Mastering Hiring & Building Teams that Thrive, with Akbar Karenga

What is the true cost of a bad hire for your company?

In this episode, we’re joined by Akbar Karenga, founder of Maarusi, a talent and people consultancy driven by his passion for diversity, equity and inclusion.

Akbar is an expert in high-stakes hiring and shares powerful tips for founders who need to hire fast without skipping steps.

Together, we discuss:

• The key difference between hiring to grow versus hiring to simply keep up.
• When to bring in pro recruiters and how to create an effective, unbiased hiring process.
• The hidden financial and cultural costs of a bad hire—and how to avoid them.

Connect with Akbar Karenga on LinkedIn for more hiring strategies and insights.

More from James:

Connect with James on LinkedIn or at peer-effect.com 

Transcript

Scaling Startups by Giving Away Control

Speaker 1 0:00

So my first role out of university was hiring for Red Bull Racing Formula One team . So recruitment super , super focused on getting success there , Then moved more into HR centric roles over my career . With the Global Remit I was looking after 21 countries and then moved to London to do that for 30 countries . And then there was a hard pause around five , six years ago where I started super focusing on startups and since then I've helped scale 54 startups .

Speaker 2 0:33

Wow . So it's fair to say that , when it comes to scaling , you've learned a thing or two .

Speaker 1 0:39

I've done a lot of mistakes and I'm getting back collecting them and saying don't do what I did 14 startups ago in that context awesome , well , I think .

Speaker 2 0:50

So good time to jump into the main question , which is , if there's one thing that you'd share with scale up founders , what is it ?

Speaker 1 1:00

um molly graham's quote about giving away your legos . Um , when you are an early , super early stage founder , you are sales , you are marketing , you're potentially products and engineering and all of that . You have to be everything for the business . And there's always the dark arts of where you say , oh , we'll get back to you , but actually you're technically customer service as well and you've got all these accounts as you begin to scale your business . There should be large chunks of your business that you find out about on that weekly meeting . You have got an amazing person who is has more talent than you in that vertical , has more time potentially and is able to be less distracted . So being able to give away your legos and realize that , hey , I'm not having all the pieces , I'm building a larger , bigger thing than when I had those six or seven pieces .

Speaker 2 1:55

I knew all the colors and all the shapes it's a really nice way of looking at every like . It's probably like they've they've got more talent and more time , like it's a good combination , because often I think sometimes it's fantastic , oh , I might have the talent edge . But even if you've got the talent edge , you won't have the time .

Speaker 1 2:12

Yeah , you know that classic . Do you really want that to be your problem ? Like for six , seven hours of the day , can you say the only emails you respond will be about that subject . You need to be either an absolute savants in that vertical or maybe you're being distracted . You're going to drop some other parts of the ball . So I've seen product centric or marketing centric founders think but I'm a marketer , I'm absolutely amazing , but I'm like , but technically you also have to sign all those docus-signs . Actually , every time you're on a call and you're not in a meeting with investors , potentially in this race the overall business is going to be coming down . So focus and time plus talent , invariably your first couple of hires and who they start hiring are large multipliers of the success of a scale-up large multipliers of the success of a scale-on .

Speaker 2 3:08

So one thing you've been very involved with is finding those new Lego pieces . I think quite scary for founders when you're giving away that piece of Lego . You're giving away that control and if you're trying to find someone that is more talented than you , maybe in a space that you don't know , what are the things that you've found really helped founders find the right Lego pieces for them .

Speaker 1 3:28

So I'm a bit of a sports geek and one of the sports I follow is NFL . There's a person in each team that's shelf scouts and they're called Breaking your Own Tendencies . So they look at all the video over the last couple of months that they've done and realize , oh , we play , we do this thing every time we need to install something that they quote like breaks our own tendencies . And that's when you're hiring people . Give yourself a pause and say , what can I do to break my own tendencies ? Because then that's a really exciting space .

Speaker 1 4:02

When you're having those meetings , when you're thinking of those ideas , somebody who just comes at it from a different perspective than you If the best idea always wins and you're having two different ideas , that's amazing because you're paying for somebody's time and their ideas and their effort . What would you want to do ? Pay yourself for ideas you already had ? Where do you look for these people ? How do you assess being super aware of ? Actually , what am I like ? Um , amazing relationships . Um , I built friendships and partners

Effective Hiring Practices for Scaling

Speaker 1 4:33

. Not all two people are very similar , that's you think of every stand-up comedian . They do like the mother-in-law joke or the wife husband joke , because it's like they're different to me , but we're compatible . So that's what I'd say . First of all , find somebody who's different from a different perspective , and there's tactics that can literally let you attract and assess somebody who's a little bit different from you okay , there's a tendency to to look for people that are similar to us , like I'm .

