In the fast-paced world of venture capital (VC), hiring the right executive talent is critical to success. However, this process comes with its unique set of challenges and complexities. In this blog article, we sum up the most effective solutions we discussed with VC Talent Partners (TPs) during our roundtable to understand how to improve the executive hiring process.
We’ll also talk about ways to build a sturdy and trusted headcount plan for 2024 and how VC TPs can deliver value to their teams during periods of slow hiring.
1. What to Consider when Hiring Executive Talent: Challenges and Solutions
Hiring executive talent can make or break any company. In this context, it is of utmost importance to improve the process as much as possible.
Talking about the most effective solutions for doing this, the VC TPs voted in the following way:
Engaging Executive Search Firms with Niche Expertise
As can be seen from the poll, the VC partners find that the most effective solution to improve the executive hiring process is to engage executive search firms. They emphasized the need to build relationships with these agencies, treating them as an extension of the team rather than a third party. At the same time, they highlight the common issue of agencies making promises but falling short on delivery or demanding hefty retainers upfront. In this context, they stress the importance of having local support, especially when their focus is on a specific geographical area. The reason is the ability to have face-to-face meetings and get to know them personally .
VC Talent Partners also often serve as mediators between search firms and founders, ensuring realistic expectations and long-lasting relationships, since demanding swift results doesn’t align with the ideal dynamics of such partnerships.
Referencing and Backchanneling
VC TPs also mentioned the value of references and backchanneling in ensuring the right executive talent is hired.
While backchanneling can provide valuable insights, they advise caution in preserving candidate trust. In this context, the VC TPs recommend restraining backchannels and waiting until later in the hiring process to explore this option.
When it comes to references, one of the key recommendations was to use them as tools for successful onboarding rather than a core data point about whether or not to hire the person. Besides, especially for executive roles, it’s a good idea to focus on feedback from both superiors and subordinates, focusing on specific areas like finance, marketing, and operations. The insights on how the candidate led others, if their employees want to keep working with them, if they created an amazing culture, etc. can indeed be a crucial piece of information
The VC TPs also offer a solution to the problem of references always coming from people sharing only positive feedback about the candidate: To handle this, they suggest using the intriguing method of getting references is conducting thorough interviews, documenting the candidate’s past collaborators, and subsequently requesting to connect with these individuals during the reference-checking phase. Of course, in this case the candidate should also be given a chance to refuse in some cases where they would not feel comfortable to do so.
While this approach may be seen as forthright, it is pretty transparent and has proven to yield valuable insights into a candidate's history and capabilities. Another thing to keep in mind is that this method can inadvertently lead to homogeneity, where the team will be hiring the same people as before.
Some other VC Talent Partners mentioned they place venture partners - who come in the beginning on a fractional basis - in the hiring team so they can assess technically during interviews or calls, whether it’s a coding together task or a take home interview.
Finally, in the context of usefulness of references, some VC Talent Partners also recommended checking out Ben Horowitz's "The Hard Thing About Hard Things," particularly the chapter on hiring executives: here the author suggests having some of the founders actually sit in the given role for a little while to understand exactly what they need instead of relying on references which don’t support what that person is actually going to be doing.
2. Building a Sturdy and Trusted Headcount Plan for 2024
VC TPs stress the importance of having a clear headcount plan in place, even if a company isn't actively hiring. Besides, they recommend building a rough estimate with input from stakeholders allowing for flexibility in response to changing needs and serving as a buoy for tracking and determining the critical metrics for the company.
They also voted in the following way when answering which are the top priorities for their portfolios 2024 headcount plan:
Investing in Executive Leadership
VC TPs in industries like building materials and lumber manufacturing emphasize the importance of executive coaching to develop strong leaders and foster positive workplace cultures.
The participants also discussed operational efficiency, touching on the use of dashboards for their portfolio companies to streamline hiring efforts, enhance collaboration, track multiple hiring needs simultaneously and allow for the sharing of potential candidates.
Some of the VC Talent Partners noted they utilize Greenhouse and its CRM function to build a comprehensive database of talent. This allows them to reduce reliance on search firms by having access to an internal talent pool.
Touching on the challenge of managing hiring goals effectively and proactively, other VC Talent Partners mentioned using the HR tool Personio, which is great but has limitations in terms of tracking potential candidates who may not fit into their headcount. As another solution they also suggested the spreadsheet to ensure hiring partners have the visibility and control needed to stay on top of hiring needs across their portfolio.
