Why is it becoming increasingly difficult for HR at startups to recruit talent?

Why is it becoming increasingly difficult for HR at startups to recruit talent?

The 2019 hiring market was anything but calm, with HR departments at small companies—especially startups—finding it increasingly difficult to recruit.

How tough has it gotten? Not long ago, a friend of mine who works in HR at an internet startup in Hangzhou told me: The company is hiring several programmers, and due to the urgent need, its two full-time HR staff plus one intern spent over a month scouring various channels—excluding headhunters—and collected more than 100 resumes. After screening down to about 50 candidates who met the basic requirements, they managed to extend interview invitations to only around ten people. They extended a single offer, but unfortunately, that lone offer was declined by the candidate.

Such rejections leave HR feeling utterly defeated—almost to the point of tears. Even more disheartening, they may find themselves trapped in a vicious cycle of hiring, employee turnover, and repeated recruitment.

01

The Talent Shortage Faced by Startups

Xiaolin is a graduate of the communications program at a prestigious 211 university. Unable to secure a better career opportunity upon graduation last year, he joined a startup, where he primarily handles media and public relations. Despite being the sole person responsible for this area, the company has bestowed upon him the title of “Public Relations Manager.”

However, what Xiao Lin didn’t anticipate was that, in addition to media outreach, his role as “PR manager” also entailed handling HR and administrative tasks—and even serving as the boss’s assistant. Running errands and drafting all sorts of documents fell squarely on his shoulders. In the end, after less than a year, Xiao Lin resigned. Explaining his decision, he complained: “The company was in its startup phase, with limited manpower and financial resources, so everyone wore multiple hats. I felt I wasn’t learning anything. Plus, startups are rife with uncertainty—there’s always the risk they could shut down overnight, which left me feeling deeply insecure.”

Xiaolin’s case is, in fact, a microcosm of the broader challenge faced by startups: recruiting talent is hard, but retaining it is even harder.

A certain online recruitment firm once found that, in today’s market, 10,000 people are considering changing jobs, with the majority ultimately gravitating toward the top 20% of opportunities.

1. 80% of people aspire to work for large, publicly listed companies—offering above-average salaries and a stable, low‑stress environment.

2. Twenty percent of people want to join a startup, but in reality, many are swayed by former colleagues or old classmates and end up signing on with a startup team—because the risks are high, and they feel that familiar faces are more trustworthy.

On several well-known domestic online communities, there’s no shortage of discussion about whether one should join a large corporation or a startup after graduation, and the top-ranked responses almost universally advocate going to a big company:

“I’d rather loaf around in a state-owned enterprise than start a business in the private sector.”

“Who’d want to work at a small company when they could land a job at a big one?” 。

02

Why is it getting harder for startups to hire?

As my HR friend put it, hiring at a startup is never easy. In a sense, starting a company is like joining a band of outlaws—have you ever seen anyone easily recruit new members to a gang?

Nowadays, it’s becoming increasingly difficult for HR teams at startups to recruit talent. I’ve identified the following key reasons:

1. Job seekers are more sensitive to changes in the broader economic environment.

Since 2018, both internet giants and start-ups have frequently been reported to be carrying out large-scale layoffs. Just recently, Oracle announced the closure of its China R&D center, with most employees being forced to leave their positions. From the perspective of Maslow’s hierarchy of needs, in today’s volatile job market, which offers employees greater security: start-ups, or large state-owned enterprises and multinational corporations?

A personal anecdote, a layoff announcement, or even details that HR would never have imagined can subtly shift a job seeker’s mindset.

2. HR doesn’t know where to source talent.

In mature industries, HR recruitment typically has clear objectives—for example, directly poaching talent from competitors who possess comparable track records of success.

However, today we are living in an era of profound transformation. Many startups—particularly those operating in cutting-edge fields like new technologies, new energy, and advanced materials—are pursuing research and development projects that have no precedents, leaving them with no established benchmarks. They must forge ahead by trial and error, and as a result, HR teams often find themselves at a loss as to where to source talent.

3. They’re looking to hire a jack-of-all-trades, yet they’re offering the salary of a fresh graduate.

This situation isn’t always the HR team’s fault, either. Startups are typically in their early stages of growth, and without strong financial backing, it’s hard for them to match the compensation packages offered by industry giants.

I know some startup founders are quite fond of “imitating others without understanding the context”—they’ve adopted the 996, full‑on work‑style popularized by Alibaba and JD.com, yet they talk only about ideals and never about compensation.