Speaker 2 5:02

Often . This with a whole unconscious bias thing comes in how would ? How do you go about self-scouting and like practically how , how would you self-scout in these situations ?

Speaker 1 5:13

uh , if your your week is basically a series of rooms that you're invited into the living room , the gym , everything like that , your whatsapp groups , those are little rooms , okay , so whenever I'm looking for somebody to hire , I'm going to ask in those rooms but , where else can I be spreading the word of my opportunity , of what I'm building outside of those rooms ?

Speaker 1 5:37

so that's one there . So you're in the open . Next , because that helps . Uh , stop confirmation bias , like you've seen so many times in pitch decks . Oh , this is a total addressable market , this is the serviceable market . Get out of there . So that's point one .

Speaker 1 5:53

Then , just like how you'd run a SAS qualifying qualification process , write down what you need . What is an ISP ? How do you know whether they are or are not ? Through , I say , observable behaviors . So , for example , um , I , I want a really smart person . So that means I need somebody from said university . So that is a understandable way to get certain about somebody's quote-unquote intellect . But actually , is that based on a verifiable metric ? So Schmidt and Hunter is a meta-analysis of 85 years of research on what matters in a CV and assessment process .

Speaker 1 6:40

They looked at it , naturally . So handwriting and number of years of post-18 education are just as effective at deciding if somebody's right for a role or not . That's a little bit scary , okay , but then there are matrices are also right at the bottom and also scarily enough . Number of years of experience , so , but then what's up at the top three is something called a work sample task . So can you replicate what they would actually be doing in their day-to-day work ? Look for that in the context that is natural to the role .

Speaker 1 7:16

So , for example , we always have oh , give a presentation and then tell us your 30 , 30 , 60 and 90 day plan now for your new cmo , who you're potentially going to give maybe even like a double figure equity offer to . Is that actually what you're going to be doing day to day ? Actually , are they going to be managing up to you ? And , uh , no , a lot of time will be hands-on agency management . Um , actually , from discrete information that they're going to know in company , they're going to have to make guesses and shots . Okay , replicate that , as opposed to them repitching their CV to you at the final stage . Those are a couple of steps Shrink and Hummer , using loans and also getting into rooms where you're not usually invited to spread the word about your opportunity I realize I do the work sample .

Speaker 2 8:08

It feels you've almost got to figure out what the job is first and figure out what . There's a lot of thought that goes into like what is this person going to do , which often people don't do enough of before doing . I just need a head of marketing . What , what type of head of marketing do you need ? What are they going to do ? Is it ahead of marketing such as quite a lot of scoping to be done , but then that helps you design a test around what they're doing to execute rather than how good they are at managing you so we , so I .

Speaker 1 8:39

I I'm not going to toot my own , but I'm a likeable person . Also , most founders are also charismatic and that means when they're trying to mirror match on what type of personality it's the convincer , it's the extrovert . That would be like oh you know , we hire for enthusiasm . But actually , if there are type A and type B personalities , if there's introverts and extroverts , I think you , as a scaling founder , should take money from everyone . So , having that motive , what does the role actually entail doing in their day-to-day ? And maybe there are some , maybe more medium-term um goals that or behaviors that they need to show . Let's do that as opposed to . I have a nice warm , fuzzy feeling about them because we got on yeah , it's that .

Speaker 2 9:24

It's that awful thing . Oh , I knew in the first 30 seconds uh thing . It's like what you really knew is that someone triggered your unconscious bias hard and from that point on you soft-saped the interview and just handled it so differently which no one was ever say oh my God , I knew that vendor was the one , or that supplier or service is going to be perfect for my company .

Speaker 1 9:50

No , you take the call , you decess it . You'd look at the SNAs . You'd be super boring about picking an ERP system .

Speaker 2 9:59

I think people think they're a good judge of character , but if you did treat it like it was an ERP system , which you maybe got a little bit less excited about , how would you go about doing it ?

Speaker 1 10:08

So back to Schmidt and Hunter's study is having standardized processes . So ask the same questions again and again , write them down and again write them down . Uh , one of the things also scale up founders potentially do if you're making a group decision is you need to speak last in an assessment or when you're making a group decision , because people will always revert back to the highest paid , most important person in a meeting for a decision . So , being able to be stumped , okay , well , what do we think as a team ? Okay , cool , you're not trying to build consensus , you're trying to form a decision and most of the people will turn to you . What do you think , boss ? Who should we hire ? Oh , actually they were a seven , but actually , because you said that thing , actually I think they're a five . So get the first nuggets of insight from your team and then you can add your piece to it .

Speaker 2 11:06

And you said five and seven . Would you recommend actually having some form of scorecard for hires so that there's some objective criteria ? Are you putting numbers against it ?

