It goes without saying how important it is for start-up and scale-up ventures to have talented, especially the right, well-fitting people on board at the different stages of their development; for roles to be filled in management/executive board, non-executive board, technology, sales, production, etc. The human factor is crucial. Opportunities for development, growth, survival, and the ultimate success of the venture will depend on it to a very large extent.
Understandably, in most cases identifying, contacting, selecting, and sustainably engaging the right people is not a natural skill, interest, and priority of those involved in start-up and scale-up ventures. The considerable time and attention that should be given to recruitment processes are also difficult to reconcile with the day-to-day issues and urgency of most ventures. Preferably, they outsource such matters. That is where the expertise and involvement of expert executive search consultants (“ESCs”) will add value.
In my view, looking at the commissioning scale-up, ESCs may be considered experts, when they have demonstrably good knowledge and understanding of (i) the specifics that make a scale-up a different type of company than a more mature or established company, (ii) the (special) dynamics that exist between the people/roles involved in the various scale-up stages, (iii) the specifics (professional and personality traits) of the role to be filled at the scale-up, and (iv) preferably also, the specific ‘product’ of the scale-up. In short, the ESC should have an excellent understanding of what is needed for the scale-up and what will work for it.
Looking at candidates for the role to be filled, ESCs may, in my opinion, be considered experts, when they have demonstrably strong skills in (i) drafting accurate, informative, and at the same time ‘attractive’ profiles, (ii) identifying (from research, databases, network) as large as possible groups of relevant potential candidates, (iii) interesting, as an ‘ambassador’ of the scale-up, as many potential candidates as possible in getting to know more about the role/the venture, (iv) assessing and interpreting the professional and personality traits of potential candidates and (v) running the entire recruitment process quickly, efficiently, effectively and with care and diligence to all parties involved. In short, the ESC needs to have an excellent understanding and ability to validate whether the candidate is the right one and fits well what is needed for the scale-up while making sure that the entire recruitment process requires as little time as possible from the scale-up.
Now, the desire to attract the right, appropriate people often raises a problem specific to scale-ups; there is no or little money available; firstly, to pay the individuals desired for the vacancies a market-conform remuneration and, secondly, to pay the cost of engaging an expert esc. As a result, there is a risk that scale-ups are more likely to use easy, quick, via-via, and cheap ‘staffing’ solutions. It is quite conceivable that these solutions may later prove to be no or a wrong investment in quality and thus an expensive error.
To avoid this risk, at least reduce it, as well as to keep costs for scale-ups low while still being able to attract well-qualified people, I advocate the following.
Individuals who want to get involved with scale-ups, especially as an executive or non-executive board member, as well as ESCs who want to be active in the scale-up sector, should be open to accepting alternative rewards/rewards different from those common elsewhere in the business world; rewards that are also more in keeping with the entrepreneurial nature of scale-ups, somewhat more uncertain and carrying somewhat more risk.
For executive and non-executive board members, this could include preparedness to receive no or minimal remuneration for a certain period of time with the agreement that they will be remunerated, (more) in line with the market – in the form of fixed remuneration, stock (options) or a combination of these – when the scale-up can afford to do so, for example in the next investment round or at another, well-defined moment.
For executive and non-executive board members, this could include preparedness to receive no or minimal remuneration for a certain period of time with the agreement that they will be remunerated, (more) in line with the market – in the form of fixed remuneration (executives and non-executives), stock (options)(only executives) or a combination of these (only executives) -when the scale-up can afford to do so, for example in the next investment round or at another, well-defined moment.
For ESCs, this could also include preparedness to receive a fee for their involvement and successful mediation that is deferred to payment, in one installment, at a well-defined moment, when the scale-up should be able to afford it; a reward in the form of a fixed sum of money, stock (options) or a combination thereof.
Despite the obvious disadvantages to the ESC’s cash flows, considerations for accepting deferred pay as referred to above are that it is in the ESC’s interest (i) to be able to stay involved with the scale-up longer in this way, thus also being involved sooner to work on other recruitments for the scale-up, thus investing in a long-term relationship with the scale-up, and (ii) to be able to present itself to others in the scale-up sector as a party that knows and truly understands the scale-up world, that is expert in it, that is willing to take a co-entrepreneurial risk and that has faith in the success of the venture in question. This is likely to spread around and lead to more and new assignments in this sphere. How many ESCs will want to/can afford this (financially) remains to be seen, however, I personally think it is worth the effort/risk to work in this manner.
In conclusion, I believe that future scale-up executive and non-executive board members and ESCs who care about the scale-up development climate in the Netherlands and thus are willing to embrace the thoughts formulated above, can make an important contribution to the staffing of more scale-ups with the right, well-fitting people and thus the survival and ultimate success of even more scale-ups in the future.
About Hans Eric Kuipéri
Hans Eric is a ScaleUpBoard Class 13 alumnus and current Partner with FRESHE Search & Solutions. Hans Eric is a former Senior Vice President of KLM Royal Dutch Airlines and previously worked with Amrop Executive Search. Hans Eric has a background in law, finance, and executive search and is enthusiastic about bringing diversity and ESG experience to non-executive boards.
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