1

EVOLVINGRECRUITMENTSTRATEGIESAstudyonrecruitmentbestpracticesinhighgrowthtechnologycompanies

JoakimKarlsson(23002)

Abstract:Recruitmentandrevenuegrowtharestronglycorrelated inSwedish

high-growthtechstart-upsbutthesecompaniesfaceacontinuouschallengeof

finding and recruiting talent in sufficient quality and numbers. The thesis

answers the question on how such companies manage to recruit the

employees they need. Since few studies have been performed on these

companies’recruitmentstrategies, thethesisbuildsontheoryaswellasona

qualitativeandexplorativeanalysisof11Swedish techcompanies.The thesis

proposesamodelofninebestpracticeswhichappliesacrossrecentlycreated

start-ups aswell as larger start-ups. Best practices include hiring a person in

charge of recruitment as soon as the company starts to grow, keeping job

descriptions broad,minimising the use of external recruitment agencies and

establishing internal search teams instead. Successful Swedish tech start-ups

innovate not only in technology and marketing but also in recruitment

strategies,whichshouldserveasaninspirationforotherstart-ups.

KeyWords:Humanresourcemanagement,recruitment,highgrowth,start-ups

StockholmSchoolofEconomics

Course619–ThesisinManagement

CourseDirectors:KarinFernler;LaurenceRomani

Supervisor:StefanEinarsson

Thesispresentation:May2016

2

Foreword

Iwouldliketothankeveryonewhohelpedmewiththewritingofmythesis,especiallythe

twelvepersonswhoacceptedtobeinterviewed.

Furthermore, Ialsowant to thankmysupervisorStefanEinarssonand thestudents in the

tutoring sessions Emelie Hedin, Maria Lindholm, Gustav Flink, Jimmy Lindfors, Freddie

Eklund,OskarAlktun,LudwigSöderqvist,andJakobPreutzApériaforinterestingdiscussions

andtheirvaluablefeedback.

JoakimKarlsson

Stockholm,2015-04-29

3

TableofContents

1.Introduction...................................................................................................................51.1Background...........................................................................................................................5

1.1.1TheimportanceofHighGrowthcompaniesandtheirrecentboominStockholm...............51.2TheimportanceofRecruitment.............................................................................................51.3Purpose.................................................................................................................................81.4Researchquestion.................................................................................................................8

2.TheoreticalFramework...................................................................................................92.1RecruitmentProcess..............................................................................................................9

2.1.1RoleDefinition.....................................................................................................................102.1.2Advertising...........................................................................................................................102.1.3Headhunting/Externalrecruitmentagencies.....................................................................102.1.4Referrals...............................................................................................................................11

2.2Companygrowth–DifferentstagesinHRM........................................................................112.3HumanResourceManagementinsmallbuthighgrowthfirms............................................13

2.3.1Impactoffirmsizeoneffectivenessofrecruitmentpractices............................................132.3.2Impactofhighgrowthoneffectivenessofrecruitmentpractices......................................14

3.Method........................................................................................................................153.1ResearchMethod................................................................................................................153.2Approach.............................................................................................................................153.3Design.................................................................................................................................163.4Selectionofcompanies........................................................................................................173.5Selectionofinterviewees.....................................................................................................173.6Methodfortheanalysis.......................................................................................................183.7CredibilityandAuthenticity.................................................................................................18

3.7.1Credibility.............................................................................................................................193.7.2Authenticity.........................................................................................................................19

3.8Ethicalconsiderations..........................................................................................................19

4.EmpiricalEvidence........................................................................................................214.1Companies...........................................................................................................................214.2RecruitmentStrategyandProcesses....................................................................................214.3EvolutionofRecruitmentStrategy.......................................................................................234.4CandidateAttributes...........................................................................................................244.5Inspirationfromothercompanies.......................................................................................264.6WorkDescriptions...............................................................................................................274.7Stagesinthecompany’sdevelopmentandemployerbranding............................................284.8Summaryoftheempiricalevidence.....................................................................................29

5.Analysis........................................................................................................................315.1ModelforRecruitmentinSwedishHigh-growthTechCompanies........................................315.2Comparisonofthemodeltotheoryandtheempiricalevidence..........................................35

