At Neon Roots, we work with a lot of founders and a lot of mobile app developers. We’ve seen some of the strongest people in both of these worlds: companies and apps that have wowed investors, raised millions of dollars in capital investment, and – most importantly – engaged and retained millions of active users. These people are product geniuses, coding wizards, and startup mages. But to carry an app or startup from the ideation and initial growth phase through to long-term, sustainable profitability takes more than just that smarts. It takes an incredible team of people – and that means hiring.
Keeping Growth Going
What makes recruiting so important? Ultimately, companies – mobile app-based and mobile app development companies included – are only as good as their people. It’s employees that write brilliant code, close on new leads, and keep the wheels of a startup turning. And while it may work to just rely on those closest to you as your team in the early stages of a startup or mobile app, growing past that phase requires hiring a dedicated team. And, unfortunately, that doesn’t always go well.
A Crisis in Hiring
A quick look at the numbers tells us one thing: hiring is a broken model. A study by Leadership IQ found that 46% of new hires fail within the first 18 months, and past that point, only 19% ever go on to achieve lasting, effective success. Think about that: despite rigorous interview processes and countless hours of deliberation, less than 2 out of every 10 people hired ever succeed long-term in the job.
This preponderance of failure isn’t for the reasons you might think. Many employers – particularly mobile app development companies – focus more on hard, technical skills than anything else. They want coders who can code, salespeople who can sell, and marketers who know how to get the word out. But a mismatch in technical skills isn’t the problem with hiring. In fact, only 11% of new hires fail because they lack the right hard skills.
So why do they fail? Soft skills: those elusive ghosts, so hard to track or measure, but so critical to performance on the job. The same study by Leadership IQ shows that of the 89% of new hires that fail from soft skill problems, attitude is the main factor:
- 26% of new hires fail because they aren’t coachable.
- 23% of new hires fail for lack of emotional intelligence.
- 17% of new hires fail for lack of motivation.
- 15% of new hires fail because of temperament problems.
If this isn’t a shock to you, then you’re well informed – and if it is, it’s time to start paying attention. Because those hiring failures aren’t just abstract statistics: they translate into real, serious losses for your company or mobile app.
The Long Shadow of Bad Hiring Decisions
Bad hires strain every aspect of your company, finances included. The US Department of Labor and Statistics finds that a bad hire, on average, costs a company about 30% of the hire’s first-year potential earnings. The ROI of a bad hire stands around -300%. If things truly go bad, the average settlement cost for a negligent hiring lawsuit is $1 million – and employers lose 79% of those cases. Even Tony Hsieh, CEO of the online shoe retailing giant Zappos, estimates that his own bad hires have cost his company $100 million.
But the cost of a bad hire isn’t just monetary: it puts a strain on intra-team relationships, company performance, and growth. A 2012 study by the National Business Research Institute (NBRI) found that of the two thirds of employers who experienced negative effects from bad hires, 37% saw a negative impact on employee morale, 18% saw client relationships suffer, and 10% saw a flat-out decrease in sales. A single bad hiring decision can have a ripple effect, depressing employee morale, team performance, and revenue numbers.
The Problem With Hiring Hard & Fast
So what’s driving all these dismal hiring statistics? One of the biggest problems is being strapped for time and resources. The same study by the NBRI found that 43% of employers made a bad hire because they needed to fill the position quickly. Sourcing, too, is to blame, as some 80% of job openings go unadvertised. Furthermore, a dearth of new research has pointed to the startling ineffectiveness of job interviews when hiring.
Another major problem in hiring is that employers, particularly those in the mobile app development industry, tend to look for hard skills over soft. The thinking goes that an employee is essentially a technician, someone hired to fulfill a specific role and perform a specific function. But, as we’ve seen, only 11% of bad hires fail because of a lack of hard skills: the overwhelming majority fail for reasons of emotional intelligence and soft skills. Failing to recognize the importance of these traits is a recipe for hiring disaster.
But even more fundamental than looking at soft skills, taking the necessary time to interview and hire, or using a diverse array of candidate validation methods is the lack of a real focus on hiring. Many companies just assume that when they post a job opportunity, the right candidate will fall into their lap – and that’s just not true. Hiring is a skill, and one that startups and mobile app development companies need to learn.
Learning How to Hire
As a startup or mobile app development company that’s moving beyond the initial three-person team stage, the first step is to recognize how critical hiring is to the success of your business and invest the time and resources necessary to do it right.
