Comparing a startup to an enterprise is much like comparing apples to oranges. And never the twain shall meet. But this isn’t to say that the two models cannot learn from one another, especially when it comes to hiring the best talent.
At the core of these discrepancies between hiring practices at startups and enterprises lies a fundamental difference in how the recruitment process is approached by these organizations.
Why would any company want to attract the best of the best? To beat its competitors.
Disruption is the current way of the world. Be it what Uber did to the transportation industry, what Airbnb did to the hotel industry, what Google did to how we search for information or what Amazon is doing to anything made of brick and mortar – legacy companies have never really had to deal with the kind of innovative competition they are facing now.
According to CNN Money, 2017 marked the year that more than 300 legacy retailers filed for Chapter 11 bankruptcy. This is resulting in the closing of 6,700 stores in the US, beating the previous all-time high of 6,163 store closings, which hit in 2008. This kind of mass level disruption can only be expected to escalate over time, especially with players like Amazon who have a startup mentality ingrained in their DNA calling the shots in unexpected markets.
Naturally, enterprises have had to adapt to survive. Business Insider proposes that when a legacy company like Walmart makes a strategic move like purchasing Jet.com for 3.3 billion dollars, they are hoping to use it as a weapon to level the playing field. The strategically sound acquisition has clearly been provoked in an effort to remain relevant in a competitive landscape and has paid off for Walmart.Market Watch stipulates that stock prices show that Walmart might finally be a better investment than Amazon. But the true question remains, what can Walmart learn from their “high-tech” Jet.com acquisition and dealing with its booze-loving, swearing, creature comfort-loving culture? How can they adopt the views and practices of a disruptor like Amazon?
Enterprises have never before had such a vested interest in monitoring and even participating in the disruption of their own industries in order to remain relevant and competitive. To do this successfully however, they must find ways to attract young talent by being willing to adjust their culture, being more open and transparent, and offering them exciting opportunities.
Startups differ from Enterprises because they tend to have an ‘idea’ that drives them. In a successful startup, this ‘idea’ is usually disruptive on some level. It challenges the status quo of how things are done in a given industry. As Bill Gross puts it in his Ted Talk, “I believe that the startup organization is one of the greatest forms to make the world a better place. If you take a group of people, with the right equity incentives, and organize them in a startup, you can unlock human potential in a way never before possible. You can get them to achieve unbelievable things.” What doesn’t newly graduated candidate want to be a part of that? The idea behind startups has the potential to create an ‘impact’ and the opportunity to create this ‘impact’ is highly attractive to qualified candidates.
Enterprises tend to be larger, more established organizations that have found stability in their workflows and processes. Successful enterprises usually tend to be companies that have been in a certain industry for a long time with a history of doing what they do well and believe that ‘if it ain’t broke, don’t fix it’. Because they already know what they’re doing, prospective candidates tend to view enterprises as immutable environments where they would be filling a set role and functioning as a part of a well-oiled mechanism.
Talented individuals feel excited at the prospect of making it big, working hard as an indispensable part of an obsessive team and trying to achieve a very specific end goal that has an impact. Startups often have a culture that not only caters to this but also encourages employees to try various things, fail, re-evaluate and innovate in contrast to an enterprise’s ‘there’s no need to reinvent the wheel’ mentality.
This single factor in itself is a big part of how startups behave in contrast to large enterprises. A Glassdoor Economics study first conducted in 2015 called ‘Why Is Hiring Taking Longer?’ explains why the size of a company really matters. The study establishes that “jobs stay open longest at large companies.”
Startups, especially when they are first founded, have the tendency to be small, scrappy organizations. They are usually started by founders who take ownership of their product or service from the get-go and tend to hire people who are extensions of themselves. The core team and any new hires reflect an extremely focused goal. This manifests as a flat organizational structure that focuses on teams rather than functions. Everyone is trying to figure things out to the best of their capability and members are expected to take on ownership of any tasks they do. Supervisors are often more like peers who consult with team members on their tasks and responsibilities to come up with viable solutions together.
Good ideas are rewarded and bad ideas are considered learning opportunities. Because accountability in startups lies with the individual, practices such as working remotely have become commonplace, giving prospective employees an added amount of flexibility and the feeling that they are trusted to do their own work without being hand-held too much. A lack of performance is quickly identified in such an environment and dealt with because mistakes have fast and obvious consequences.
