Why Startups are Finding it Difficult to Maintain an Efficient Tech Team Today

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November 11, 2022
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Why Startups are Finding it Difficult to Maintain an Efficient Tech Team Today

Any startup needs an excellent team to work towards achieving the company vision. While hiring remains one of the critical challenges for building a successful startup in any industry, hiring in the technology field is particularly tough because of the short supply of talent in the market.

It is not only essential to find candidates that are the right match, but it is equally critical to avoid those who will not be able to contribute much to achieving the set targets for the business. The talent shortage in the tech industry is just one-half of the story. A startup can face several other challenges in building and maintaining a successful tech team.

Tech hiring challenges faced by startups

There are a variety of obstacles a startup can face in the early phases of its development. According to the 2018 Future Workforce Report by Inavero, access to skills, costs, internal hiring processes, limitations in current hiring resources, and time are the top five challenges a business faces while hiring. A startup faces several other critical challenges in building a strong tech team. (Source)

Source: 2018 Future Workforce Report, Inavero, Feb. 2018

Here are the top tech hiring challenges faced by startups:

High competition

As with all demand-supply equations, since tech talent is in limited supply, there is an increased demand for such professionals among hiring companies. As a result, there is intense competition for hiring the best talent available.

When startups compete with established names to hire the same candidate, more often than not, they find themselves on the losing side. Unless the startup can provide a compelling case for the candidate to join, the latter usually prefers working for established names than for new, relatively unproven startups.

The high job market competition from other companies makes it challenging for startups to hire the best talent for their tech needs. 

Unreliable candidates

When the business is planning to hire tech talent, it is better not to take anything for granted. It has become commonplace for candidates to receive an offer from a startup only to negotiate a better offer with a bigger company. While this may not be completely ethical, there is not much that startups can do about it. To circumvent this issue, most startups chase multiple candidates for the same position rather than just focusing on the top candidate.

Lack of evaluation skills

Another key challenge in hiring tech talent for startups is that regular HR managers do not have the right skill set to evaluate applicants' capabilities to find the right fit for the job.

Even HR departments in large companies face this challenge. Most of them resort to keyword-matching tests to find the right candidate. There may be better ways forward, leading to a loss of opportunity for the business.

For instance, multinational companies such as Apple hire specialized technical recruiters that understand the industry and the job requirements and proceed to select candidates based on this knowledge. However, a startup may need more funds to invest in a technical recruiter in its formative days. 

Limited bandwidth

More often than not, current employees from a startup's tech department are expected to carry out the technical evaluation of potential candidates. This means they spend precious time and effort hiring tech talent for the company that they could have spent working on core responsibilities. Tech teams are usually pressed for time at work, so shortlisting and finalizing a candidate for a role becomes a challenge for them and the startup.

Skyrocketing salaries

With the market's shortage of efficient tech talent, most candidates now expect a lucrative hike in salary when changing jobs. However, it can be daunting for startups to keep up with the increased salary demand of the candidates. Even for startups that have managed to raise funds, competing with established companies with significant budgets becomes difficult.

Many startups offer generous employee stock options (ESOPs) to attract and retain tech talent, but the actual worth of ESOPs for the employee differs from case to case.

Brand reputation

Another key challenge faced by startups in hiring tech talent is brand reputation. Without the relevant PR and advertising machinery, it is difficult for startups to build a brand that can compete with established tech firms.

As a result, candidates usually opt for known names even if the startup offers exciting growth opportunities. Thus, startups need to build a positive employer brand so that candidates have enough reasons to join the business.

For instance, when they started, Amazon or Google had a different brand appeal. Hence, in the initial stage, the startup's responsibility is to build a compelling case for candidates to work for them. 

How can startups overcome tech hiring challenges?

Any startup must overcome tech hiring challenges and build a team to achieve the company vision. Here are some steps that can be taken to overcome the tech hiring challenges faced by startups today:

5 Solutions to overcome tech hiring challenges

 Manage traffic quality

The hiring process should be designed so that the startup can access relevant applications. Without attracting relevant applications, it is highly unlikely the startup will be able to fill the role with the right fit. It is better to opt for an applicant tracking system (ATS) to ensure a streamlined approach is adapted to hiring tech talent.

Other measures, such as improving employer reputation, using the right platforms to invite applications, and ensuring precise job requirements, will help attract applications from the right candidates.

Capture micro-conversions

It helps to look at the hiring process as a funnel for the business. Once the startup can understand the stage at which candidates drop out of the funnel, it will be better equipped to handle the cause of concern.

For instance, if more candidates are dropping off in the post-interview stage, they are likely not fully convinced in the interview process that joining the startup will be worth their time.

Similarly, it is important to analyze the pre-application, post-application, pre-interview and post-interview stages to understand the behavior of the candidates and what can be done to improve their experience.

Focus on the art of interviewing

While the tech talent already working at the startup is expected to play a critical role in finding the right candidate for the job, they may need more soft skills for interviewing or consider it an activity worth their time. In both scenarios, the startup will need help to hire the right people for the job.

The startup's hiring manager should try to get the developers working in the company to participate in the hiring process. At the same time, the business should consider providing these employees with the required training to make them better at interviewing.

Communicate the job offer properly

Startups need to identify candidates with unreasonable demands in the early hiring stage and move to candidates that are worth the effort. But more is needed to acquire the right talent. After understanding the candidate's requirements, the business needs to communicate the job offer properly.

The hiring manager should interact with the shortlisted candidate and get them to agree to a realistic salary. In the next stage, the business should focus on customizing the offer per the candidate's requirements.

The startup should be confident enough to move on without a second thought from candidates unwilling to budge on salary.

Keep candidates engaged

The startup should keep candidates engaged throughout the hiring process. This can range from arranging for candidates to visit the office to meet the other employees or offering a signing bonus contingent upon joining the company. Other options, such as buying out the notice period and participating in meetings or town halls, should be considered by hiring managers to keep shortlisted candidates engaged.

Even after all these steps are completed, it is still important for the startup to ensure the candidate joins the firm and does not reconsider at the last minute.

 Conclusion

Startups need to make a conscious effort to hire the right people for the job. Any slip-ups in the early days can prove to be a costly mistake. Startups should understand how to utilize the available resources best and ensure the best talent can be attracted and retained in the company.

Get in touch to know how you can overcome recruitment challenges at your organization.

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