Secrets of Growth

How crafty startups handle job recruiting

December 19, 2011: 9:57 AM ET

Finding great job candidates is both time-consuming and competitive, especially for startups. Some companies and B-schools are getting creative.

By Ethan Rouen, contributor

FORTUNE -- Just hearing the words "cash flow" can send a startup CEO into a panic, and for good reason. Entrepreneurs are frequently lectured on the importance of managing cash as their businesses grow, and hot companies can implode when they run out of money to support their expansion.

But "talent flow" can be just as important -- and as challenging -- to manage when a founder's wildest dreams come true and the company she has risked everything to build is finally taking off. Finding the right people, the ones who have the technical skills and the desire to work at a startup, is both time-consuming and competitive. How a company approaches this task can mean the difference between an IPO and a plain old P.U.

"It's less about putting up a job posting and waiting for resumes to start flowing in," says Leah Busque, founder of TaskRabbit, a San Francisco-based company that puts busy people in touch with others willing to do chores and a variety of other services for a fee. "Bringing people in to spend time with the team, doing rounds of interviews with team members is what we do. We're not just looking for technical competencies. Fit is the most important thing."

Perhaps more than in the corporate world, recruiting at smaller companies is a two-way street, Busque says. Companies need to prove themselves to potential employees as much as job seekers need to prove themselves to executives. This can be particularly daunting when a company has an immediate need for new workers, in part because the current staff is already being pushed to their limit.

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Companies like TaskRabbit, which now has 35 employees, don't have the resources to bring on a full-time human resources staffer, so they need to get creative when they want to grow.

Busque has used Bay Area programmer and engineer social networks to recruit engineers and designers. TaskRabbit also created a video showing off one of its most valuable selling points, its office culture.

With panning shots of the company's offices, featuring a game room, groups of people eating lunch together, and seemingly happy dogs sitting next to desks, the video includes interviews with employees discussing work-life balance (an engineer training for a marathon and dressed in running clothes mentions the freedom to go for a run during work), the challenges the company faces, and the collegial atmosphere.

"It really provides context for people who are applying," Busque says. "There are so many great jobs out there. We're looking for someone who is unique, and those candidates are looking for something unique as well."

While many small companies fret about getting too few resumes, many also fear getting far too many. Wading through dozens of candidates who all look similar on paper can be a disheartening exercise.

Enter the job auction

The Wharton School of the University of Pennsylvania has created partnerships with several venture capital firms to create an easier way for MBA students and companies to pair up.

Every year, startups with VC backing submit requests for interns to Wharton's career services office. Students then bid on positions in an auction, which reduces the number of people competing for any given internship and ensures that the companies see resumes from the most interested candidates.

After that first round, startups often begin an application process that adds many twists to the traditional case-based interview, says Michelle Hopping, senior associate director at the Wharton MBA Career Management Office.

"Companies ask students to do homework in advance of the interview to show fit and passion," she says. "Startups use this to act as a filter. 'Is he committed to this position, or is he dropping a hundred resumes?'"

From video resumes to business development pitches, job seekers are expected to distinguish themselves from the outset because startups usually do not have HR managers to serve as buffers before top candidates meet the busy executives they will be working for.

"Often, at the MBA level, they are looking for someone who can serve in a consultant role," Hopping says. "Someone who can help with the problem of 'We're growing so fast, we can't figure out how to continue doing what we do.'"

Eschewing the traditional post-MBA career

Hopping says that Wharton created the internship auction program in response to student demand. MBA students have been exiting school less afraid to buck the traditional career paths of consulting, investment banking, or working at a large corporation.

At a startup, a recent graduate often gets to touch every aspect of a business and play a senior role from the start, while the company gets a generalist used to hard work.

Still, this ideal fit is taking a while to catch on. With just-in-time hiring and limited travel budgets, smaller companies often find a shallower talent pool come graduation in May, after students have been wined and dined by big companies with impressive recruiting budgets. For students, it's a trade-off between a near-sure thing and a much riskier -- though potentially more exciting -- venture.

"The hardest thing for non-traditional exit strategies is the culture on campus," says Jonathan Lyons, who graduated from Wharton in May. "It's scary when a lot of your friends are getting offers in October, and you're out in the wind."

Lyons wanted to work in clean technology and knew that most likely meant working for a startup. After graduation, he landed several consulting gigs in clean tech but was unable to find a full-time offer.

See also: Top 10 MBA programs in the U.S.

He continued to network and show his enthusiasm for the industry until a Wharton alumnus introduced him to the executives at Noribachi, a smart-energy company that sells an array of energy-efficient products.

Noribachi was a match: It was a clean-tech company with offices in northern California and a relaxed hierarchy that would allow him to play a substantial part in the company's growth. And Noribachi, which had already hired some MBA graduates, knew it was getting a flexible person capable of evolving with his job.

After a series of interviews that turned into honest conversations about his skills, where the company is now, and where it is going, Lyons accepted a job as a business development manager in early December.

"I wanted a company I could fall in love with," Lyons says. "People I really respected told me it was a good company with good founders, and that was confirmed during the interview process."

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