Enterprises tend to employ thousands of people, often on a global level. This scale of human resource management calls for a much more complex and compartmentalized approach. Large enterprises usually have specific functions that are set up by departments. This compartmentalization of roles leads to a more top-down structure where a clear line of accountability is established and supervisors are responsible for actively leading their direct reports.
While working for an established enterprise has its merits, super talented individuals might prefer to work in startup environments where they have the opportunity to take on more responsibility, affect the overall direction of the company from the get-go, allowing them to feel that they have an influence on the company’s future.
It naturally follows that the culture in a startup is extremely different from the culture of an established enterprise. In a discussion with Business in Vancouver, Tech Talks: Enterprises vs.startups, Rocky Ozaki, Vice-President at BC Tech and Co-Founder of NoW said, “The connected generation is highly engaged in the shared economy through technology and is the driving force behind the future of work. If enterprises are unable to create a culture that resonates with the connected generation, they stand to lose out on the top talent that’s coming into the market.”
He also thinks that on the flip-side, startups must think about scaling and learn from enterprise business models and experience. Scaling can be a difficult process for startups because as they grow, the multi-functional nature of the roles played by individuals begins to ease and work becomes more streamlined with the startup trying to keep its original DNA intact.
Startup culture is often based on how the founders choose to lead by example. Their core values tend to color how things are done. People are busy, work is fast-paced, teams are close-knit and a ‘personality fit’ becomes an important consideration. Startups are very careful about whether or not a prospective candidate will be able to integrate and add value to their current culture.
It is customary for things like emotional quotient, self-awareness, empathy, work ethic and ability to collaborate to be assessed during an interview process at a startup. Attitude also counts for a lot. It establishes the candidate’s willingness to try new things in a setting where failure is viewed with less fear than in larger, more established organizations. The main attitude they must display should be a willingness to ‘jump in and own it’.
This is very attractive to multi-talented individuals, especially when it can be taken literally when stock options are offered up to sweeten the deal, which is a common practice in startup environments. This is another huge draw because the opportunity to apply freshly acquired skills to products and services with a passionate team that are trying to disrupt the status quo and the candidate has the prospect to personally own is highly appealing.
Enterprise culture tends to be of a kind that operates on a much larger scale. Here, culture is much more set in stone, in fact, it is managed as one of the functions under HR. New hires are expected to mold to it rather participate in creating it. ‘Functional fits’ are more important compared to ‘personality fits’ and considerations about whether or not the candidate has the right past experience and how quickly they can take on the role they have been selected for are more important.
Startup teams are small, multifunctional and flexible. Consequently, lean startup employees are expected to wear multiple hats, have a diverse skillset and knowledge base as well as be able to learn new skills on the job. Hiring practices at startups are much more top down. It is not uncommon for candidates to feel that they have a direct connection with those in charge and feel that they are being directly sourced by someone who has a clear understanding of what they bring to the table.
The barebones operations of a startup often require quick decision-making. Startups are naturally innovative and this also bleeds into their hiring methodology. It is often referral-based, personality plays a key role and having varied interests is looked at as an advantage and new hires are taken on a lot quicker. In a Harvard i-lab discussion, Michael J. Skok introduces Eric Gaffen, the then Global Manager of Talent Acquisition at Acquia by mentioning that he had gone through 16,000 interviews to make 180 hires in 2014, illustrating the rate at which HR assessments and decisions are made at fast-growing startups.
Enterprises run the hiring function through their HR departments, which are looked at as slow-moving entities by those in the job market. It can be assumed that the amount of time it takes to conduct the selection, interview and recruitment process is much longer in an established enterprise than it is in a startup. This can be a hindrance for legacy companies trying to find talented hires.
The same Glassdoor Economics study mentioned previously explains why:
”First, larger employers typically have sharper division of labor, hiring more specialized and technical workers that require more careful screening of applicants. Second is the problem of growing bureaucracy: larger organizations typically have more administrative layers of candidate review and approval, markedly slowing down hiring decisions.” The 2017 version of the same Glassdoor Economics study also stipulates that “individual company policies do seem to play an important role in the length of job interview durations. Company factors — such as the number and type of interview “screens” used by hiring managers — explain about twice as much of hiring delays as other factors that are largely beyond the control of employers, such as the industry, location and job title being hired for.”
Enterprises appear to be at a disadvantage when it comes to snapping up the best talent because of their size, culture, and policies, but they have every opportunity to change their hiring tactics.
In the next blog, we will discuss how enterprises can adapt their hiring practices to compete in the current talent acquisition market.
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