Over-hiring as part of a growth phase is a common problem for start-ups. Especially if those start-ups have first-time Founders who aren’t experienced in scaling a company.
The most recent case to break the news this week was UK gut health start-up Zoe. Once riding high as one of Europe’s best-funded healthtechs, Jonathan Wolf, Co-Founder & CEO announced that due to over-expanding the team over the past six months they are resorting to a cost reduction of 20% which will sadly include redundancies.
As a start-up Founder/CEO how can you strategise your growth to make sure you don’t run into this problem further down the road? And if you do, what is the impact you can expect on your team and operations as a business? Jules Holland, Think & Grow Partner, reveals the expertise you need from a people and growth perspective.
Don’t fall into the ‘cloning syndrome’ trap
It's a tale as old as time — or at least as old as the modern business landscape. Leaders tend to hire based on immediate needs, often duplicating roles they already have. We call it the ‘cloning syndrome’ in the industry.
More Customer Success or Product Managers may seem like the answer to today's challenges. However, when the dust settles, they often find themselves with a surplus of talent and a shortfall in strategy and cashflow, unable to proceed to that next phase of growth.
It’s like you’re building a bridge halfway across a river before realising you’ve chosen the wrong bank, so you have to cut back and rebuild in a new direction.
This is why we challenge Founders on their hiring strategy, understanding at a deeper level the current skill gaps they have within their business, what they need today and also the runway ahead. Every organisation is unique in its needs, goals, and gaps making external expertise key to avoid over-hiring. Overall, the experience of having to lay off employees can be deeply emotional and challenging for Founders, along with the cost and long-term impact.
How to embrace the opportunities from the aftermath of team redundancies
Balancing the books is half the battle. Shortages and cuts have a profound impact on the very fabric of an organisation. The talent, culture, and operational effectiveness that has previously been so neatly woven together will suffer.
A team that’s weighed down by layoffs and uncertainty breeds low morale and motivation. Not only will employees be witnessing their friends go through a redundancy (changing their workplace environment), but they will also be feeling insecure about their own role too.
Navigating redundancies within your business is obviously an incredibly tough part of the Founder/CEO job. But what’s worse is making those redundancies for nout. The fact is – you are making these redundancies to make way for growth. Your next moves are literally all to play for.
Step one: Prioritise the wellbeing of the remaining team members.
Your leadership team needs to live and breathe your values more than ever before. Consider how you can improve the day-to-day lives of your employees, if something like confidential counselling would be beneficial, and how you can offer upskilling opportunities to people who want to develop and grow within the business.
Step two: Address the elephant in the room.
Job security. Whether it’s to existing employees or fresh talent coming in, many people are starting to get turned off by start-ups. What was once exciting and adventurous is transitioning into a potentially unstable career choice. Times are tough right now, so talent wants to guarantee a salary every month and longevity in their role. If you can genuinely offer them a secure future, make sure that’s clear to them.
Step three: Review the gaps and strategise how you’re going to fill them.
If you’re having to make redundancies due to over-hiring, you must embrace the opportunity to reevaluate and reimagine your team and its capabilities in alignment with your growth pathway.
It reminds me of our capability review and team restructure for Spotify. At the time, their sales team was underperforming to the point that they had missed their target for five consecutive quarters. After our review, they achieved 120% of their sales target within the first quarter post-work. For full transparency, here’s what we did:
- Reviewed the regional sales capabilities across people, systems and tools.
- Removed the blockers and bad blood at leadership level.
- Realigned the sales team and implemented a sales training program.
- Hired a Country Manager and Head of Sales we believed they needed.
This is a prime example of how to capitalise on the cuts, restructure the teams to cover the gaps, provide them with what they need to thrive, and hire the right people to build that bridge onto the right bank.
What type of people do you need to retain and hire at a time like this?
While the roles will differ depending on the business, the type of human will be similar. They are the people who flourish within a nimble, pressured environment. As a starting point, we would advise:
- Purpose-driven leaders: Skills can be learned, passion can’t. Purpose-driven leaders shine in positions where they get to fill gaps. Provide them with the means to upskill and develop.
- “Swiss army knife”: Chiefs of Staff are a great example of a swiss army knife-type role and personality. They may not be experts in everything, but they will do what they can to master the basics in order to step into any role and complete any task.
Preventing and handling over-hiring requires a delicate balance of cost-cutting measures and strategic foresight. If you’re a first-time Founder/CEO, this can feel overwhelming with the constant questioning of, ‘Is this right?’
We are a people-led growth company, working with Founders of tech companies globally to be that external expertise to deliver instant impact through hiring and growth services.
If you’re interested in seeing how we can help your business, connect with us and one of our Co-Founders will be in touch.
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