Founders Guide to HR: Hiring Best Practices

Hiring is probably your top priority. But don’t just hire quickly to fill roles. Avoid this common startup mistake. As a founder and CEO, you’ll want to invest your time in hiring the right person.

Why? Turnover has high costs on both your bottom line and company morale. Turnover costs are usually  1.5 to 2x an employee’s annual salary.  So creating an effective hiring process and finding the right candidate with the right skills from day 1 is key to your startup’s success.

Design every step of your hiring process to help you identify the best talent, as well as stick to federal and state labor regulations.

Here’s a HR hiring best practices checklist

1. Register in the state where you plan to have your HQ and/or where you have a presence.

• Most likely, you’ve incorporated your startup in Delaware, but you'll also need to register your startup as a “foreign entity” in the state where you plan to have your HQ.
• This means registering with the Secretary of State in that state. You'll also need to set up payroll taxes in the state where any of your employees reside (even if remote).
• As your startup grows and you hire employees in different states, the rules for when you need to register vary by state.
• In some states, you'll need to register if you have even a single employee or if you're doing any sales there, while in others, you need a more substantial presence. 
• Talk to your attorney as you expand to determine when registration is necessary and appropriate.

Resource:Every–an all-in-one HR Payroll, Benefits, & Compliance platform–can help you with foreign qualification, registration, and payroll taxes in all the U.S. states you plan to do business and hire employees. Find out how Every can help you.

2. Don’t just get AI to write a job description

While it’s easy to get AI to write a job description, don’t just cut & paste. Think strategically about what kind of role and skills you actually need. 

For example, how will this new employee fit in with you and your co-founder’s skill sets? What skill gaps are you missing? Writing a good job description is about attracting the right candidates as well as developing an org chart and clearly defining who does what, so there’s no confusion from the get-go.

As you craft your job description, here’s a quick checklist:

Role & responsibilities

Job title 

• Create the right title that matches the type and level of the role, as well as compensation. Mismatched titles can lead to the wrong candidates applying.
• Avoid inflating titles or giving out C-Suite titles too early in your startup journey. It’s often challenging to “demote” early hires when you need a more seasoned and experienced leader at later stages.  

Worker classification

• Will they be full-time, part-time, or contract? 
• Will they be in the office, hybrid, or remote?
• Classification matters when it comes to compliance with labor and tax laws, so be clear on this. Many startups overlook worker classification–leading to unexpected fines and penalties.
• Read more information.

Key areas of responsibility

• What will be the new employee’s remit and scope?
• List responsibilities and tasks out clearly and concisely in a few bullets. 
• Clearly defined boundaries help avoid overlapping roles and conflict later. 
• During early startup days, employees often get their hands involved in multiple pots, and that’s OK. But at the end of the day, it’s still important to hold one person accountable.
• You’ve heard the phrase – the fastest way to starve a horse is to assign two people to feed it. 
• The buck needs to stop with one person (and it can’t always be you), or let’s face it, balls will get dropped.

Expected impact or objectives

• This is the role’s north star and the impact you want this employee to have in the big picture for your startup. 
• This is also where you can excite and inspire the candidate to join your journey to build something new.

Reporting structure

• Mention who this employee will be reporting to, so it’s clear.

Skills & qualifications

Map out the exact skills and experience you are looking for. This can then feed into your interview rubric and help you select the right candidate (more on this later). Think of these skills in three main areas:

• Experience (e.g., number of years, types of roles or companies, etc.)
• Skills Competence (e.g., specific skills, certifications/degree, knowledge, & ability to perform them successfully on a job in a real-world context)
• Soft skills that align with your company values (e.g., collaborative, innovative, etc.)

You can also break these out into “must-have skills” and “nice-to-have skills.”

Ideally, you’ll want to find a candidate who has just experienced scaling a startup to the level where you want to go next. They’ll have a wealth of lessons learned, so you don’t need to reinvent the wheel.

A few more things to think about in your JD:

About us paragraph: Explain your company, product, and market you are trying to revolutionize, as well as offer a glimpse into your workplace culture and company values.

Location: If this is a full-time or hybrid role in the office, list the location. If this is a remote full-time role, you’ll still need to list the states you are legally permitted to hire employees in.

Benefits & compensation range: List the benefits you offer, like health, dental & vision, and paid time off. Some states and cities also require transparent pay and salary ranges to be published on your job description, so you’ll need to check state and local regulations where you plan to hire employees.

Compliance: Finally, check that your job description is compliant with federal and state regulations. For example, you’ll want to avoid any language that may be viewed as discriminatory or exclusionary, such as age, gender, or race-based preferences. Title VII of the Civil Rights Act prohibits discrimination in the workplace based on race, color, religion, national origin, age, and sex (including sexual orientation, gender identity, and pregnancy). 

Resource: LinkedIn has some great job description templates by role to get you started here.

3. Don’t hire your college buddy, but do tap into referral networks

Just sticking your job description up on LinkedIn is probably not going to do much. No one knows who you are. You’ve got zero brand. So it’s going to be hard to attract anyone good. Sure, you might get a slew of resumes, but you don’t have the time to vet them either.