Speaker 1 11:18

Yes . So I like a one to five and take out three . Don't have people hedge . I have people some people do like one thumbs up , two thumbs up , or one thumb down , two thumbs down , just to let people stick their neck out on the line . And also you , because this is it's a summative assessment . They ever pass or fail to get onto a seat at your company assessment . They ever pass or fail to get onto a seat at your company .

Speaker 1 11:48

Um , these so work from the rubric back to the role . So you said it was really difficult , uh , for example , to be like you need to know what the role is , and most people start off with , okay , let's do job title , let's think broad strategy . But if you're , uh , I've hired good , how many account executives across my career ? So many times people say , okay , quota attainment is what we need . Okay , or convincing skills , okay , cool . Well , actually , do you , unless you're going to be hiring in market for that very specific thing that you're already selling ? Actually , it's research skills . It's actually conscientiousness around a process . It's potentially , potentially okay . Uh , how to say no to bad deals . So those are the three things that you'd ask for stories for them to demonstrate , and it's okay . I saw several examples of that .

Speaker 2 12:33

That's a five out of five so for you this sort of one to five , no three . Is that as an overall score , or is that against certain characteristics ? So let's say you've identified that role and it's kind of we really need these three things . Would you put a score per characteristic or just overall ?

Speaker 1 12:49

yeah . So that example with an account executive in a sas business , I'd split . So one score for each of those um coincidences , and then that gives you kind of a nuanced conversation about no , maybe two candidates have the same score , but across what ? So then you'd ask yourself okay , well , a lot of our leads are marketing qualified and that's why I think a lot of money will be coming from in the next six months . So this person , although they have similar scores , way more strength in terms of running a predefined process . Well , it could be a different reason why you choose those close cases between two different people .

Speaker 2 13:31

When you get to the scaling phase , particularly in sort of a good market , there's a sense of oh , I don't have time , I just need to hire people , I don't have time to do this . This sounds like there's quite a lot of planning and preparation for doing this hiring process . I imagine you had that pushback from founders before . What would you say to them ?

Speaker 1 13:51

If we look at the number one line item at a company , it's staff . But there are very few businesses who call themselves scale-ups or have VC or some sort of alternative financing that are not beholden to the ideas of their people . So I'm I'm always going to struggle to be like what are you doing right now ? That is not . It is as important as the payroll investment that you're going to make into somebody . So so there's a company called Enborder , e-n and Enborder and they tracked okay , how much does it cost a business regarding a bad hire or bad onboarding

Effective Hiring Strategies for Success

Speaker 1 14:32

?

Speaker 1 14:32

You take the starting salary and you times that by 2.3 . That's the cost in-year for a bad hire . That's to recruit , that's to close , that's to onboard , that's to pay , that's to off , that's to close , that's to onboard , that's to pay , that's to off board and then find somebody again . So that's a big ticket item . If you are in a hours billable environment across all of your team , all of your stuff , to go through that and not go right , that's expensive it's something that you can do quickly , isn't it hiring you can , you could , you can just tick it off your list and go .

Speaker 2 15:05

Brilliant , I've got someone in . But is that really success ? Success is not having them in day one .

Speaker 1 15:10

Success having them in day 90 or day 180 , when you're confident that you know that they're the right hire I think , uh , there are always sometimes in a business where you do need to engineer for speed , but you need to have certainty about something that means that you can make less than ideal decisions . So , for example , right now you already have product market fit and you are losing money every time you do not hire an SDR . Every time you do not hire an SDR , all your investors are like we've given you a shed load of money . Why are you not using this to market in XYZ when you don't have a growth marketer ? You have certainty of products or you have certainty of need from partners and investors .

Speaker 1 15:55

Okay , then move quickly , but you haven't solved what . You might have solved a recruitment problem , but maybe you've just nudged it down the line . Now you have a onboarding problem , a coaching problem . Maybe you have a created a bottlenecking team in terms of misalignment . So your energy doesn't disappear , it just converts . It's a law of physics . So you usually move that along to a different thing that you're going to have to solve later .

Speaker 1 16:22

But I did . This doesn't have to be something that's arduous that you need to do also . Just back to what I said about giving away your legos why are you sure you should be solving this . There's a whole community of hr and recruitment and talent professionals who can come in fractionally . You can come in on a contract um , definitely be able to do this .

Speaker 1 16:44

My one piece of advice when people do that , though , is don't go back to the founder circles exclusively for these type of recommendations , because again it's back to the rooms that you're invited into . Um , well , us founders , and founder generally , we're a very unusual breed of people . Uh , maybe going to places for more established businesses , or , uh , people from a different country or context can maybe just get . Oh , so that's how I would grow . That I saw that specifically when I was looking after portfolio 30 startups and founders factory just before covid I come in , and then what I saw in a portfolio-wide level , across seed and series A businesses , was that the different reactions to change and how you'd hire and retain and policy and everything like that .

