Hiring for a Start-up – Hiring and Retaining Your Managers
The ideal size for a software sales and support outpost in Japan is about 10 to 20 people. Broken down, the numbers are typically: CEO, PA/office manager, sales manager and 2-3 sales people, engineering manager and 2-3 engineers, marketing manager, and then possibly assistants for all of the above managers.
Note that I haven't included an accounting or HR manager. For the first 6-9 months I imagine that your new company won't be earning a lot of revenue, and thus I would be tempted to outsource the accounting, HR regulatory work, and staff pay functions to one of the many specialist outsourcing companies out there. Quite possibly, you will already have a bookkeeper in the form of the office manager, and at least temporarily this person can also look after any minor HR needs. As your business starts to grow towards 20 people or so, that's when you will want to bring on these additional managers in a specialist and full-time role.
The major advantage of hiring in experienced managers is that they will often bring trusted members of their former teams, just as the CEO should be doing. This saves recruiting costs, and ensures tight bonds between employees; bonds that will see them over some of the challenges of the ensuing 2-3 years until the company becomes profitable.
One possible disadvantage of hiring experienced managers is that they can be set in their ways and have their own standards of performance. Sometimes their attitude can border on arrogance or insolence, so it can be difficult to migrate them into your company culture. The planning here, then, is to use these people as pioneers, then gradually over a period of months require changes in their behavior so as to bring them closer in line with the company culture. This way, their colleagues will see that the company is trying hard to give the person a chance and thus if they subsequently leave, any efforts the departing employee makes to try to pull their former colleagues with them will be less likely to succeed. On the other hand, if you can migrate your managers into new behavior patterns, and can do it without arousing a feeling of resentment, you will have powerful allies when the hard times set in.
One goal of any start-up is to protect oneself from the vulnerability of being exposed when a key employee leaves. This should be an ongoing strategic consideration of whoever is looking after the operation on the behalf of the parent company - not just the local CEO. Therefore, from the CEO down, the parent company should insist that there should be succession planning and training, and preparation to cover a sudden departure. Apart from the CEO, who can be locked in with a contract, other employees can leave with just 2 week's notice - the labor laws guarantee freedom of employment, and thus you can be left high and dry just as a key customer relationship gets started. Not a fun experience.
Did I just say that you couldn't contract a manager to stay and fulfill his/her responsibility for a smooth transition to another person, which including hiring and training can take 3-6 months? Well, "yes" and "no". Although you cannot force someone by contract to stay, you can, however, incentivize them and deny them various rewards if they act irresponsibly. And to some extent, that's what the Japanese bonus system is all about. If you have ever noticed, the bonuses are paid just once every six months and in most companies you have to remain and be actively working at the company this whole time in order to receive those bonuses. Indeed, many companies pay 1-2 months after the bonus period ends, to get the employee part of the way into the following bonus period, thus keeping employees on the hook for the next bonus. Using a carrot like this has its limits though, and there will always be another company out there waiting to offer better conditions than your total package.
In-house succession planning is really only possible if you have sufficient depth of employee skills and knowledge in a particular department. This is one reason why "mini" 1 to 3 person offices don't work so well in Japan unless they are owner-operated. Mini offices like this can be extremely vulnerable to a key person leaving and you are stuck with no one to back them up.
Realistically you can't offer continuity of service or product support with just a small and potentially unreliable operation. Thus, you need at least 2-3 people of descending capability behind each core person within a skill or knowledge group. Indeed, your business needs to be large enough to provide continuity at all times - a state normally achievable with a minimum 10-12 people per product segment - or basically the typical one-product software company rep office. Succession planning also implies an active training program, and this should be a top priority for small firms.
Terrie Lloyd is the founder of DaiJob, Inc. He also writes a weekly newsletter for entrepreneurs and business people about business and political opportunities in Japan. You can find the newsletter at www.terrie.com. For further contact with Terrie, email him at email@example.com.