5.2.1Hirearecruitmentspecialist................................................................................................355.2.2EstablishHR&RecruitmentStrategy..................................................................................355.2.3Tailoredrecruitmentstrategy,butwithanemphasisonreferrals......................................365.2.4BuildEmployerBrand..........................................................................................................375.2.5InternalRecruitmentandSourcing......................................................................................385.2.6Internationalrecruitment....................................................................................................395.2.7Morestructureandrules.....................................................................................................395.2.8Start-upculture...................................................................................................................40

4

5.2.9Broadworkdescriptions......................................................................................................41

6.Discussion....................................................................................................................426.1ResultofthestudyandpracticalconsequencesforCompanyandHRManagers..................426.2Evaluationoftheresultsvis-à-visthemethod.....................................................................426.3Suggestionsforfurtherresearch..........................................................................................43

7.Conclusion....................................................................................................................447.1AnswertotheResearchQuestion........................................................................................44

7.References....................................................................................................................45

8.Appendix......................................................................................................................498.1RespondentGuide...............................................................................................................498.2CompanyGuide...................................................................................................................508.3InterviewGuide...................................................................................................................548.4ExtraGraphs........................................................................................................................57

5

1.Introduction

1.1Background

1.1.1TheimportanceofHighGrowthcompaniesandtheirrecentboominStockholm

TheNordicRegionattractssignificantinvestorattentionwithsuccessfulSwedishtechfirms

standingout.AfterSiliconValley,Stockholmproducesthehighestnumberofunicorns1per

capitathananyotherglobalcityandSwedenasawholecomessecondintheworldonaper

capitabasis.TheNordic regionrepresents2%ofglobalGDPbuthasaccounted foralmost

10% of theworld’s billion-dollar exits over the last decade,withmore than half of these

coming from Sweden. Unicorns with an origin in Sweden include Fingerprint Cards,

King.com,Klarna,Mojang,Qliktech, Skype&Spotify and thereare several unicorns in the

makingincludingTobii,TruecallerandiZettle.

In Barrett and Mayson’s International handbook of entrepreneurship and HRM (Human

ResourceManagement) (2008),Heneman,Tansky,andCamp(2000)stress the importance

ofhighgrowthcompanies for their respectivecountries.Ofmost importanceaccording to

Goswami, McMahan and Wright (2000) are entrepreneurial firms since they have the

potentialtobecomehigh-growthfirms.

1.2TheimportanceofRecruitment

Recruitment is a critical aspect of Human Resources for any company. In a study by SHL

TalentManagement(whichformspartofCEBTalentMeasurement),failedrecruitmentand

1AUnicorn is a start-up companywhich has reached a value ofmore thanUSD1billion, in other

words a company characterised by very high growth. According to VentureBeat, there were 229

unicornsintheworldasofJanuary2016.ThelargestunicornsincludeUber,Xiaomi,Airbnb,Palantir,

Snapchat,DropboxandPinterest.Unicornsappearinvariousregionsoftheworld,butmainlyinthe

USA,andespeciallyinCaliforniawhere101unicornsareheadquartered.

6

poor human resources development costs Swedish companies more than 10 billion SEK

annually.

As can be seen in the below charts for Spotify, Klarna and iZettlewhich form part of 11

interviewedcompaniesthereisaverystrongcorrelationbetweenorganisationgrowthand

revenuegrowth (Retriever).Asimilarlystrongcorrelationexists for theother8companies

thatwereinterviewed.

Spotify

Correlationfactor:0,985

Graph1:SpotifyRevenueandEmployees(2010-2014)

Klarna

Correlationfactor:0,994

Graph2:KlarnaRevenueandEmployees(2010-2014)

0

200

400

600

800

0200000040000006000000800000010000000

2010 2011 2012 2013 2014

Omsättning AntalAnställda

0

500

1000

1500

0

1000000

2000000

3000000

2010 2011 2012 2013 2014

Omsättning AntalAnställda

7

iZettle

Correlationfactor:0,894

Graph3:iZettleRevenueandEmployees(2010-2014)

Findingtherightpeopletoworkatacompany isoneof theessential tasksofacompany.

Theonlyunique,sustainablesourceofcompetitiveadvantageisthehumancapital(Gratton,

2000;Michaelsetal.,2001).Maintainingandstrengtheningthecompany’shumancapitalis

one of the main strategic challenges facing the human resource (HR) professional, and

recruitmentandselectionarekey toachieving thisgoal (BanfieldandKay,2008).Burrows

(2004)explainsthatacompanymusthaveafirmgraspofhumanresourcemanagementand

have an understanding for the whole process, and that a lack thereof could lead to

unfortunateimplicationssuchashiringthewrongpeople.

