October 18, 2016


By T. Muralidharan, Chairman, TMI Group

There is a constant influx of resumes of candidates love to work for a company that is well known, offers top salaries with great perks. But at an early stage the resources are tight in a start up. Offering salaries according to the market standards or perks becomes an issue. Every start up entrepreneur faces the same reality – that his organization has no brand and the organization itself being the promoter – is the brand.

T. Muralidharan, Chairman, TMI Group

The top 5 challenges while hiring along with solution approach is given below:

Challenge 1:

Hire the right person – avoid the best person
Every start - up employee thinks and acts as if he/she is the owner. This is part of the start up mindset. The other aspects are collaborative work style and a ‘never say die’ attitude. Unfortunately these kind of people are not easily available since corporate employees work in a very different way. This would not be an issue if people with prior start up experience are hired or people who have worked before in mid-size companies.

Challenge 2:  

Employer Brand
Most professionals have a climbing mindset. It is widely believed that one has to leap the employer brand ladder with every job change. The truth is that start ups have no employer brand which raises a question on how to hire? The answer is to hire based on promoter brand.  Most start up promoters hire the people who have worked with them previously. This is a good practice for hiring the first 5 to 10 people.

Challenge 3:

Job stability
Corporate professionals, these days borrow home loans, car loans, educational loans for children etc, to cover these fixed liabilities they need a fixed monthly salary. Startups are, by design, high risk business enterprises. Only one out of 10 startups makes it. So to address this fixed issue one must first workout the minimal salary required and prioritize this payout on a month to month basis along with rent and electricity bills. Second – avoid hiring honchos with huge liability (openly ask for the list during the interview)

Challenge 4

Every employee expects approximately a 10% - 15% hike on their salary while looking for a job switch. Because of inherent risk, the expectation for joining a start up goes with 40% hike. But start ups, by nature, do not start with a huge budget and cannot afford salaries. The solution is to break up the salary into minimum salary, an annual bonus linked to company performance (which may be equal to the minimum salary) and a performance bonus payable after 3 years

This three tier payment structure staggers the payment, links it to performance/ retention and most importantly provides a big upside to the candidate, if the start up succeeds. Of course, if the candidate still insists on the 40% hike pay, you have the wrong guy. Risk adverse individuals are unfit to be in a start up team.