How did you get into the bottleneck?
Forming a startup team starts with hiring from your personal network –
your college friends, your cousin’s husband, your former roommates, and old
colleagues. This works. Ideally, in the early stages of a company, you need
a small, close-knit team that communicates effectively and has personally
bought into the company’s goals. The initial experimentation phase will be
a tough ride, so you need a totally committed team. The founder’s
relationship to the team is what holds it together in the early
stages. There will be difficult conversations and decisions that only a
close-knit group can have: When to call it on the failing product idea?
Which customer segment do we target? How do we find the next 10% of
growth? Should we give up equity for funding?
A team like this can carry a company through initial funding and maybe
even Series A and B. If the product is a success, it’s gaining traction,
and you will quickly have to think about hiring. Its natural, and easiest,
to approach the job market in search of candidates that look and behave
like you. The new joiners, often senior people, can fit immediately into
the initial culture and be productive out of the door. Again, this will
work, but only up to a point. In these early days, your extended personal
network may be strong enough to source enough people willing to give up a
stable job and take on an amount of personal risk. It’s often the
founder’s energy and values that convince them to join.
Like most other bottlenecks, the scaling problem happens when the
product’s success moves the company into a hyper-growth phase. Invariably,
by then the initial team has taken on a lot. The technical founders might
still be coding and putting out fires. Product-oriented founders are
approving small design changes and at the same time, trying to think
about a broader strategy. Without enough resources, there isn’t a choice,
but to stretch everyone. Ideally, stresses that come with the growth period are
noticed early, and the team can hire before a crisis.
More often than not however, indicators lag, and before anyone has had a
chance to prioritize hiring, growth is bottlenecked by both capacity and
capability.
When companies do expand through aggressive hiring, if it’s not handled
carefully, it will cause many problems. It puts a lot of extra work onto
the current team. The company is now at a scale where the leadership team
can’t spend time interviewing and selling every candidate on the company.
Just getting people in the door isn’t enough; you have to be able to
incorporate new talent into the company. We frequently hear
stories where new hires are not aligned with the founders and initial
team, so the hiring investment doesn’t help with the bottleneck.
The story we’re telling is familiar to anyone that has tried to scale a
startup. But, is there a better way? How do we recognize the signs that
the talent bottleneck is coming? How do we set up our companies better to
scale people? That is what we will attempt to answer in this
article.
Signs you are approaching a scaling bottleneck
When you are in the midst of scaling it can be difficult to notice that
you are being constrained by talent, until you really feel it, and your
business growth is affected. These are some of the signs you can look
for.
Frustrations from employees
Creating a startup is stressful. Working a lot of hours is expected.
The strains business growth puts on people can go unnoticed. Concerns
are often solved with “let’s just push for this next release, then we
can slow down”. Of course – the slowing down never happens.
You need to look for signs of reaching capacity. Listening to people is
critical and it requires intentionality. Establishing check-ins from
managers and from a people department, as well as anonymous forms of
feedback, can give good insights. Concerns about feeling overworked
might not be bubbled up by managers reluctant to highlight delays, so
it's key to foster a culture of transparency from the beginning – what
did it really take to launch a product? Is that sustainable?
You may also notice this frustration surfacing by growing disagreement on
deadline dates and ultimately by increased attrition.
Stretching to hit deadlines, quality is slipping
Rushing to hit deadlines naturally means shortcuts will be taken.
This will result in quality problems. They might be visible via
user-facing bugs, outages, more customer service calls, delays or
problematic releases. It might be covered up by developers firefighting
or a customer service team appeasing customers, but this will soon
become unsustainable.
There may be other problems with less apparent quality issues that
would only surface over time, for example, code standards or testing
coverage. We talk about a slippery slope of quality in our technical debt bottleneck. Managers
can try to spot the internal problems by giving teams forums to explain
the shortcuts they have taken, such as post mortems and retrospectives.
A clear indicator it’s time to add more help is when a team
constantly feels the need to take shortcuts but doesn’t have a chance to
go back and fix them. But you might only know this is happening if
there’s a level of safety established where employees don’t fear
repercussions for bringing weaknesses to light.
Pay close attention to the level of testing and automation.
Developers might be having to do manual deploys and quality engineers
doing repetitive manual testing. Common administrative tasks, if they're
being done manually, e.g. with an ad-hoc spreadsheet, will run into
problems with scaling.