In an excellent blog post, David Skok argues that, just like sales, recruiting is a funnel process that requires attention at every level. At the highest level of the funnel, you need to source candidates, attracting as many applications as possible from qualified people in the same way that you generate leads when selling a product. Once collected, you move to the middle of the funnel, where you evaluate those candidates and skim off ones that clearly aren’t fit for the job. At the lowest point in the funnel, just like in traditional sales, you must “sell” the candidate on the notion that the job is right for them.
Step 1: Sourcing
Although sourcing is the highest level of the recruiting funnel, it isn’t purely about volume. Yes, you want to attract as many candidates as possible, but it’s also critical to be targeting the right kind of candidate. Traditional models like job postings and external recruiters can work, but the modern startup and mobile app development environment presents a unique challenge to companies: demand far outstrips supply. Most good candidates are already working at a company, so finding a qualified candidate takes more than just posting an ad on a job board. Recruitment methods that were once tried and true may fall flat in today’s startup environment.
Still, though, there are practical, effective steps you can take to source the right candidates. First off, don’t underestimate the power of your own social network. Tell everyone you know that you’re looking to hire, and ask them to spread the word – Malcolm Gladwell has an entire book on the strength of personal networks. Also make use of online social networks, looking through Facebook friends, Twitter accounts, and LinkedIn profiles for good candidates. Needless to say, you should also be pushing the job opening through your company’s social media channels.
Branching out, don’t be afraid of looking through other sources and online communities like GitHub or Reddit for members who regularly contribute of post comments in sections of the site dedicated to software, mobile app development, or whatever industry most relates to your company. Hacker News has a monthly job board where companies can submit job ads, and some companies like Entelo are even offering software-based, data-driven solutions to hiring. In your search for the right candidate, take advantage of as many tools as possible to generate the right kind of outbound leads.
Step 2: Evaluation & Selling
Once you have a solid number of applicants, it’s time to separate the wheat from the chaff. As we stated, it’s foolhardy to rely on traditional interviewing alone: both numbers and collective experience tell us that a job interview isn’t predictive of a candidate’s overall success. Instead, rely on newer, smarter tools to evaluate candidates. Personality tests and skill or problem problem-based interviewing can be powerful here, as these help to evaluate more nuanced elements like personality traits and the ways that candidates approach challenges.
But what about the all-important soft skills? It turns out, you can measure those too. A great starting point is to build a profile of your ideal candidate, outlining their attitude, character traits, and approach to working. You can use this profile to compare candidates to what you think is the right fit. Some companies, like Scoutible, are even quantifying and gamifying the hiring process, providing skills-based games that measure soft skills and evaluate candidates based on how well they fit the profile of your top performers.
Step 3: Selling
Once you’ve found your ideal candidate, though, you need to convince them that this is an ideal opportunity. Thankfully for your bottom line, this doesn’t just mean bumping up their paycheck. While salary is still one of the most important factors for potential employees, Millennials place a high value on culture. In fact, people under 30 are more interested in a job they love that pays $40,000 than a job they find boring that pays $100,000. When you’re selling a great candidate on a job with your company, don’t just sell with salary: sell your culture and your story, too.
Step 4: Onboarding
Even after you’ve sourced the right candidates, found the ones that fit the job, and sold them on the position, there’s still one crucial step left: onboarding. And unfortunately, this is where many companies fail themselves and their new employees.
Proper onboarding is critical to the long-term success of a new employee, and investing the time and resources necessary to train them effectively will help them be more productive earlier on in their time at your company. Take the time to create a thought-out, structured onboarding process that includes introducing new employees to your corporate culture, values, and best practices. New employees should have a thorough understanding of the brand and corporate structure from day one, and as in all things, making them feel welcome is critically important.
Once you have a program in place, the best way to evaluate it is to experience it. If you really want to fundamentally understand what it’s like to join your company, try going through the program yourself – and if you don’t have the time for that, have one of your friends or employees do it. This will tell you where the strong points and weak points are in your onboarding process, and fixing up any weak links will have positive impacts on just about every area of your company for years to come.
Using Hiring & Recruitment As a Competitive Advantage
Truth be told, hiring isn’t just something you need to do to keep the gears turning: it’s a competitive advantage (or disadvantage) just as impactful as your mobile app features or key value proposition. Putting the necessary time and energy into recruiting, hiring, and onboarding great employees is a long-term investment that pays off for the entire life of the company – and neglecting that process is a recipe for failure.