people. The stakes get higher, the processes more complex, and the impact of poor hiring decisions becomes increasingly costly.

While one hire could be a drop in the ocean of a large company, in a startup, especially in the 50-100 person range, each new hire can have an outsized impact on your company’s health and success.

For instance, I worked with a B2B SaaS company doing $8M in revenue with only 15 employees – a promising start for any high-growth company. The problem was that their hiring pipeline was weak, and turnover was extremely high (over 50% of new hires left or were terminated in their first six months). This led to a revolving door of talent that was slowly sinking the company and stunting its growth, eliminating the possibility of building institutional knowledge from the outset, and preventing a strong internal culture from taking root.

That’s why it’s important to hire the right people for your startup.

I’m going to break this down into four major phases of company growth and examine how hiring practices need to evolve at each stage. Then, I’ll address some of the hiring challenges that companies face as they transition through these phases.

How Hiring Changes as Your Startup Scales

With over a decade of experience working with high-growth startups, I’ve seen what works and what doesn’t at different stages of growth. I find that the following phases are a helpful frame of reference:

• The Startup Phase (1- 50 employees)
• The Formalization Phase (50-100 employees)
• The Professionalization Phase (100 - 500 employees)
• The Enterprise Phase (500+ Employees)

Hiring at the Startup Phase (1- 50 employees)

In the initial phase, startups often rely heavily on a “friends and family” hiring model, where you’re reaching into your personal network, relying on informal processes, and making decisions based on gut feelings and relationships.

While this approach can work when you’re small and nimble, it quickly becomes a liability as you grow and your needs become more specialized and diverse.

Here are some key actions for this phase:

• Define and Conquer: Clearly articulate why each role is crucial to your startup’s success. What unique value does it bring to your team? This clarity will ensure that you only hire when absolutely necessary.
• Test Before You Invest: It’s vital to implement a paid project to test new candidates’ skills in a real-world context. This not only evaluates their capabilities and competencies but also assesses their cultural fit and adaptability within your team environment.

Hiring at the Formalization Phase (50-100 employees)

As you progress into this phase, relying on spreadsheets and informal processes will no longer suffice.

You’ve reached a point where introducing systems and structure is necessary to handle the increasing complexity of your operations.

Here are some key actions for this phase:

• Implement an ATS: An Applicant Tracking System (ATS) isn’t just an option—it’s non-negotiable during this stage. An ATS ensures consistency, accountability, and efficiency across your hiring processes to reduce errors and help you stay organized.
• Standardize Everything: From job descriptions to onboarding processes, creating a uniform approach is crucial to prevent inconsistencies and maintain quality. This helps to establish a strong foundation for all recruitment activities moving forward.
• Hire a Recruiter: Bringing a dedicated recruiter on board will focus the effort on sourcing the right talent for your organization, freeing your existing team members to focus on their core responsibilities without being bogged down by recruitment tasks.

Hiring at the Professionalization Phase (100 - 500 employees)

At this stage, hiring transitions into a full-fledged operation.

The “startup mentality” that promotes an informal structure and flexible rules must give way to a more professionalized approach that can support sustainable growth.

Here are some key actions for this phase:

• Train Your Team: It’s important to equip hiring managers with the necessary skills and knowledge to make informed decisions. Proper training can significantly improve the quality of hires, ensuring that each addition is a strategic move toward company goals.
• Track and Measure: Utilize data analytics to refine your hiring process. Monitor metrics such as time-to-hire and offer acceptance rates to help manage and control recruitment costs effectively.
• Document Everything: Compliance becomes critical at this scale. Ensure every hiring action and decision is logged and tracked meticulously in your ATS to avoid potential pitfalls and ensure legal protection.

Hiring at the Enterprise Phase (Beyond 500 Employees)

Now, you’re in the big leagues, and your hiring strategy must evolve to reflect your status as a significant player in the industry.

The complexity of your recruitment operations will increase dramatically, necessitating a strategic and scalable approach.

Here are some key actions for this phase:

• Leverage Automation: Utilize the latest tools and technology to streamline processes and minimize manual tasks, enabling your recruitment team to deliver results more efficiently and avoid being hindered by administrative work that adds no value.
• Enhance Employer Branding: Position yourself as a top employer in your industry to attract the best talent available. A strong employer brand can significantly improve recruitment outcomes and increase employee retention.
• Globalize Your Process: As you grow, tailor your hiring practices to accommodate a diverse, international workforce. This includes understanding cultural nuances and legal requirements in different regions to create a seamless recruitment experience.

Challenges You’ll Run Into as You Scale

After over a decade of startup HR experience, I’ve seen the dark side that comes with hypergrowth.

Companies that reached $10M in ARR but could barely keep pace with new customer growth. High-growth startups that suddenly found employees churning out after six months. While multi-million dollar funding rounds and company offsites in Paris may seem enticing, fast growth brings along a unique set of challenges.

Here’s how to tackle the six most common ones you’ll run into:

• Maintaining Culture While Standardizing Processes: Good processes protect, not harm, your company culture. They ensure you hire people who align with your values, maintaining the essence of what makes your company unique, even as you grow.
• Balancing Speed and Quality: Avoid the temptation to rush. A bad hire can be costly—estimates suggest over $25,000 per mistake. Maintaining a balance ensures quality doesn’t suffer and that each candidate is thoroughly assessed.
• Managing Compliance: Each new jurisdiction you expand into adds layers of complexity. It’s crucial to consult with labor law experts to navigate compliance requirements smoothly and avoid legal issues.
• Controlling Costs: Regularly track metrics like cost-per-hire to ensure your spending is effective and you’re getting a good return on your recruitment investment.
• Maintaining the Candidate Experience: Keep interactions human, and personalize communication throughout the hiring process to maintain a positive candidate experience. This can set your company apart in a competitive hiring landscape.
• Scalable Onboarding: Deliver a consistent onboarding experience across departments, ensuring all new hires feel integrated from day one, which is vital for both employee satisfaction and productivity.

This list is by no means exhaustive, but it will prepare you for that next phase.

Actionable Tips for Your Scaling Journey

If I could condense my years of experience into five tips to prime your company to scale, here they are:

• Invest in Systems Wisely: Choose systems and tools that are capable of scaling with your organization. Being forward-thinking in your HR tech investments can save time and resources in the long run.
• Strategic HR Hiring: Add HR and recruiting personnel proactively, before hiring bottlenecks occur. This ensures that you have the resources needed to keep pace with growth.
• Regular Updates to Policies and Procedures: Continuously refine and update policies and procedures to match your evolving needs. This flexibility helps in adapting to changes in your business as it scales.
• Train Hiring Managers: Equip your hiring managers with the skills and knowledge needed to make effective hiring decisions, improving outcomes and boosting team productivity.
• Data-Driven Decisions: Measure everything and use analytics to refine and improve your recruitment strategy continuously. Data will help you to make informed decisions and take action quickly where needed.

Hiring is Just One Part of HR: Download the Startup HR Survival Guide For the Rest

Hiring is a key piece of your startup’s success, but it’s only one element of HR.

The most successful startups know that their path to scaling from 7 to 9 figures will be made possible by the practices they follow to attract and retain top performers in their company.

I mapped out this and more in my Startup HR Survival Guide. In this free guide, you will learn:

• How HR can drive growth
• How to hire
• How HR evolves as your company grows
• And more!

Fill out the form below to download the free guide and put your company on the path to hypergrowth.