Key dependency on people
A growing startup can't afford to have a single point of failure,
that if they lose will affect the business critically (the so-called bus
factor). An engineer that owns a component that no one else works on. A
promoted manager that is still in the weeds running teams. A specialist
that builds the core algorithms. As the startup grows, the risk of
losing critical members becomes more significant. Finding talent that
reduces these dependencies is key.
We can spot this by examining how we’ve designed teams; auditing the
owners and contributors to various systems.The in-demand person will
likely keep coming up as a dependency on projects.
New employee’s expectations aren't being met
The new people who come in the door aren't happy, not producing the result
you expected, and you aren’t maximizing their potential. Often a company looks
to the new employees as if these failures are their fault - but typically the
problem lies within how these team members have been welcomed and set them up
for success. We’ve observed typical complaints:
- Leadership hasn’t made space for the new role, they’re either still trying
to do it or are micromanaging the new employee.
- New ICs, not given the same
level of ownership and access, aren't treated the same way as tenured
employees.
- Environment is difficult to get started in, not having tools and the
knowledge they need to be productive. E.g. technical documentation about APIs
and libraries, or access to infra to be able to run services, or access to
design tools.
To identify problems we need to listen closely to the new employees after
they join.
Underestimating growth
Commonly, leaders underestimate how long it can take to hire and build a good
team. A startup might see the indicators of growth, but be skittish to commit to
hiring in order to reduce their run-rate or extend their runway. At the same
time, being able to double down on successes before competitors catch up is
critical.
For a quickly growing company, even after hiring, it can take an additional
2-5 months for new hires to be productive, depending on complexity of the domain
and the technical platform. All this means it’s necessary to proactively plan
for hiring before it becomes a bottleneck.
One way to predict hiring needs is to have a solid platform to monitor the
product and business indicators associated with growth. Use trends to hire,
rather than simply hire in reaction to obvious problems. Plan well in advance
for new product initiatives, and remember to factor in a level of attrition.
How do you get out of the bottleneck?
Covering a good hiring strategy for startups would require a whole
book. These are lessons from our digital scaleup teams that are competing
for the best talent.
Use your technology and innovation as a hiring differentiator
As the company gains traction and becomes more well-known, hiring
becomes easier. Currently, the market is highly competitive for
technologists. You can attract people based on the impact of your
product, the projected success, or the personal interest someone has in
your field. This may not be enough, we also recommend making your
technology and innovation the things that set you apart as a
company.
What interests a technologist is different depending on the
candidate, but we find the impact of the work, innovation in the
technology and the effectiveness of the technology environment, are big
draws for candidates. A scaleup can offer these so it’s important to
tell that story to candidates.
The impact of the work
At a large company a technologist may spend a lot of time on a
product or a featureset that never sees the light of day, which is
demotivating. The appeal of a startup is that they will work on
something that matters, their work will have material differences to
the company's success, and their incentives and career will be linked
to that. Candidates will have more impact, and the downside – more
pressure.
Innovation in the technology
The ecosystem, stack and tools matter a lot to candidates because this
dictates what they will be interacting with every day. The choice
you make should weigh both what appeals to candidates and what is
dependable to build your product. An older technology will be off
putting to candidates. However, a new and shiny technology may be risky
because the talent pool is small, and the technology may not be stable.
Often there’s a desire to pick the latest and greatest niche tech,
sold under the justification that it will attract top-quality
candidates. The company can train candidates in the new technology, but
in reality we have seen they may not be willing to learn, for fear it
will limit their future job prospects
Innovation is also leveraged in the product itself; through using
an emerging technology like Machine learning or Virtual Reality, or
because the product design and implementation itself is innovative or
unique. This can be compelling for candidates, and should be part of
the hiring messaging.
Effective environments
Technologists want to be effective, and they want to succeed at the
job they have been given. This is not measured by lines of code, it’s
creating useful software. The reality is a lot of working environments
are full of bureaucracy, friction and needless red tape, which leads to
less high-quality working software. Chances are candidates have
experienced that in previous jobs.
The advantage of a well-run startup is that it will have little
baggage and be comparatively effective at software delivery. This
message should come through to the candidates. We can do this by
talking about the company structure, how products are produced, how
people communicate and collaborate.