Greiner (1972) studied organizational growth and the different phases that such growth

consistsof.Hedescribed itasapatternofevolutionandrevolutionwithacompanygoing

through periods of evolutionary growth followed by shorter transformational and painful

revolutionary periods. Galbraith (1985) argues that all companies need not grow in this

manner and that the key tomanaging these painful transitions is fixing organization and

humanresourceplanning.Henemanetal.(2000)alsoemphasizetheimportanceofHuman

ResourceManagement (HRM) in thesuccessofcompanies.ResearchbyNealetal. (2004)

and Purcell (2003) shows that HRM has the potential to deliver strategically valuable

outcomes.While it is difficult to establish clear-cut cause and effect relationships, certain

outcomes can without doubt be connected to HRM (Legge, 1995). Most small firms are

characterizedbyinformalHRM(Cardon&Stevens(2004),Casselletal.,(2002),Henemanet

0

50

100

150

200

0

50000

100000

150000

200000

2010 2011 2012 2013 2014

Omsättning AntalAnställda

8

al.,(2000)).Galbraith(1985)describestheprocessbywhichfirmgrowthisaccompaniedby

changesandthecreationofformalHRdepartments.

High-growth companies are vital for an economy and society and recruitment is vital for

these high growth firms. However, there is a lack of theoretical and empirical studies

concerning high-growth companies and recruitment. Heneman et al. (2000) call formore

research on HRM strategies in entrepreneurial firms. This thesis should contribute to

managementtheorywithregardstorecruitmentthroughitsanalysisofdifferentstrategies

employedbyentrepreneurialrapidly-growingcompanies.

1.3Purpose

Theobjectiveofthethesis isto identifyrecruitmentbestpracticesacrossboththeoryand

empiricaldatafromelevenSwedishtechcompaniesthathaveexperiencedandcontinueto

experience rapid growth. The study focuses on Swedish tech start-ups as there is little

research related to their recruitingpractices,despite theSwedish techscenebeingsucha

hottopicandrecruitmentbeingsuchan importantcontributortotechcompanies’growth

andsuccess.

The thesis should provide a better understanding of the recruitment challenges faced by

high-growthentrepreneurialcompaniesinSwedenandactasaguidetostart-upsonhowto

strategically plan their recruitment strategy based on both theory and the experience of

othercompanies.

1.4Researchquestion

Thefollowingresearchquestionhasbeendefinedforthethesis:

Howdohigh-growthSwedishtechcompaniesmanagetorecruittheamountofemployees

thattheyneed?

9

2.TheoreticalFramework

Mondy & Mondy (2013) divide Human Resource Management into five parts: Staffing,

Human Resource Development, Compensation, Safety and Health, Employee and Labour

Relations.Barrettetal.’s(2008)divideHRMintoSelectionandRecruitment,FormalTraining

and Performance Evaluation, and Remuneration and Compensation. The thesis focuses

solelyonSelectionandRecruitment,orStaffinginMondyandMondy’smodel.

Thischaptergoesthroughthetheoreticalframeworkonhigh-growthtechfirms’recruitment

strategies.Theframeworkisbasedonresearchliteratureonthetopicofrecruitment.

2.1RecruitmentProcess

RecruitmentcanbedividedintofourcategoriesaccordingtoGranberg(1994)andHeneman

etal.(2008).Seemodelbelow.

Figure1:Granberg’sfourstagesofRecruitment

Firstcomesthedefinition oftherolesthatneedtobefilled.Thisincludesdefiningtheworkdescriptionandtasksforthenew

employees.

ThenextstepistheSearchphase wherecompaniesusedifferentchannelssuchasheadhunting,advertisementsandreferralstofindtheappropriatecandidatesforopenpositions.Wewillgointofurtherdetailaboutthedifferentrecruitmentchannels

below.

Oncecandidateswhowanttoworkatthecompanyhavebeenidentified,thecompanyhastosortandevaluatetheminordertofindthebestpersonforeachrole.Thisiscalledtheevaluationandselection phase.

