Hiring & Firing

 

Contents

Introduction

by Wong Meng Weng, Social Engineer · JFDI.Asia

Where are all the good coders?

Startups need developers who know Ruby, Python, Javascript, Android, iOS. They need UI/UX designers with good taste and HTML5, CSS, and AJAX skills. Sysadmins who know CouchDB and Mongo and AWS and Heroku. Software engineers who do test-driven agile development, pair programming, scrum.

Without talent, our startups are starving!

Well, guess what: every startup in the world complains about shortage of talent, whether they’re in Singapore, SIlicon Valley, New York, Shanghai or Beijing.

This whitepaper is intended for two audiences: startups new to Singapore, and Singaporeans new to startups. Welcome to Southeast Asia; welcome to high tech entrepreneurship. This white paper is your guide to HR.Good people are always in demand. That’s a fact.

The good news: They exist. They’re here. (And if they’re not, they’re willing to move.)

But they’re not looking at job portals. Chances are, they’re already employed. Maybe they’re pulling down big bucks working for a bank. Or they’re in school, a semester or two away from graduation. Or they’re already doing their own thing.

It’s not easy to reach them. (You might have to teach them.) But it can be done.

Over the last six months, the fearless frogs at JFDI immersed themselves in questions of hiring (and firing!) in Singapore’s startup scene.

We conducted dozens of interviews with employers and employers. Big companies and small. With founders and early hires. We held half a dozen Startup Weekends around Southeast Asia. We scoured the net for advice. We’ve heard a lot of opinions.

This white paper is the result. We hope you enjoy it.

And we hope you participate! This document is a snapshot of an ongoing online discussion. We used Quora.com to collate contributions from Singapore startups and from international experts. We curated the best answers to each question, but due to space constraints we had to omit many more. (This white paper is 12 pages printed. It could have been 80.) Hit the QR link on the next page to browse the Quora archives for additional perspectives – and add your own.

The hackerspace.sg mailing list is another good place to discuss hiring – one great thread can be found at http://bit.ly/GI4fUi

If you find this useful, please let me know – send a tweet @jfdiasia with #hiringwp.

Before we begin, a few meta points about startups generally–

Where do I Find Candidates?

Start-ups today have various channels to source for talent, who may be local or come from overseas. Jobs boards, career fairs, universities, developer events, referrals, etc – which sources are recommended?

Each language and platform has its user group – look for a short list below (or google your language/platform.) You can also meet developers at various hacker-centric events such as code competitions, UX critique sessions and conferences.

Most hires are made through referrals. Some startups don’t even bother posting to job boards. Remember the old rule: “A’s hire A’s. B’s hire C’s.” It’s a lot easier to hire top talent if you’re top talent yourself – develop a reputation for being someone that people like to work with, and the rest is easy. (If you’re not top talent, why are you running a startup?)

Start by getting plugged in to the Singapore startup community  of News and Happenings:

Besides the threads above with the latest and best resources, we can recommend:

If you spam these communities, you will piss them off, and they will laugh at you. Better to join, lurk, participate, impress, and convince the talent to work for you. You could also try the old-fashioned way; there are job boards and recruiters who specialise in these areas but please refer to the links above for resources that others have had success with.

There are also some specialised job boards and commercial providers, like

And of course, subscribe to the following calendars:

Practical HR Policies for Start-ups

Many start-ups don’t offer what candidates really want. Top talent have many options: there are many jobs available, especially with MNCs which offer attractive packages. How can a start-up compete with other employers?

A start-up must hook the employee on an emotional level: if the employee connects with the mission of the startup, he’ll be more willing to take a pay cut relative to a big-company package. Well-funded startups can of course match market rates; others will have to be more generous with their option packages. Most important is attitude: founders should treat their employees as volunteers who they just happen to pay well enough that they don’t need to find work elsewhere.Salary. So what does a typical package look like? Every situation is different but a fair guideline for a junior developer would be:

$2,500–3,000 for a fresh poly or uni grad (after NS for males), but with some coding experience, perhaps from contributing to open source projects or freelance/hobbyist coding. No experience? $2,000 for poly and $2,300 for uni, but you’d have to ask how they managed to get a degree in CS/CE if they didn’t actually enjoy coding. Big red flag. Good luck training them.

For a senior developer, you might pay $8,000–$12,000 and up. You’re competing with employers around the world, not just in Singapore.

Foreign staff will usually come on an Employment Pass. That requires a salary of at least $3,000 a month.

Equity. Can’t afford the cash? Make up the difference with equity. You’ll have to convince them that it might be worth something one day. If you can’t, you might not have a business. It sounds harsh, but most startups do fail.

If your leadership team are missing a key founder, you should expect to issue as many shares when you find him or her, as you did to the other founders.

Employees who are well compensated in cash might be satisfied with your ESOP scheme – an ESOP pool may reserve 10%–20% of pre-funding equity, of which an employee might take between 0.5% and 3%. Of course founder shares and employee stock options should be subject to vesting. A 3–4 year vesting schedule with a 6–12 month cliff is standard in Silicon Valley, but every startup’s situation is different. Exercise as early as you can, of course.

