This week’s theme for the Startup chronicles, aka “Why some Nigerian businesses fail,” is friendship. We hope that you are both entertained and educated by this story.
A founder hired his friends as consultants for his startup. They signed a six-month contract with a vague scope of work, and no KPIs or penalties. These consultants supposedly had a wealth of experience and didn’t come cheap.
Then the founder recruited people to head the HR, Finance, Marketing and Public Relations functions. He said he wanted to build a world-class company with a strong culture; a family that worked and played hard. The team developed organograms, job descriptions, processes, operational plans and KPIs. They shortlisted candidates to fill the roles occupied by the consultants and developed performance appraisal guidelines.
When presented with CVs, the founder said he wanted only candidates who schooled abroad. The Head of HR said he couldn’t afford to pay people with foreign degrees based on the approved salary structure. But he insisted. The Head of HR shortlisted candidates afresh. They conducted interviews and he realised he couldn’t afford the calibre of people he wanted.
The Head of HR advised him to reconsider the previous shortlists. He did. They conducted interviews but he said they were not a culture fit because they lacked pizzaz. In fact, he rejected an excellent technical candidate because he did not speak with a twang. The team cautioned that corporate culture wasn’t built on accents but shared values. He did not listen.
Instead, he held countless strategy sessions with his consultants that ended with partying. Six months elapsed but he neither renewed nor terminated the contracts so the consultants continued to attend meetings and expected to get paid. Meanwhile, the company hadn’t launched a single product. The Head of HR advised the founder to convert the consultants to full-time employees so he could hold them accountable through appraisals. He still ignored it.
Two months later, the second round of funding which the company was expecting did not come through. The founder tried to secure a loan from a bank, and he was told that his idea could not be funded. He would only get funding if he had a product to show. Now desperate and angry, the founder instructed Finance to stop paying the consultants. The Head of Finance drafted a letter to terminate the consultants’ contracts but the founder did not sign it.
After owing the consultants for five months, they called for a meeting, and he said they had not delivered the product, so they did not deserve to be paid. The consultants sued the company. Afraid that a crisis was looming, the team resigned.
𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆
Startup founders must be decisive about hiring the right talent for their businesses. Don’t hire who you cannot fire. Also, cut your coat according to your size.
Originally posted on LinkedIn