Hire more T-shaped technologists than specialists
Another difficult balance to get right is between hiring experts
who know a specific tech stack or business domain well and candidates
who don’t have the exact experience you need but can learn.
This balance likely changes as you progress. In the beginning, you
need a few specialists, who can set patterns for the rest of the team
to follow – an infra SME, a seasoned developer who has built a similar
scalable architecture, or a data scientist who has worked in the
domain of your product. The rest of the group should have
relevant experience, but we'd recommend you prioritize flexibility,
bias for action, and ability to learn — your archetypal
T-Shaped candidate.
Later on in the hyper-growth and optimization phases, there's going
to be more room for specialization. There will likely be whole teams
that are focused on a single capability, such as observability, front
end tech, or data science. However, we often see companies trying to
fill too narrow of a gap, which can lead to losing great candidates or
taking a long time to find that special person.
A candidate’s deep expertise doesn’t give them a pass on company
values. They should go through the same process and hit the same bar
e.g. soft skills, like communication and listening skills.
Utilize Non-Senior Developers
It makes sense to have a small senior (10+ year experience) team in
the early stages. However, if the startup continues to hire senior
employees as they grow this will quickly become a bottleneck. There is
a limited amount of talent in the marketplace, and the demand is very
high. They’re also expensive. We recommend that startups alter
the balance and include more non-senior talent (2-6 years) in teams.
To hire for non-senior talent, we have to be more flexible on the
level of experience and technical skills. Ideally, we want to hire
someone that can learn and pick up skills quickly. This requires
changes in the interview and sourcing process. We can’t just match
against a number of keywords.
To embrace less senior technologists there will have to be a
culture shift. A typical anti-pattern we've seen is relying on “hero
developers” to do the majority of the work; Senior and tenured, they
have written a lot of the core systems and can trouble fix easily. The
issue is that they often don’t take the time to bring others up and
support the team. Of course, we always need developers that can do
heavy lifting, but we find effective teams sacrifice a bit of that
individual productivity to increase the productivity of the team.
Embrace remote working
It’s challenging to make precise recommendations about working habits, as
this is evolving. One thing we can say is that the scaleup
companies we work with are all embracing remote working. They do this
by
- Providing quality remote collaboration tools like video conferencing,
long lived group chat rooms, whiteboarding etc.
- Budget to set up a home office environment e.g. ergonomic chair,
camera and monitor.
- Reducing the amount of video meetings; a lot of calls is
energy-sapping.
- Changing the rituals and practices to better support remote. E.g.
making sure in-person and remote groups are on equal footing.
How does this help with hiring? Because creating an efficient
remote culture allows startups to leverage wider regional and global
talent pools. We’ve seen companies try to embrace remote working
while skipping the above steps, but it’s caused a lot of friction for
employees, so we’d advise fully committing to remote capabilities once
you decide to go this route.
Example initiatives as you grow
Phase 1
Experimenting
Small founder team hired from personal network
Phase 2
Getting Traction
Referrals from extended network and investors
Create hiring value proposition from product mission
Leverage technology and innovation story to differentiate
Establish mindful and welcoming culture intentionally
Phase 3
(Hyper) Growth
Bring in an experienced hiring leader
Based on projected growth, build hiring team to match capacity
Ensure clear messaging on mission, goals and culture
Sourcing beyond referrals, identify talents pools considering diversity goals
Include hiring in everyone's job responsibilities
Phase 4
Optimizing
Consider expansion to capture talent - global, regional
Invest hiring process for scale; improve consistency, remove friction
Optimize onboarding; time to effectiveness across org
Augment sourcing with AI matching tools
Invest in the hiring process
Scaling the hiring team
The phased-approach in the initiative diagram demonstrates how to grow the
hiring team incrementally. Expanding as a company moves from experimenting to
optimizing phases. It's important to plan early. As a rule of thumb, a
recruiter can manage 2-3 hires per month. If you want to grow your team by 36
people in a year, you will need at least one recruiter. Supported by
the right tools, administrative support and efficient process.
In addition, we’ve found that for every three recruiters, you should hire a
recruiter operations person for interview scheduling and accompanying
administrative tasks. This is often missed.