Lots more information is available at the IRAS.gov.sg website, about tax implications, and also about ERIS exemptions. Your CFO should have at least a working knowledge of these issues.

Vacation. 21 days of paid leave is generous, but expected if you want to attract the best. Anything above 14 days at a junior level is fair. However some of the best work environments don’t strictly count “leave”. A startup’s work day doesn’t usually end at 5pm so if you want to attract staff who work to a job rather than the clock, it helps if you don’t make them punch in and out for personal time. Send them to conferences instead and they might not take any leave at all!Workload. 40 hours a week has been shown to be optimal, especially for knowledge workers under a lot of stress. Depart from that number at your own risk.Medical. The company is responsible for providing health insurance for foreign employees. (Singaporean citizens and PRs have the benefit of our very good socialised healthcare.) If your employees are coming from the US, they may be surprised the first time they go to a clinic: they’ll be seen quickly, professionally, and inexpensively.Income Tax. Personal income taxes are low in Singapore (usually 7–19%). And paying taxes is relatively painless, at least in the sense that you can do it online. Corporate income tax is also quite low – about 17%.CPF. Contributions to the Central Provident Fund are, effectively, a hidden tax on income paid to citizens and PRs. (It’s not a pure tax, as payers do get to use the funds under certain circumstances.) Salaries are usually quoted inclusive of employee contribution, which is 20%, but excluding employer contributions, which are up to 16% of quoted salary; budget accordingly. Find a CFO, payroll company, or company accountant who knows their stuff.13th month bonus. Depending on how long your staff have spent in the corporate world, they may expect a 13th month bonus. Some people use that bonus to pay income tax. If you don’t expect to pay it, say so early.National Service. Singaporean males are liable for up to 40 days a year of in-camp training, though 2–3 weeks is more common. It’s very hard for them to get out of this. But if Israel’s startups can cope with this sort of militarism, so can Singapore’s. And just think: how many foreign “hotshot” programmers can actually put a hole in a beer can at 100 paces?Perks. Free meals and unlimited soda are nice, but what matters more is that the company is supportive and appreciative of the employee’s contributions. Since employees are unlikely to stay in an oppressive environment even with 3 meals and a bed, offer sustainable benefits while making sure your employees are happy. Free beer is cool, but freedom to work from home is cooler.

Know your stuff. Every country comes with gotchas. The above remarks about National Service commitments, CPF issues, and taxes are not comprehensive. And we didn’t even start on work visas. A corporate services firm should be able to advise you.

Are you a foreigner, or just new to being a boss? You may have questions about National Service commitments, Central Provident Fund or even work visas. We can’t advise you on these matters, but just about any corporate services firm will be able to. The following links will help you with a bit of research:

In brief, you’ll want to make sure your staff (and you, if you’re a foreigner) are on the right work pass, that you pay CPF for local employees, and that you’re prepared to allow male citizens (and some permanent residents) time off for National Service (conscription). As with any other country you’ll want to make sure you pay your taxes, but that’s a little outside the scope of this document.

The Ideal Founding Team

Employees come and go, but it is the founding team that starts the ball rolling. What should potential founders of new start-ups look-out for in their initial team? How should they be rewarded? How is an idea valued alongside engineering capabilities?

Every startup performs multiple functions. If we pretend that functions map to roles which map to humans, we’d have a business guy, a developer, and a designer. Teams which lack one of those roles tend to be weak. Without a business guy who can deliver a pitch, you don’t win investors or customers. Without a developer, your product doesn’t work. Without a designer, your product looks like crap. In Dave McClure’s words, you need a hacker, a hipster, and a hustler.

Just as your co-founders complement your strengths and weaknesses, their share in the business should complement your own. And contributions must be evaluated over time: as the business moves through different phases, different co-founders may do more or less in different stages. But obsessing over fairness, and keeping a mental tally of “what have you done for me lately?” is a sure way to kill a marriage. Remember 1 Corinthians 13:

Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. 

Love your co-founders.

Where can you meet co-founders? At the events described earlier in this document. In your industry. Through your network. School. Good luck!

You may also want to look out for events that give you opportunities to meet co-founders:

It may also be useful to base yourself out of a co-working space, even if it’s just you for now. Try:

Attracting and Retaining Talent

A start-up’s recruitment process creates an employer-brand which matters to its ability to attract the best talent. What are the industry norms for attracting talent? How does the compensation package relate to the start-up’s employer-brand? What are the trade-offs between cash remuneration and equity or options?

Startups compete with other employers for talent. Capable people willing to take a risk with startups are usually aware of their worth while startups sometimes struggle even to define themselves. Because of this, a startup must know how to woo attractive hires and present a compelling employment experience even as it assesses potential candidates. A poorly designed interview or interview process may leave the candidate with an unflattering view of the company. That will hurt you.

You’ve probably prepared a pitch to investors. You need to prepare your pitch to staff too. Not enormously different, just a shift in emphasis.

Start-ups should give every appearance of being an attractive place to work. The best way to give that appearance is to actually be an attractive place to work. And the best way to do that, is to hire smart, interesting, effective, upbeat people who anybody would want to work with, in a productive office space, in a funky part of town that’s easy to get to by public transit. How charismatic are you? How hip?

