Venture Capitalist at Theory

About / Categories / Subscribe / Twitter

2 minute read / Aug 16, 2021 /

The Secret to Recruiting Quickly and Retaining Your People

There’s a simple secret to hiring quickly and building a strong team. Invest in great managers early.


Let’s compare the organizational chart of two different startups. On the left, the startup is flat. There is a single leader, with a handful of individual contributors. On the right, the company structure is a classic hierarchy.

When startups start, they tend to look like the company on the left. There might be a few founders who lead, rather than the one depicted here. But most people are individual contributors. They write code, author blog posts, publish the website, attract customers, with the goal of achieving product-market fit.

Post-PMF, the organization must evolve: it has to grow headcount and then manage that headcount well.

How many hiring managers are in each of the two hierarchies from above?

On the left, there’s one. On the right, three. The structure on the right divides the recruiting work in thirds. With the flat structure, we have a single leader who carries the entire recruiting burden on their shoulders.

This is a simple example to prove the point. As a business scales, the company benefits from a layer of managers to distribute the recruiting burden. In addition, when you hire an executive, you’re hiring a network. More hiring managers implies a broader pool of candidates to fish.

Once those hiring managers hire a team, the responsibility to manage people begins. The same story is true between the left and right structures. Our GTM survey found sales teams with spans of control consistently outperform teams with spans of control greater than 7. The benefits of smaller teams are real.

Team leads or hiring managers can originate from outside or inside the company. Most companies try to maintain something like a 50/50 blend or so (roughly).

Because talent is the most valuable part of a startup and also the greatest cost (recruiting and salaries), investing in the infrastructure to attract and retain talent is good business.

Of course attrition is part of startups, with many businesses observing 15-20% annual attrition. Consequently, recruiting numbers should be about 1.25x the actual number of seats to fill, including hiring managers. It’s easy to miss that detail when building a headcount plan.

People managers in startups distribute the recruiting and retention work over more people, enabling the company to scale faster, and more efficiently by reducing retention.

Read More:

The Optimal Pricing Strategy for Your Startup - Office Hours with Madhavan Ramanujam