Streamline the process, practice continuous improvement
To create the best experience for candidates and the most efficient
process, our scaleup teams use a lean technique to optimize, similar to the
way we optimize other business processes. Using a cross-functional group we
map the process, making sure we’re hitting the outcome for all stakeholders (
sourcers, recruiters, managers, interviewers, candidates hired or not). We can
then do more detailed research to find the friction and create steps to
remove.
This should be an data-driven approach; these are typical data
points that are useful:
- Diversity definition and goals – Your baseline metrics for diversity should
look like the census data of your office locations and you should strive for
incremental improvements every year.
- Success of the hire – adjust the hiring process and job requirements based
on feedback from managers.
- Analysis of friction / touchpoints - where can we remove steps
to speed up and improve efficacy
- Candidate feedback on recruiting experience - both hired and non-hired
- Market and competitor data - to make evidence-based decisions on comp and
benefits. Ensure job titles and descriptions are attractive.
- Interviewer availability and effectiveness – employees are motivated and
have enough time to do the required tasks e.g. read resume, preparation, write
notes.
- Funnel / Conversion rates - over time to be able to monitor and
improve downward trends.
Hiring datasets can be small, often messy, with lots of nuances. We’ve
seen small data used to support inaccurate hypotheses. To draw conclusions you
should apply statistical techniques, and research techniques to decipher
qualitative information. Including a data analyst in your team can help with
the research.
Collecting feedback from both candidates and internal participants enables
us to continually improve the hiring process. An anonymous survey can be used
to capture metrics, like the Net Promoter Score, or responses that are
freeform verbatim comments. These inputs can reveal what stages of our process
need improvement. An ongoing analysis and calibration will contribute to a
high-quality interview experience.
Examples of a streamlined hiring process:
Recruiting and business partnership for planning
We often encounter wildly optimistic hiring plans that have no hope in the
realities of today’s market. The recruiting team and business leaders have to
work together to make a plan that is reasonable and is able to keep to quality
standards. Important guidelines:
Length of time to hire - The length of time needed to hire is difficult to
estimate, especially for exec or specialist roles, but hiring teams must try
to give the best accuracy they can. It will likely be a range that will also
change over time, as the market changes and the company’s profile changes.
Constraints - The hiring team should be transparent about market trends and
challenges. While it’s tough to communicate, they’ll be the first ones
to see if the company brand is not attractive, why they’re continually losing
out to other companies, or if the hiring team doesn't have the capability to
find a certain skillset. These constraints are beyond control of the
hiring team and will require help from the rest of the company to
improve.
Telling the story
As a company grows and starts to add people, it can no longer rely
on the founder to work directly with new employees. There are more
people sharing the company mission, goals and ways of working, so
conveying a consistent message from the recruiters to HR, to leaders,
and even peers - becomes an even bigger challenge. You want to
effectively make sure newcomers hear the same messages regardless of
who they’re talking to. The message has to be consistent, authentic
and clear even if the mission and goals may have changed over time. In
the early stages, when goals are especially fluid, it’s prudent to
re-examine before a big hiring push.
Everyone has to prioritize recruiting
Unlike our systems, we typically run our product teams at full capacity, if
not overcapacity. A hiring push means even more work for everyone: more
interviews, sourcing, and hiring decision meetings. Your team might already be
frustrated with the pace, so adding more responsibilities is difficult to
accept. There’s no way around it – if you are going to maintain the quality,
culture and ultimately accept the new joiners in their teams, your employees
have to be involved. Hiring shouldn’t be outsourced.
A typical scaling problem is not federating hiring decisions. A
small number of people become a bottleneck. It can be uncomfortable
for founders to lose some control, but if they have brought new
leaders, they should have trust in their hiring decisions.
To make time for hiring, things have to slow down. Build margin for people
to be taken away for interviewing– and not just the interview itself; the
prep, writing notes, context switching. Managers need to begin planning even
earlier than interviewers if there are open roles on a team, so that they can
consider how to recruit for those open spots.
Succession planning helps. When a business is growing, it opens up new
opportunities for employees. It makes sense to move our top performers into
new roles that stretch and challenge them. Their previous teams will need
replacements. It’s a good practice for a manager to always know who might
replace them and their team leads. Doing this will give the hiring team time
to find a candidate before it’s too critical.