Another option: join an incubator. Look up “NRF TIS” and “iJam”.

In the startup economy, today’s employee is tomorrow’s entrepreneur. If they’re going to take a pay cut anyway, why should they work for you, on your idea, when they could be working for themselves, on theirs? Your idea has to be compelling enough to make them set aside their entrepreneurial ambitions. Your team has to be stronger than what they could build on their own.

It doesn’t hurt for the founders to explain – with integrity and conviction – that the employee’s stock options will soon be worth quite a fair amount of cash, after the IPO or the acquisition. One rule of thumb is that the options should be worth at least as much as what the employee could make on the open market – minus the cash salary that you’re paying them, of course. Assuming your ESOP plan vests their options monthly, this should be fairly straightforward for you to set up.

All you have to do is build the company. What’s your exit strategy?

Assessment Techniques (Eligibility vs Suitability)

Assessment is the essential foundation for getting developers with the right skills (eligibility) and fit (suitability). Eligibility factors include previous experience, education, certifications, skills, abilities and reference checks, and aptitude. Suitability factors include attitude, motivation, interpersonal skills, task preferences, interests, and work environment preferences. Start-ups often have little experience with hiring, and mistakes can be costly. How do they assess new hires?

Most candidates come in through the network – on somebody else’s trusted recommendation. That network is rich and active. Most engineers who are willing to work in a startup environment have had exposure to open source software, collaborative development, or previous employment in other startups. As the community of startups includes serial entrepreneurs who have succeeded and moved on or failed and are trying again, it’s not difficult to get a reference of some sort. Startup software developers also tend to move in a group, and participate widely in community events such as programming-related interest groups and conventions. If you’ve kept your current developers happy, they should have no problem recommending their friends!

As part of your interview process, ask your existing developers to do a sanity check on their code and skills. Carl Coryell-Martin suggests pair programming with them on an actual work task.

Look for a match in skills and platforms. Good programmers carry years of experience in specific languages and platforms. They might be great thinkers, but if your company runs Ruby and the candidate only knows PHP, they might take a long time to get productive with your codebase and legacy systems. Pair programming can accelerate knowledge transfer.

If it’s your first hire you may have to find a friend or someone you trust to help evaluate the potential employee. No friends or not a part of the community? Perhaps it’d be a good idea to take a step back and network amongst entrepreneurs before venturing out on your own.

The same philosophy applies for non-engineering jobs. The startup community feeds itself, so whether you’re looking for someone in biz dev or marketing, chances are that anyone willing and suited to working for a startup is a part of the entrepreneurship community and looking for the next big thing to do. The unique thing about starting up in technology is that most of the workforce is not looking for a long term career plan but a chance to challenge themselves before moving on. This means you can’t expect to hold on to them forever, but as you grow your needs will change anyway.

The good news for small companies? Talent is always available since a reason for leaving is simply that their previous employer has grown too big!

The search doesn’t end with a pool of talented applicants. Candidates must be competent but also capable of working with other employees to achieve goals. The advice below provides tips on assessing employee fit beyond basic competency and track record.

Employee Training

Good developers keep up with new technologies and platforms. A startup’s talent pool is likely to be self motivated and continuously learning. Workshops, hackathons, user groups, and conferences keep developers plugged in and staying on top of technology.

One of the most effective methods of employee training in startups is the use of peer-training or scheduled knowledge-sharing hours. In case the startup or its employees are new to town or need exposure to a new field, the community resources will help to cross-train designers, developers and marketers.

The best thing an enlightened startup can do for employee training is to allow employees time-off to attend, participate and even organise their own interest groups. If you’ve hired right, your employees are motivated to remain at the peak of their craft, and this typically means having the freedom to share and learn from their peers in other companies or industries.

If you sponsor one of the conferences your staff like to attend, you could quickly reach a large number of the geeks you’re trying to hire. Or even just buy beer and pizza for the user groups they attend.

Keeping a well stocked library or providing an employee budget for books is another way to help employees train themselves. In a startup there is no need to organise training for motivated employees – give them support and they’ll naturally bring the best out in themselves, for your mutual benefit.

Closing Words from Carl Coryell-Martin
On 2 Mar 2012, Carl crystallized some important points in a post to the hackerspace list. We present a link to his post, and the entire thread.

On 4 Jul 2012, Paul Gallagher added a different perspective in a post to the Singapore Ruby Brigade.

 

Credits

This project was conceived and funded by the Infocomm Development Authority of Singapore. It was produced by JFDI.Asia, a 100-day seed accelerator, and edited by Alvin Jiang and Wong Meng Weng. Original content was sourced from Quora.com.

 

rtfmThis page is part of JFDI.Asia’s archive of Frequently Asked Questions on innovation and entrepreneurship. For more, Read The Frogging Manual. If you’re here because someone at JFDI gave you a link, please don’t be offended. We get a lot of questions from people, and these pages are the best way we have found to offer a comprehensive, helpful response. If your question remains unanswered, please post it to our OpenFrog Community and we will compile the best of the answers here.