Still other VC Talent Partners noted they rely on Getro for job boards and analytics, mentioning the upcoming Getro Connect feature for networking. According to them, utilizing Getro's reporting helps a lot in assessing hiring needs and making data-driven decisions. They also employ a survey system to gather priority roles through a Google form, enabling them to focus on key positions.
This discussion underscores the ongoing pursuit of efficient and effective hiring strategies within the realm of venture capital and highlights the diverse approaches taken by professionals in the field.
3. How VC TPs Can Deliver Value to their Teams during Periods of Slow Hiring
Touching on strategies that have been most effective for delivering value during the downturn, the VP TPs voted in the following way:
During the slowdown, most VP TPs focus on enhancing employer branding for future recruitment appeal.
Some of them have been meeting with portfolio companies to find out what they want to spend time on and how TPs can add value from the recruiting side. This effort ensures they stand out when hiring picks up.
For early-stage firms, many VC TPs assist with career site and website redesigns to make sure they perform well and provide enough information for talents. In contrast, for growth companies, VP TPs emphasize reinforcing internal values and conducting self-audits to project the right image. Prioritizing company values and employee value propositions fosters pride, especially after layoffs. This psychological safety and checking in on employees' well-being is especially important in remote work environments, where people are often alone without supportive colleagues.
As to VC TPs working in smaller cities, they tend to host tech community events and meetups, aiming to establish a local presence, get out into the community and foster in-person connections.
One of the VP TPs noticed that during the slowdown they focused on talent nurturing, creating a specialized campaign for software engineers. They built a candidate database, defined profiles, pre-vetted candidates, and crafted compelling pitches. This approach diversified their talent pipeline, achieving a 20% representation rate and streamlining recruitment. Notably, they reduced the hiring timeline to just three weeks from the decision to hire.
Another direction to focus on during the slow hiring is DEI. In a bid to foster diversity and inclusivity across portfolio companies, some VC TPs mentioned they have initiated gatherings for women within their portfolio firms, aiming to create a supportive network where women can empower one another. This way they aim to open doors for individuals from diverse backgrounds, recognizing the value of unique perspectives.
Special training focusing on the potential dividends of diversity in boards and companies also plays a crucial role in supporting DEI efforts. Their aim is to make diversity a core business principle rather than a mere checkbox, recognizing that diverse perspectives can lead to innovative solutions and improved business outcomes.
Another VP TP noted that ensuring DEI in their portfolio companies begins with their own team. Actively participating in various events and engaging with diverse communities, they ensure that their talent pipeline is naturally diverse. For instance, they take a proactive approach to engage with historical black colleges to tap into emerging diverse talent. However, they also mention that cultivating a network that includes tenured diverse talent should start early in the process. Building a diverse network within a firm can be instrumental in attracting diverse talent and fostering a culture of inclusivity and equity.
Investing in Automation & Technology Solution
VC TPs recognize the necessity of staying tech-savvy in today's rapidly evolving landscape, emphasizing the role of AI tools like ChatGPT and Bard in optimizing efficiency. These tools transform time-consuming tasks into quick accomplishments, benefiting entire teams and portfolio companies.
Collaborating with AI ensures speed and accuracy in various tasks, from creating documents and pitch decks to optimizing workflows. VC TPs stress the importance of using AI tools like Candidate Connector and Talent Pipeline to manage their talent-related responsibilities efficiently, highlighting the need to embrace AI for success in the technology-driven world.
Offering In-Depth Training and Upskilling
In professional development, VC TPs mentioned using different providers, catering to various needs and preferences. Whether it's self-guided online platforms, interactive virtual training, or hands-on coaching, there's a method suited for every context. They emphasize the value of virtual learning, benefiting budget-conscious early-stage teams. Platforms like Udemy, Coursera, and LinkedIn Learning complement their training efforts.
Some VC TPs also take a proactive approach by inviting recruiting companies to teach them a range of topics from recruiting to deal structuring, getting the best out of people, creating a collaborative learning environment, etc. Others also prioritize mental health and career growth with coaching sessions.
These diverse training options help teams thrive and adapt in a continuously changing world.
In conclusion, hiring executive talent is a multifaceted process, rife with challenges and complexities. However, as our discussion with VC Talent Partners has revealed, there are innovative and effective solutions available. From redefining the role of references to nurturing diverse talent pipelines and embracing AI tools, the landscape of executive recruitment is evolving. These strategies not only enhance the hiring process but also prepare organizations for future growth.
As the business world continues to change, staying agile and open to new approaches is key to securing top-tier executive talent and ensuring long-term success.