Candidates are interviewing you
A good candidate is interviewing for culture, just as much as the
hiring company. Candidates will choose a company where they had a
positive interview experience, over one with better salaries and
benefits where they had a less favorable experience. Despite offering
better salaries and benefits, candidates will often choose companies
where they had a positive interview experience. It is quite easy for
an interviewer to let their ego or self-centeredness get the better of
them and create a very uncomfortable experience for the candidate. A
candidate appreciates genuine interest in them and their unique
background, not just whether they fit well into a predefined job
description.
We strongly recommend cogent and consistent interviewer training.
It will provide the framework for knowing what interviewers can and
cannot say from a legal point of view, and it will enforce the
guardrails of what good looks like. Interview training also is a
reminder for interviews to do preparation; read the job description
and review the candidate's resume.
Include unconscious bias and awareness training to reinforce that
assessments need to be based on capabilities and attributes, and not
grounded in a cultural fit for the organization. Interviewer training
reminds employees that they are empowered to help recruit their future
coworkers. And it may serve as a retention tool to remind people why
they are working on the team.
Finding internal talent
While the company is small, it’s easy for leaders to know the
capability of every employee and direct top performers into new
opportunities. When you get beyond 50 people, an internal talent
program guards against the danger of under-utilizing great people in
your team, or creating a culture where only people in the inner circle
get promoted. This is started quite easily by using the existing
recruiting team. Post job titles internally and interview using a
lightweight version of the external hiring process. The difficulty
with internal candidates is removing biases from leaders who have only
seen someone operating in their current role.
Diversity won’t just happen
Diversity won’t just happen. It needs intention, planning, and
effort. To find people from non-traditional talent pools requires more
recruiting steps and time. In our research, many leaders expressed
that they’d have started creating a diverse workforce in the early
stages. Entering the hyper-growth phase with the need to scaleup
capacity, diversity goals can easily be put aside. Before you
know it you have a homogeneous workforce, that is difficult to change.
Some of the deliberate things our scaleups do to consider
Diversity, Equity and Inclusion (DEI) while hiring:
- Start with the recruiting team; the recruiting workforce itself
should reflect the company’s diversity goals.
- Intentional sourcing; e.g. underrepresented minority tech
communities, coding bootcamps, geographic focus outside major
technology hubs.
- Language in job posting; Go beyond experience and tech skills in
job postings; focus on attributes that would make a good match
- Expect evidence from interviewers; vague comments such as “not
fitting into the culture” can hide bias.
- Clear diversity definition; your company should have a clear
definition and be transparent on targets and initiatives.
- Careful with referrals; if you rely too much on referrals, there
is a risk of creating a workforce from the same background,
referrals should be at most 30-40% after early growth stages.
How Thoughtworks grew its talent
While Thoughtworks is a software development consultancy rather than
a product company, there are a lot of transferable lessons. Over the
last 10 years, Thoughtworks has grown from 1,000 to 10,000 people; not
hypergrowth, but it represents significant growth and that put a lot of
strain on the business.
Identity
An important principle was to grow at a sustainable pace, keeping the
cultural ideals that were core to Thoughtworks, but also recognizing it
would change, that there are differences working at the increased scale.
Thoughtworks set out to re-examine their mission by looking at “why does Thoughtworks exist”? This was
conducted as a research project involving input from every consultant
worldwide. The results were:
- Be an awesome partner for clients and their ambitious missions
- Revolutionize the technology industry.
- Amplify positive social change and advocate for an equitable tech
future.
- Foster a vibrant community of diverse and passionate technologists.
- Achieve enduring commercial success and sustained growth.
Using this mission statement, as we scale, we could assess every
decision, whether it would help to further the mission.
Thoughtworks also wanted to protect the cultural values that are to us critical to
our success. Our values were important to share externally and use within the
hiring process as we scaled. They are – Global first, Courageous,
Inclusivity, Cultivation, Integrity, Curiosity, Pursuit of Excellence
and Autonomous Teams.
Scaling the hiring team
A case study of the Thoughtworks journey in North America is a good
example. Four years ago, the North American Thoughtworks recruiting
team was 12 people. That team, structured fairly inconsistently, could
barely hire 10 people a month. Fast forward to the present. That team
is now 25 people, and can consistently hire 75+ people a quarter.
Here are some of the foundational frameworks we implemented.
