This article originally appeared on the Stanford Graduate School of Business Tumblr page, March 6, 2014.
In last week’s “Nuts & Bolts” talk at Stanford GSB, Lecturer Robert Siegel (MBA ‘94) shared insights on hiring and compensating employees at a startup. Read three key takeaways below, and view the slides from his talk here.
1. Hire a star executive team
“Your executive team will be the single most important hire that you’ll make,” says Siegel. “Your ability to scale is directly related to the capability of your direct reports.” Think about skill sets when building this team; you want a group of people who are smarter and better than you.
Some of the common roles to fill on the executive team include vice presidents of marketing, sales, engineering/CTO, and product. There will also be “outlier leaders,” or executives who come later with more years of experience. In any case, the founding team should think about bringing on people who are going to help change the game. Hire people with long “runways,” and consider how they could grow into different roles as the company scales.
2. Hire technical talent who can get your product out the door
Looking for a technical cofounder? You have to be aggressive in going out and finding someone, says Siegel. Look for local meet-ups and talks where you can cross paths with engineers. Ask all potential candidates: “Have you ever delivered and shipped a product?” You want to hire people who can get your product out the door and working to spec because in the end what matters is that the product functions correctly and shows up on time.
3. Pay your team what is fair
Don’t overpay and don’t underpay. All that most people who believe in your product and company want is to be paid fairly, believes Siegel. Make the compensation conversation data-driven versus emotional.
Also remember that not all founders are created equal; sometimes when you start a company, one person has more experience or a broader skill set. You need to talk upfront about divvying up the compensation. It’s never an easy discussion, but if you don’t deal with the financial issues at the start, they’ll come back to haunt you later. (View the slides for more on compensation best practices.)
Follow Lecturer Siegel on Twitter: @RobSiegel