In large companies, employees enjoy greater career prospects, more comprehensive benefits, and a more robust training system—sounds like the perfect setup. But if, as a startup, you’re still unwilling to offer higher compensation, then what exactly sets you apart?

03 

How HR at a Startup Can Hire the Talent They Want

After a startup secures funding, the top priority for the CEO and HR is hiring. Without swiftly building a tiered, well‑structured team, the business can easily lose momentum and ultimately fail.

If you look closely, you’ll find that companies that emerge victorious in fierce competition often identify and recruit top talent early on—for example, Alibaba’s “Eighteen Arhats,” who each played a pivotal role in the company’s formative years; or Meituan’s Wang Xing, who, during the era of the “Thousand Group Wars,” poached Gan Jiawei from Alibaba to lead its grassroots marketing team, ultimately securing victory.

So, as an HR professional at a startup, how can you recruit the talent you’re looking for?

1. Company-wide Recruitment

Many people mistakenly believe that recruitment is solely the HR department’s responsibility, but that’s far from the truth. Especially in startups, HR faces immense pressure to hire, and it’s already a significant achievement if the founder can ensure that professional HR handles the job properly—let alone expect additional manpower to be devoted to recruiting. Therefore, HR must learn to leverage the company’s resources effectively and even encourage the founder to take an active role in the hiring process.

In Xiaomi’s early days, the company was small and didn’t even have any products yet. So during the first six months, Lei Jun spent 70 to 80 percent of his time every day recruiting people.

Once, in his quest to recruit an exceptional hardware engineer, Lei Jun made over 90 phone calls in a row and interviewed more than 100 hardware professionals over the course of three months—ultimately landing Dr. Zhou Guangping, who became the co‑founder responsible for hardware.

2. The clearer the talent profile, the easier recruitment becomes.

Once, the CEO of a startup came to me for consulting, saying his company was short a product manager and that no matter what they did, they couldn’t attract the right candidate. I asked him to show me the job posting; it described a role straight out of a large corporation—yet in reality, it was an internet‑startup team with fewer than 20 employees, and the responsibilities were clearly entirely different.

He also told me that after this information was shared, a highly experienced individual came on board, but left within two weeks.

I believe the root cause is that they haven’t clearly defined their ideal talent profile. For startups, I’d advise against blindly poaching top-tier experts or senior directors, because more often than not, once you’ve brought someone on board, you discover they lack the experience and skills your product actually requires—resulting in excessively high trial-and-error costs.

Therefore, in the early stages of entrepreneurship, HR should strive to define clear talent profiles and pay close attention to the following three key factors:

First, select talent based on the company’s positioning and business objectives, and clearly articulate “who we are” and “where our strengths lie.”

Second, the talent profile must be co‑created with the CEO and business partners to clearly identify the specialized skills your product requires, and to source talent from a business‑oriented perspective.

Third, clearly articulate what the founding team aims to achieve, articulate a vision for talent development, and, along the way, identify individuals who share your passion.

3. Attract talent with reliable incentive mechanisms.

Many startup CEOs believe that equity is the key to attracting top talent. Indeed, equity is crucial, but salaries should not be set too low; competitive compensation and benefits are often far more tangible than distant, unattainable equity options.

On this point, my recommendation is: HR should offer salaries 10%–20% above market rates, or even higher, when recruiting. The main benefits of doing so are:

First, as salary competitiveness improves, the quality of potential candidates also rises, thereby expanding HR’s scope for sourcing and negotiation.

Second, in the long run, this approach actually reduces costs, because hiring capable, high-performing employees often enables a single individual to deliver the output of two. Exceptional talent is never truly expensive.

Third, respecting talent is no empty slogan; startups should be even more resolute in this regard. Although we may not yet enjoy widespread recognition and our infrastructure remains modest, at least we approach recruitment with genuine sincerity.

I’d like to say: HR professionals at startups, don’t keep hoping that top talent will just fall into your lap—because that’s truly a rare and unpredictable occurrence.

What you need to do is attract talent with sound incentive mechanisms.

04

Written at the end

In this era, HR professionals at startups undeniably face the daunting reality of “difficulty in recruiting.” Yet, viewed from another angle, it’s often the companies’ own recruitment practices that lead candidates to walk away.

So after all this talk, we end up back where we started: if you can’t become the kind of company that talent deems a good fit, then you’ll inevitably keep searching for “the right” people.

As the saying goes: if you lift others up in life, they will, in turn, offer you a whole new horizon.