3 Tips For Startups To Win Over Top Candidates In London's War For Talent

I was at an event last night hosted at Lyst, a gathering of COOs in the London tech scene.

I introduced myself to the group as a "recovering COO" and it was good to see some old friends and make some new ones.

The topic of talent comes up every time we meet. All agreed that hiring great people in London is getting more difficult. There are many opportunities for smart team players who want to make a difference, especially in tech, product and design.

Part of the challenge is finding great candidates. Equally difficult is getting a "yes" after having made an offer. Good candidates invariably have more than one offer to choose from.

Startups are competing with each other and the wider job market for the best talent. Having a strong vision of what the team are trying to achieve is a must. Finding candidates that buy into that vision is the first challenge. Putting a package together that closes the deal is another challenge.

A startup usually has to be frugal with cash. Big salaries are not usually an option. Even offering mid range salaries, a vision and story isn't enough to win the best candidates.

To complicate matters, many candidates don't understand or value the main lever that a startup has to work with, (stock options) and in many cases.

A couple of tips then from the group on how to close a deal with frugal resources...

Tip 1 - the three way offer 

To preserve your option pool for those that will value it most, make a three way offer like this.

We can offer you either
a) higher salary, no stock options
b) mid range salary, a few stock options
c) lower salary, generous stock options

This method often works as the candidate will choose what matter most to them. It's a simple risk/reward choice. By only offering stock options to candidates that appreciate their value you can maximise use of the option pool and offer compelling packages to those that want to share the upside.

It's also a great negotiation tactic.  In many cases people will choose the middle option.  That means the middle option should be constructed on terms that work best for the company.

Tip 2 - offer benefits, but use a menu

In the same way that candidates may or may not value stock options, there are certain benefits which are valued differently by different candidates.

Gym membership, life insurance, critical illness cover, pension contribution, private healthcare. All of these things can cost a company less to buy than it would cost to an individual. Offering benefits as part of a package can increase the overall perceived value without increasing the actual cost to the same degree.

A simple example is healthcare. It might cost someone £100 a month to take out private healthcare if they were to apply directly but under a company scheme the company would only pay say £60.

By offering benefits it means that a modest salary with a high perceived benefits package can be worth more to a candidate than a higher salary with no benefits.  Plus, the overall cost to the employer can be lower.

The key to is to structure a benefits package with the maximum value to the candidate that has a minimal cost to the company.  To do this, you can create a "flexible" benefits scheme and one way to do this is to use a points system.

A points system works like this.  Each team member would have a number of points to spend (e.g. 1,000).  Each benefit has a number of points allocated.  The points relate to the relative cost to the company.  A pension contribution of 1% of salary might cost 500 points for example, maybe an extra holiday day costs 200 points of maybe private medical care costs 300 points.  The numbers I've just given are just examples.

The point is that the company only spends money on benefits that the team member actually values.  I've built this type of benefits system on two previous occasions and a great package need only cost 5% of salary.  The perceived value is more like 10%.

You can also reward loyalty by adding more points for long service.

This kind of scheme works better for growth companies (as opposed to early stage companies) as some degree of setup and administration overhead is added.

Tip 3 - avoid making an offer via a recruiter

Everyone loves to hire direct and avoid recruiter fees but the reality is they are difficult to avoid altogether.

If a recruiter is rewarded with a % of base salary beware of making an offer via the recruiter.  They will sometimes bump up the salary demands of the candidate to get a better % cut.  If you talk directly with the candidate, you'll get a better negotiation experience and a better result.  Make this clear when you engage a recruiter that you intend to work this way.  Alternatively, negotiate a fixed fee with a recruiter to avoid any ulterior motives disrupting the offer.


The London talent war has no signs of easing.  If you have any other tips, do leave a comment below.

Why Your Weaknesses are Your Strengths

My grandma once told me a story about how my younger self was prone to impulsive urges.
We were walking past a shop and in the window was a toy car. I really wanted that toy car and started pleading with my grandma to buy it.

She asked me how much pocket money I had and whatever I had was not enough. She said that we could come back on the weekend when I would have received some pocket money and have had a chance to save up for it.

I was not happy. I did not want to wait until the weekend. I can't imagine it was a pleasant scene. Still, my Grandma (rightly so) stood firm and we did not buy the car. Not then and not at the weekend because by then I was no longer interested in the car.

She told me this story about my younger self when I was a teenager. She said she was worried about my impulsive nature. It's true, I do have an impulsive nature. And I love it. I've learnt to control spending urges, but there have been many times in life when this side of my character has served me well. I've done many unusual things in life that have left a richness of experience and that in part is due to my willingness to make instant decisions and "do".

Impulsiveness can be a weakness, it can also be a strength. The same is true I find of most personality traits. It all depends on context. Most traits have a use so if you can understand better who you are and put yourself into situations that suit your personality, you'll find a good path.