Finally,oncecandidatesarechosenandhired,thereisalaststagecalledonboarding,whichiskeygiventhecostandtimeofthe

wholerecruitmentprocess- iftheonboardingprocessdoesnotgoasrequired,thecompanywillhavetogothroughthe

entireprocessagain.

10

The thesis encompasses the first three of the four phases and if/how tech companies’

recruitment strategies have changed as the company has grown. Research by Rioux and

Bernthal (1999) shows that the more effective a company’s recruitment strategy is, the

morelikelyitisforthecompanytoemploybetterandmoresatisfiedemployees.

2.1.1RoleDefinition

IntheirstudyHenemanetal(2008)explainthatjobdescriptionsaremorelooselydefinedin

visionaryhighgrowthcompanieswith jobduties shapedmoreby theemployee thanbya

specific job description. However, job descriptions depend significantly on the level of

employment (Banfield & Kay, 2012). Junior levels have more defined tasks, while senior

levelsaremoreconcernedwithoverall responsibilities.Wecanconclude that tech jobs in

theinterviewedcompaniesshouldbelessclearlydefinedthanmoretraditionaljobs.

2.1.2Advertising

Out of the recruitment channels for all companies advertising is the most widely used

(BanfieldandKay,2012)withonlineadvertisingasthemostrecenttrend.BanfieldandKay

(2012) suggest that companies are moving away from traditional methods of attracting

applicantstowardsonlineadvertisingmainlybecauseittendstobecheaperthantraditional

advertising.

2.1.3Headhunting/Externalrecruitmentagencies

Withregardstoexternalrecruitmentagencies,alsocalled“headhunters”,BanfieldandKay

(2012) explain that this source can be effective, but that both costs and quality can vary

significantly and that employee retention can become an issue when using external

recruitmentagencies.Theygoontosaythatthischannelcanbeverytargetedandefficient

but that it cancomeatahighprice.Abenefitofexternal recruiters is theirability toalso

trackdownpassivecandidates (i.e.potentialcandidateswhoarenotactively looking fora

job). Mondy and Mondy (2013) point out that external recruitment agencies can be of

11

varyingqualityand shouldbecarefully selectedby theniche that the specific recruitment

agencyisspecializedin.

2.1.4Referrals

Most jobpositionsare filled throughemployee recommendations,alsoknownas referrals

(Bohlander and Snell (2013). Thebenefits of using referrals according toBanfield andKay

(2012)are their inexpensivenesswhile stillmaintainingefficiencyandquality.Shuit (2006)

alsopointsoutthatthequalityoriginatingfromthissortofrecruitment isnormallyhigher

and the applicants if hired tend to stay longer in the company (Fernandez et al, 2000).

Mondy &Mondy (2013) explain that this can be due to the fact that applicants arriving

throughreferralsarepre-screenedbythepersonprovidingthereferral.

Rob Fuggeta (2012)makes anobservationwith regards to the rewards system,explaining

thatthereferrallosessomegenuinenesswhenafinancialrewardisapplied.

2.2Companygrowth–DifferentstagesinHRM

Companies grow and have different challenges at different points of their development.

HumanResourceManagementandRecruitmentstrategiesneedtoadapttothesesteps in

theprocessinordertobeeffectiveforthecompany.

Inthe1stchapterwewereintroducedtoGreiner’stheoriesonevolutionarygrowthpatterns

in companies. The below figure shows Greiner’s growthmodel which explains howmost

companies have a period of growth, followed by a crisis which they have to fix. If they

managetoresolvethecrisis,thecompanycankeepongrowinguntilithitsthenextproblem

whichitneedstosolve.

12

Figure2:Greiner’sGrowthModel

Greinerexplainsthatinthefirststageacompanygrowsthroughcreativity.Themainfocusin

thisphaseisbuildingaworkingproductandfindingtherightmarket.Oncethecompanyhas

founditsmarketandstartedoperating,thenextstepismakingtheoperationmoreefficient

and this is why a crisis of leadership can arise as the more creative entrepreneur and

founderofthecompanytypicallycannothandlebusinessaspectsaswellascreativeaspects.

In this case there should be a delegation of leadership responsibility to other managers

leading to a new growth period through direction. The next crisis becomes a crisis of

autonomy when the company has become too large for only a few managers to decide

everythingandthecompanyneedsdelegationinordertogrow.

Galbraith(1985)hasbuiltonGreiner’smodeloforganizationalgrowthwithregardstoHR.

