When Lyft went public earlier this year, investors scrambled to grab their piece of the popular ride-sharing platform. But while Lyft is hot on the stock market (the company was valued close to $24 billion), investor demand doesn’t always indicate long-term success and profitability (or the ability to keep hiring top talent).
While short-term success might be good enough for hedge fund investors, the goal for Lyft leadership and employees is long-term growth. However, over the last year alone, the company had a net loss of nearly $1 billion.
Unstable profitability isn’t unique to Lyft, and doesn’t seem to sway investor interest. In 2018, 81 percent of U.S. companieswere unprofitable the year leading up to their public offering, making it clear that tech startups everywhere are struggling to scale, turn a profit, and survive into the long term.
For Lyft to continue to grab market share, it needs to focus on more than just loyal customers. For long-term growth, Lyft must concentrate on hiring smart.
Hire for Long-Term Growth
Talent acquisition is high on the long list of factors that contribute to a tech company’s success and profitability. But organizations are making major hiring mistakes that could impact their chances of long-term success.
Tech startups have a habit of hiring rapidly to get bodies in the door to cover the growing mountain of work. But that’s where they also run into some major challenges. Hiring for what you need in the “now” translates to employees who may fall short down the road when their responsibilities evolve.
Not every hire is going to want to have the skills to grow into a leader, and that’s OK. When hiring for the future, the focus should be on creating brilliant, functioning teams, not just hiring a single genius (or all born leaders). However, it’s critical to consciously hire someemployees who are intent on future management positions.
For example, if you only hire employees who have no desire to lead, you’ll eventually find your company in a tough spot. When profitability is uncertain, and resources are tight, you may have to decide between letting them go to make room for management hires or promoting someone internally who may not have the necessary skills.
Growing companies must pivot their hiring mentalities to mediate such talent issues. Assess some of your potential hires for the ability to grow into a leadership or managerial position. If you expect your organization will need a larger population of managers in a few years, make sure you hire for those roles from both a skills and knowledge standpoint. While growth is important in the tech space, it might be worth slowing down to find the perfect fit who will continue to be a good investment for the long haul.
Pay Attention to Your Culture
The perfect candidate might not see your organization as the perfect fit—after all, hiring is a two-way street. A lot of the strategy behind tech hiring revolves around having the coolest office and best perks, but today’s candidates see right through that. The competition to be cool is leveling off, and candidates are considering the underlying cultural factors: diversity, inclusion, philanthropy and other intangibles. Candidates are in the driver’s seat, so take a critical look at your culture.
Younger candidates are more discerning than their generational predecessors and want to work at companies that align with their personal values. In fact, 77 percent of Gen Z workerssay a company’s level of diversity affects their desire to work there. Companies located in tech centers such as Silicon Valley must realize the increased competition for talent means these candidates can afford to be more choosy about organizational values.
Because of this competition, it’s also important to pay attention to others in your market. Beyond culture, be aware of what your competition is doing when it comes to salary and benefits—these can create a lot of leverage in tech markets.
Clean Up Your Brand
Part of cleaning up your culture includes taking steps to overcome a negative reputation. Your word-of-mouth employment brand is an important factor for candidates, and a bad reputation can permeate through tech communities both big and small. Tech workers have often been employed at multiple companies, gone to school with other tech workers in the community, or attend local tech events. The bottom line: gossip spreads fast.
Tech companies can use this underground gossip network to their advantage. If you currently have a bad reputation rooted in diversity issues or a poor culture, make authentic and genuine changes. Then, empower internal brand champions to communicate these changes within the community, including recruiting events, larger conferences, or even on social media. People react to truth and authenticity; communicate where you went wrong and what you are doing now to fix it.
The Future Depends on Present Hiring Practices
Hiring for your company’s present and future are two very different exercises. It’s important that tech leaders acknowledge the necessity of cultural clean-ups and more intentional candidate vetting processes in future-proofing a business, even at the smallest of startups. We’re in a candidate-driven market, but that doesn’t mean tech companies can’t guide their candidates down the right road.
Julia Kanouse is the CEO of the Illinois Technology Association (ITA) and has worked with the organization for nearly four years. Julia leads the overall strategic direction and management of the association. Before joining the ITA team, Julia worked with the National Restaurant Association as the VP of Strategic Marketing. She also graduated with a Bachelor of Science degree in economics and finance from the University of Idaho.