During the early-stage startup hiring phase, you’ll have to lean in heavily on referrals in your network. But don’t just hire your friends to fill roles quickly.

• Lean on your VC, advisor, and co-founder networks to identify the right candidates with the right skills for the role.
• Leverage LinkedIn’s first-degree and second-degree connections in your network to source potential candidates with experience at mature startups in your industry. 
• Invest time in nurturing potential candidates and inspiring them about your startup’s vision and how they can have an impact. This might mean several coffees, lunches, and Zoom calls before they even agree to a formal interview.

4. Avoid any interview faux pas - master the art of interviewing

Interviewing a candidate seems easy enough. However, done poorly, it could lead to hiring a bad apple or, worse, a lawsuit down the road. And avoid asking any illegal interview questions–a common newbie CEO mistake. 

As a founder and CEO, avoid any interview faux pas and master the art of interviewing.

Rely on objective and transparent criteria during your interview and selection process to help you identify and hire the most qualified person, as well as avoid any legal challenges down the road. 

• Create a structured interview scorecard. Turn the list of key skills and qualifications in your job description into an interview rubric and scorecard for each candidate. This helps you ensure a transparent and objective evaluation process that eliminates bias and identifies the best talent for the role. Rate your candidate across each of the skills in your rubric (1-5).
• Document why a candidate was selected or not selected. Taking detailed notes in your scorecard can also help protect you in the event of a discrimination lawsuit.  
• Create a list of focused interview questions for each interviewer.  Make a list of questions that help you assess each skill and experience in your interview scorecard. Assign each interviewer a different focus area to evaluate and create a unique list of questions for them. Also, add a list of what NOT to ask as a reminder of what’s legal and illegal. 
• Avoid asking any illegal interview questions. Don’t ask any illegal interview questions about age, ethnicity, criminal history, marital status, pregnancy, disability, religion, sexual orientation, work or visa status, plans to start a family, or any other categories protected by law. 
• Stick to questions solely about the role, skills, and experience. Non-job-related questions, like asking about relationships or personal habits, may also be non-compliant. Even asking about hobbies can open the door for bias during an interview. For example, if you both share the same hobby, it might create an unconscious preference for this candidate, unrelated to whether the person can do the job well or not.
• Conduct a de-brief with your interview panel. Fill out your scorecard and notes before talking to anyone else who interviewed the candidate to minimize any outside influences. Then have a quick debrief meeting with the other interviewers to share the pros and cons of each candidate. You, as the CEO (and likely the hiring manager), should always share your thoughts last. While the hiring manager always makes the final decision, it’s still good to hear what others think first to make sure you’ve evaluated the candidate from every angle.

‍Resource: Here’s a link to an interview scorecard template

5. Assign them an assignment or conduct role-play scenarios during the interview.

• Some people interview well, so you’ll want to dive deeper by checking whether they can produce the work.
• In the world of AI, take-home assignments might be too easy, so you might want to try real-time assignments during the interview, like problem-solving on the whiteboard for engineers or role-playing scenarios for other jobs. 
• For leadership positions, live presentations on their proposed strategy for your startup are also great.

Video - Advice from Rajeev Behera, Founder & CEO of Every and former Co-Founder & CEO of Reflektive on how to spot a bad hire before it's too late

6. Do your due diligence - reference, offer letter, & background check.

It’s easy to fall in love with a great candidate, especially one who interviews well. But do your due diligence. 

Check at least three references - ideally, former managers.  

• Once you identify a candidate who meets your criteria, request at least three references from their most recent jobs and schedule a 15-minute call with each of them as soon as possible.
• Don’t skip this step. Many startups do, and discover too late that the person didn’t have the skills or experience they sold in the interview.
• The three references should ideally all be their former managers rather than a friendly colleague.
• Connecting with their former managers is also a great way to get to know your candidate’s strengths and weaknesses, which can help you set them up for success as their new manager.

Here’s a standard list of reference questions:

• What is your role in relation to the candidate? How long did you work together? Approximately what dates and at what company?
• What were their roles and responsibilities at your company?
• What was their impact? Can you share one successful project and its impact?
• Can you list their top 3 strengths?
• Can you share 1-2 areas of improvement you saw at the time?
• How would you grade the candidate in terms of an  A, B, C, or D? (And ideally, only hire A players)

Create an offer letter. 

• If the candidate’s references check out, create an offer letter template and contract that includes compensation, job classification, job description, benefits, at-will status, contingencies (e.g., background check), non-disclosure agreement, and required documentation (I-9 form). 
• The candidate will need to sign the offer letter and contract. Give them a deadline, like the weekend or 48 hours to sign the contract.

Resource: Employee offer letter template here.

Conduct a background check

• Make the offer contingent on the background check. The background check is helpful to confirm former employers, education, and any previous criminal record.
• Remember in order to conduct a background check, you will need the candidate to sign an authorization form by law. 
• Many vendors can help you conduct a background check.
  

Rejection Email 

• Finally, always send a polite, non-discriminatory rejection email to candidates you didn’t select as well.
  

Resource: LinkedIn has sample rejection email templates you can use here. ‍

Now you’ve hired a great candidate, read on to find out what else you need to do when it comes to HR.

‍