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How startups recruit, hire and retain software developers

How startups recruit, hire and retain software developers

Startups can't offer the same salaries and benefits as larger tech companies, but they've built creative strategies to compete when it comes to hiring and retaining software developers.

Coding Sans, a software development company, released its State of Software Development at Startups survey looking at 126 tech workers at startup companies. Of those polled, 35 percent cited hiring talent as one of the "biggest challenges in software development," and 90 percent expect the demand for software developers will only grow in the next five years.

The survey also uncovered some interesting tactics startups use to compete with bigger, more established tech companies. Here are seven realities they've uncovered about hiring software developers at startup companies.

Most efficient hiring methods

When startups hire software developers, 35 percent rely on employee referrals, 30 percent use professional networks and only 13 percent said they rely on recruitment agencies or headhunters. Hiring people from your network or candidates referred by a current employee helps bring some certainty to the process.

"When the referral is being made by someone who knows both the candidate and your business' needs, there's a much better chance that that the match will be a good one," says Travis Bloom, senior front-end engineer at Rocketrip website, a company that provides travel software for businesses.

And when an employee is referred by a current employee or recruited through a professional network, Bloom says it's easier to get them on board, "since the employee who made the referral can answer questions and give a detailed look at what life inside the company is really like."

[ Related story: 4 tips to help you wait for a promotion or raise ]

Most important hiring criteria

For startups, technical skills aren't the most important hiring criteria. Instead, 69 percent cited work experience as the top priority in hiring, followed closely by cultural fit at 60 percent. Less than six percent cited a bachelors or master's degree as a key hiring criteria.

Startups are built on small teams so hiring someone who fits well into the company culture can be more important at a startup than a larger organization.

"It's hard to work around a dysfunctional team dynamic when there are only a handful of people on the team," says Bloom. And in the fast-paced world of a startup, the last thing you want are delays over office politics.

How startups lure talent

Startups are at a hiring disadvantage when competing against large corporations that offer competitive salary packages and only 10 percent of startups said they rely on high salaries to woo software developers. Instead, startups lure talent with interesting and challenging tasks (79 percent), a strong team and corporate culture (64 percent), flexible hours (39 percent) and remote work (28 percent.

Erick Tai, co-founder and head of engineering at Reflektive, a company offering performance management software, has first-hand experience luring an engineer away from Twitter. Tai asked what the candidate's career goals were and when the candidate mentioned a desire to learn more about scaling, Tai emphasized how he could learn that and more at Reflektive.

"I sat down with him and wrote what his resume would look like in two years. It led him here, and I'm proud to say that he accomplished that two-year milestone in just one year," he says.

[ Related story: Culture key to attracting and retaining tech talent ]

Keeping software developers motivated

Startups keep software developers motivated similar to how they recruit -- 58 percent say strong teams keep software developers in house and 57 percent also cited challenging and engaging work. An exciting product (45 percent), autonomy (45 percent) and variety of tasks (29 percent) were the next most popular answers. Only 16 percent cited stock options as motivation, while 13 percent and 12 percent cited extra benefits and money.

"Autonomy, challenging peers and a continually developing product are all key to retaining talent. It helps too if the developer believes in the product's value," says Bloom.

Outsourcing to fill the gaps

Hiring doesn't always involve full-time employees; 56 percent of startups said they "have already outsourced software development to an external partner," while 15 percent said they have plans to outsource in the next 12 months.

Of those companies who outsourced, 48 percent said they were satisfied with the results, while 24 percent were dissatisfied. Outsourcing included freelancers (31 percent), software development companies (39 percent) and a combination of freelancers and software development companies (30 percent).

Preparing for changes

Startups are no stranger to fast paced change; the early years of any startup can be tumultuous and unpredictable. That includes talent -- with small teams and limited budgets, startups need to prepare for an employee to quit or take leave.

To make sure code is "easily readable when someone leaves a project," 49 percent leave comments within the code, 48 percent also use documentation, 39 percent say they rely on industry style guides and 20 percent say they don't have a specific strategy.

These strategies not only leave businesses prepared if they're caught off guard by a resignation, but it also helps new hires get up to speed.

Measuring performance

When it comes to tracking performance, 61 percent said they focus on "completed tasks," while 27 percent said they didn't use any metrics; 29 percent said they look at code readability, 25 percent consider the speed of the developer and 21 percent evaluate the number of bugs.

Startups offer more autonomy than larger companies, which can be a selling point to any software developer craving some independence. One of the draws for software developers is that they won't be micromanaged at a startup.

"Developers want to build things. They want to create. It's pervasive across startup developers, big company developers, social media developers, enterprise developers. A common thing we see at larger companies is that there's just too much in the way to create. You want to hire great people and get out of their way," says Tai.

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