For every 3 recruiters, we brought on one coordinator; someone to
be responsible for the scheduling, travel arrangements, and
administrative paperwork for the candidates. This one “pod” of
recruiters would be capable of hiring 20-25 hires per quarter or ~100+
hires per year. More senior roles will require more effort and equal
1-2 hires per month for the same work. Be sure you build this
deviation into your capacity model.
We also implemented a process we call Joy of Interviewing. Using a
set process, we systematically reviewed every role and associated
assessment process. We organized our candidate stages, standardized
our questions and attributes, and effectively created a repeatable
process that helped define our talent bar. With this foundation, we
created a system that was easy to scale and replicate from country to
country. It also guaranteed that a Senior Developer in the USA would
be the same skill level as someone in Munich or London. We review our
assessment tools regularly to ensure what we are hiring is still in
line with what is required in the marketplace.
Finally, we knew you can’t improve what you don’t measure…so we set
out on the journey of capturing meaningful data, and displaying it in
a format that made sense. We hired the first ever Talent Data Analyst
to help extract and visualize the numbers so we could measure our
success by conversion rates and days to offer, to name just two. Using
a combination of existing tools, and adding a couple of additional
visualization products, we’ve been able to craft dashboards that are
easy to read and understand. There is a level of rigor that is
required by the associated Talent Teams to ensure that there is a high
level of accuracy in order to use this to predictively model and
forecast but the effort is worth the end result. With every year, the
data we collect will make our hiring estimates closer to reality.
Thoughtworks University
Like a lot of companies, at a certain scale we created a program to
support junior technologists. It has existed since 2005, and has been
the key capability to our ability to grow. It is not purely a graduate
program, it is designed for anyone that is inexperienced in software
development, career changers are very common.
What makes it unique, is that it is run by practitioners, experienced
managers and tech leads who will take 3-6 months away to dedicate to teaching
the skills and practices they have learnt. The course is 8 weeks, they work in
teams to build and deploy a product, working with in a simulated client
environment.
It is designed to mimic situations they will experience when
working for TW, so they can be fully productive when they hit the
ground. Graduates of the program talk about the benefits of the
immersion into agile practices and the relationships that they build
during that time. Many of our current leaders and managers came from
Thoughtworks University.
Diversity, Equity, and Inclusion as a core mission
As Thoughtworks grew, the goal was to be a company that is
equitable, reflective and inclusive of the societies we live in. We
aim to include all of society, both in our community and through our
tech, by providing talent with a place to belong.
Thoughtworks believes diversity, equity and inclusion have the
power to create social change and also to make better software
products. By incorporating the perspectives of those from a variety of
identities, backgrounds, and lived experiences, we’re better enabled
to solve for the needs of the customer/user. The Organisation for
Economic Co-operation and Development (OCED) in a study on scaleups
entitled “Understanding Firm Growth;
Helping SMEs Scale Up”
said that “Gender and ethnic diversity are associated with better firm
performance in growth-oriented firms...”
Finding and nurturing diverse talent
One foundational aspect involved redefining what it meant to be a
“technologist” at Thoughtworks. Although the definition of
“technologist” varies across the tech industry, most definitions center
on those in technical or engineering specialists roles, which can often
be dominated by those who identify as cis-men. We recognize that not all
technologists are engineers, they are anyone who actively participates
in the creation of software
We aim to attract talent from non-traditional backgrounds, by not
requiring degrees, welcoming career changers. We also partner with
community programs to help us increase the representation of women and
underrepresented gender minorities, LGBTQIA+, and BIPOC
technologists.
Cultivating and retaining diverse talent
Beyond hiring diverse talent, it’s essential to provide an
environment where technologists of differing identities and backgrounds
can thrive.
In collaboration with employee resource groups (ERGs), we design
initiatives to promote intersectional awareness-building, inclusion
training and education, and campaigns that represent the stories and
experiences of our diverse talent.
Initiatives include Women in
Leadership Development (WiLD), intentional executive sponsorship and
employee-led DEI benefits, policy, and reward & recognition working
groups.
We further demonstrate this through our metrics, welcoming feedback
and engagement from our talent to influence how we improve. At the time
of writing, 40.6% of all employees are WUGM (women and underrepresented
gender minorities), 38.2% in tech, 62.4% in non-tech and 60% of
Executive officers are WUGM. At Thoughtworks University 49% of graduates
were women and under-represented gender minorities.