Speaker 2 17:36

There's a difference between rigor and speed , so it sounds like just could do something rigorously and put the thought in doesn't mean it has taken a long time . But also , just because you're taking a long time and umming and ahhing about doesn't necessarily mean you're being rigorous and doing the right thing .

Speaker 1 17:49

It's from what you can know , and I use that epistemology of what do you know . So that's why I go back to facts studies , what matters in a profile , what matters in a decision , away from the 264 volumes of cognitive bias , as much as you can , and I'm not going to know everything . Perfect is the enemy of good , so it's just like , from what I know , there's a risk to it completely . So don't be paralyzed by a decision , but also aim to have your decisions as much based on facts based , empirical data for a large payroll decision .

Speaker 2 18:31

It sounds like we're saying that hiring is very important , which I don't think is a radical statement . It accounts for most of your P&L . It certainly accounts for the way you spend your money . When you fundraise , there's a temptation to rush it and do it fast , but actually you can do it rigorously . You don't have to do it yourself . There are professionals out there that will help you do this and bring all this knowledge with them . But it's just acknowledging that you really want to set yourself up for success by doing the thinking around what the role is , who you need from it , run a process that is based on best practice , not on sort of historical habit , and it doesn't have to be slow . It's just you don't want to rush it and you don't want to skip steps . What , from your side , what you've seen , is a good success rate on hiring .

Speaker 1 19:21

from what you've seen , is a good success rate on hiring . So churn rate is obviously across a period , how many people stay and that comes as a number there , the highest I've seen . It depends on industry , but there was one startup I was involved in . They hired 94 people in one year and only five people left in that year .

Speaker 2 19:44

That's a really high number . I mean , that's saying like over nine out of ten hires worked out . Do you think more than five should have left , because sometimes you can have a low churn rate because you're not making the decision to exit , and so I'm just wondering what is a sort of a number out of ten out of five that you should be getting right over half like six months ?

Speaker 1 20:06

See , that's , I think , why you raise a really good point , because there's the cumulative element of it and also in the scaling business . Back to Molly Graham . She was the CEO of Facebook when it was 200 people and then , when they were , I think she was the cio still , so it was okay .

Tracking Employee Sentiment for Successful Hiring

Speaker 1 20:27

Giving away an ed is . Maybe there are people who that wasn't for them , they had to leave . Or there are people who are passionate about different stages of business , or I mean , how many ? Uh , if you look at your engineering team now for the last five years , the top three programming languages change every five to six years , so you needed to refresh that already so I wouldn't say aim for a static number , um , but it's across your growth , across a business who's staying , that you wanted to keep .

Speaker 1 21:00

Basically , yeah , um . One way to actually do this is maybe not track all who's coming , who's going , how happy are the people here already ? So , um , turn the mps score back on your team it's called an emps and track them . So if a really good um , a really good consumer product has to try aim north of plus 50 on an net promoter score , I've , but then a good employer , you should aim for plus 20 , and I've been so that that we may be more there , because that captures sentiment , confidence in the people that you're hiring . People want to stay , people think they're in the right place , and then the churn figure will be the churn figure um over . Since covid , we've had scaling up , scaling down by debt financing , we've had all these bridges and stuff like that . So your headcount number and your churn rates .

Speaker 2 21:54

We've had three black events in a row yeah , basically , and actually one thing I used to look at was less about the absolute churn rate but more like as cohorts , like we look at it on a graph like average length of service and just see where people are spiking . I just think that people leaving before six months is probably okay because you're like there's something wrong with the hire no , it's too high , this probably hiring is not right , but like I think it's okay . You will have almost no churn six months to two years , three years , and then we just acknowledge that maybe it spikes again because people , people stay in companies , less skills change etc . But particularly having like lots around sort of the year to two year mark feels like maybe there's a cultural you said a really interesting point , uh , about you're always interviewing , um so for position .

Speaker 1 22:48

It's like the ramp-ups period for staff is where you're like , this is where we know , so it's understandable if there is a churn right there , for sure . Um . Same thing when you're one year mark and beyond . It's like they now introduce themselves when they're in their pub with their friends this is what I do and now they get repeat business when if then , uh , they get that anniversary ticker on linkedin , all that stuff there . So then there's an establishment piece that you know forming and norming elements in some of the L&D piece , but I'm sure you've got amazing guests who'll speak about that in the future . But good point regarding that aspect of knowing whether your team is doing well in terms of recruitment and keeping .

Speaker 2 23:37

Well , I think this has been so useful . I think for like fans , it's like just really dive into practical bits of like what what good hiring looks like , but it doesn't look like where you can go , looking for people that get out of some of those rooms , maybe change your processes , put the rigor in up front and , and when you get that stage , find people that can bring you these skills so that you can give them that lego brick and go you , you do this bit . I've got I've got enough on my plate .