Galbraith explains that every start-up begins with a handful of people and an informal

organizationmanagedbyface-to-faceinteraction.Companiesinthisphasearecharacterized

by the informal communicationamongemployees.As size increases,asanumberof sites

and divisions are created, formalization and impersonality increases and the functional

organizationinevitablyarises.

13

Afirststageconcernscreativityand“invention”;asecondstageiswherethebusinesssideof

theconceptstartskickingin;followedbyathirdstepwhereefficiencybecomesevenmore

importantoncethebusinessmodelhasbeenproventowork.Thisthesisstudiescompanies

in the transition between stage 2 and stage 3 given that themajority of the interviewed

companiesare in theearly stagesof companygrowthandhaveexperiencedorare in the

process of experiencing these challenges. The findings show that companies go from

informalitytoformalityastheypassacertainearlystage.

Galbraithexplainsthatthereisarapidadditionofnewpeopleandnewfunctionsandthat

everythinghastobesynchronized(engineering,manufacturing,salesandservice) inorder

for the company to sustainably grow.Notmany tech companies have the sort of growth

described by Galbraith (adding 1,000 people in 1-2 years). However, one can expand the

conceptofastart-upphasetoencompasscompaniesthathirehundredsofpeople,instead

of thousands. The same structural and organizational dilemma remains true for these

companies,albeitataslightlylowerscale.

2.3HumanResourceManagementinsmallbuthighgrowthfirms

2.3.1Impactoffirmsizeoneffectivenessofrecruitmentpractices

Mondy and Mondy (2013) note that smaller companies tend to find more candidates

through network recruiting and referrals. This is supported by extensive research on the

subject (KoteyandSheridan,2004;Saarietal.,1988;Wilkinson,1999;AldrichandAuster,

1986).WilliamsonandRobinson (2012)observethat formal recruitmentpractices, suchas

using external recruitment agencies, provide an advantage for smaller firms due to their

ability to expand the number and diversity of applicants. However, due to smaller firms’

limitedfinancialresourcesandthefactthatformalpractices(suchasheadhunting)aremore

expensivetoimplement,smallerfirmsarelesslikelytousethismethodandmorelikelyto

usereferrals(KoteyandSheridan,2004).Asthecompanygrowsthebenefitsofusingformal

methods also increase. This is linked to ‘employer branding’; the more well-known a

14

companyis,themoreapplicationsitwillreceivethroughformalnetworks(Williamsonetal.,

2002).

2.3.2Impactofhighgrowthoneffectivenessofrecruitmentpractices

With specific relevance to this thesis, Barrett and Mayson (2006) have researched small

high-growthcompaniesandhowHRinthecompaniesdealswithproblemslinkedwithrapid

growth. Their observations include hiring specialists instead of generalists, and having a

morewell-definedcompanystructuretofacilitategivingrolesanddefiningtasks.Barrettand

Maysonexplainthatcompanies“shouldestablishformalHRMpracticesinordertohelpcope

withtheincreaseincomplexityresultingfromgreaternumbersofemployeesifgrowthisto

besustained”.

Rutherford et al. (2003) confirm this researchby showing that rapidly-growing companies

shouldconsider formalisingprocessesanddevelopingoperationalandmanagerial systems

aswellasothertypesoforganisationalinfrastructurewhichmayreducedependenceonthe

owner-manager.Whiledependencemaynotbeentirelyeliminated, formalisationand the

developmentofsystemscanprovideaplatformfromwhichsustainablegrowthcanoccur.

In the empirical section, we will analyse the similarities and differences between the

interviewedcompanies’recruitmentstrategiesaswellastheirevolutioninordertocreatea

modelofbestpracticesforrecruitmentinhigh-growthcompanies.

15

3.Method

3.1ResearchMethod

The objective of the thesis is to identify recruitment best practices from theory and/or

empirical data on the recruitment strategies of eleven Swedish tech companies that have

experienced and continue to experience rapid growth. A tech company is defined as a

companythathasatechnologicalproductorwhosecorebusinessisbasedontechnology.

GiventhattheinterviewedcompaniesdonotpubliclyshareinformationontheirHRMand

recruitment strategies, there were two ways of obtaining the information for the thesis:

throughqualitativeinterviewsoraquantitativemethodsuchasasurvey.