Very persuasive, tenacious and curious? Great if you are an investigative journalist or sales person. Not very good at writing? Perhaps sales works better for you than journalism.

I don't actually believe that we have "strengths" or "weaknesses". I believe instead that we all have certain personality traits that are amplified, that we use and abuse and that in the right context can be a strength.

Therefore if you are interviewing for a job, either as a candidate or as a recruiter, consider it a dating game. You're both trying to assess if this person is the right "fit" for the job. The right person for the job may well be narcissistic, impetuous and driven by self-doubt. Or gregarious, conservative and self-confident. Or not. It's all about the fit at that moment in time.

There are no strengths and weaknesses, only context.

It's Not What You Know, It's Who You Know

How recruitment is changing to use social networks and "Web 2.0" technology to source candidates.

The recruitment business has always been about matching supply and demand. Candidates and Employers.

In the old days, this would involve newspaper and magazine advertising to source potential candiates. Then along came the internet, which allowed for three important changes:

1. Aggregation of supply
Websites sprung up that posted jobs from many different employers and agencies, allowing for a one stop shop for candidates.

2. Employer direct advertising
With the internet employers can advertise directly themselves with ease and source lots of candidates with a simple online listing.

3. Candidate driven demand
Candidates can search for jobs using search engines. This allows employers and agencies to advertise using paid search (e.g. Google Adwords) to fish for candidates that were stating their interest.

There have been a few winners in this first round of the internet revolution. A good example is Monster.co.uk, a jobs listing site that when I checked last had over nearly 2000 jobs in London for just one sector: IT/Software Development.

HR Managers and the recruitment industry have adapted to this new world. Can they adapt to what's coming next?


Get A Haircut And Get A New Job

The next round of change is being driven by online social networks and "web 2.0" (community driven) applications.


Here's 5 examples of what's coming next...

What connects them all is that increasingly we will be referring each other for jobs and sites will facilitate this.


1. Niche Community job boards
Specialist communities have built up over the last few years. Owners of these sites realise that their audience might be interested in jobs in that sector. An example that I've found to be successful was http://www.e-consultancy.com/jobs/ which is an online marketing and ecommerce resource. I posted a job here for just £99. I only got a few candidates, but one of them was the one we hired. Result.


2. Linkedin.com - professional networking site
Linkedin is a networking site that allows you to keep in touch with your professional contacts. It's like an online contacts list that is automatically kept up to date. There's over a million users in the UK. By my calculations, there's probably only 200,000 that are "power" users.

Anyway - linkedin has job ads. As an employer I can list a job for only about £100 (Monster is about £500). What's clever is that when a user logs in, jobs in their "network" are shown. I've found many of the jobs advertised that I've seen when I log in to be highly relevant: they're in the right sector and are interesting job roles.

What's also clever is that if you apply for a job, Linkedin will tel you how you might be connected to someone at the hiring company. You know "John Smith" who knows a "Jane White" at "Company X" where company X is the job opportunity. It gives you a chance to knock on a few doors, ask John to have a chat with Jane to find out more about the job, put in a good word for you. The power of a personal introduction is always and will always be a useful door-opener.


3. Facebook pages and applications
Facebook has a number of jobs applications. Companies are trying to find one that works. I'm not sure that Facebook is the right place for job hunting, but lots of companies have tried to make it work.

There are two main types of applications: "refer a friend" and "search for a job". The trouble is with the "search for a job" type applications is this: why would you want a "David added the search-for-a-job application" message to appear on your profile, especially as so many of your "friends" are probably your colleagues. Who can you trust these days?

Refer-a-friend type applications are potentially interesting, but the whimsical nature of Facebook means that it doesn't lend itself to a decent referral audience. If you are going to refer a friend you need to put some effort into it. See Zubka.com, below.


4. Zubka.com - referral reward site
This is a very interesting start-up and it's private equity backers are the same guys that backed eBay, Betfair and Bebo.

Zubka’s approach is that a user will log on to their website, see a job that they think that their friend may be interested in, and make a referral. If the friend gets the job, the user gets a fee. The fees are substantial. For a £50,000 role, the referrer stands to make £3,600 if the candidate is successful. That's a pretty big carrot. It does require some effort from the referrer, but not too much. 10 minutes work could land you a couple of grand.


5. Notchup.com - get paid to interview for jobs
Taking things one step further is Notchup.com. Let's see if this one works out, but it sounds interesting. Here, you register and employers can invite you for interview.

What's great is that they PAY YOU to go on the interview. How great is that? According to their "interview calculator, I'm worth $610 an interview. Could be worth an afternoon off? I haven't really test driven this site myself, so I'd be interested in feedback from anyone that has.


So - what success have you had with finding candidates or jobs through community based websites?

I'd be interested to know. Comments welcomed....