Bell (2006) points out thebenefits of an explorativemethodwhen researching areas that

havenotbeenextensivelystudiedbefore.Yin(2014)pointsoutthataqualitativemethodis

preferableforastudyanalysingarelativelynewtopic.Consideringthe lackofresearchon

recruitmentprocesses inhigh-growthSwedish techcompaniesandof theirevolutionover

time, it appears that an explorative and qualitative research method is suitable for this

study. The qualitative method allows for a deeper understanding of the complex

phenomenathatarebeinganalysedandexistingresearchandstudiesareusedtocompare

theempiricalfindings.

As there is no secondary data source available that can be used to validate the collected

data and that the interviews can give a subjective view of the company’s recruitment

strategy,thegathereddataneedstobecriticallyanalysedandquestioned(Bryman,2002).

The empirical data collected through the interviews is thereafter divided into different

motifsandtopics,inordertosimplifytheanalysisofthedata.

3.2Approach

A deductive reasoningmeans taking a hypothesis fromexisting theory and conducting an

empirical test of that hypothesis. An inductive reasoning implies coming to broad

16

conclusions based on empirical evidence (Bell, 2006). A middle-way, called abductive

reasoning, means making use of incomplete theory and data, and adapting one when

learningsomethingnewintheother,andviceversa.

Anabductive reasoninghasbeenchosen for the thesisas there is limited researchon the

recruitingprocessesofSwedishhigh-growthstart-ups.Thestudyisbuiltonexistingresearch

onthetopicofrecruitmentwiththedatagatheredfromthequalitativeinterviews.

Qualitativeinterviewsenablethecontributiontoandexpansionofexistingtheories,rather

than validating already established theories (Bonoma, 1985). The qualitative method is

focusedondescribingprocessesandpatternsandonhow theyevolveover time (Bryman

andBell, 2013). All the above factors arewhyqualitative interviewswere selected as the

methodforthethesis.

3.3Design

The thesiswas executed as a qualitative case studyof eleven companieswheredatawas

gathered from interviews with recruiting managers, HR managers, CEOs as well as a

consultantfromarecruitmentagency.

Acommoncriticismofqualitativeresearchistheirpotentiallackofobjectivity,whichiswhy

semi-structured interviewswere performed. Bernard (2006) explains that semi-structured

interviews provide reliable, comparable and qualitative data and that they also help the

interviewer to keep control of the conversation and discussion topic while allowing the

interviewerandtherespondenttofollownewleads.BrymanandBell(2013)showthatthis

sort of interview allows interviewers to ask deeper follow-up questions if they are not

satisfiedwiththeinitialanswer.

Theguidethatwasusedtoconducttheinterviewsisincludedintheappendix.Thequestions

were based on existing theory on the subject in order to obtain asmuch information as

possibleoutoftheinterviews.Theinterviewscoveredthetopicofrecruitment,andincluded

questionsaboutthecompanycultureinordertogainabetterunderstandingofthesubject.

17

3.4Selectionofcompanies

20companieswerecontactedandaskediftheywerewillingtobeapartofthestudy.The

criteriaforselectingthesecompanieswereasfollows:

• haveastrongcouplingtoatechnology-basedproduct

• bebasedinSwedenorwithanorigininSweden

• experiencerapidgrowth,definedasacompoundannualrevenuegrowthratesince

2010ofmorethan20%2

Both established companies and small companies with less than 50 employees were

interviewed.Smallcompaniestendtofocusontheirproductand/orserviceandonmeeting

only basic HR requirements and are not expected to have established an HR department

(seeTheoreticalFramework).

SomecompaniessuchasTictailandiZettlearesmallincomparisontoKlarnaandSpotify,but

provideuswith insights into theearlier stages (phaseoneand twoof theGreinergrowth

model)oftheestablishmentofformalrecruitingdivisionsinstart-ups.

Thedecision to also interview smaller companieswasmadewhen therewas a realisation

thatseveralintervieweeslackedinformationvitalforthestudywithregardstotheevolution

of the company’sHRand recruitment strategy. In addition, thenumberof relatively large

tech start-ups in Sweden is quite small and by expanding the number of interviewed

companiestheempiricaldatacouldbesignificantlyimproved.

3.5Selectionofinterviewees

Withtheresearchquestionfocusingonrecruitment,thetargetintervieweeswerethehead

of recruitment at the company who should have the best knowledge of the company’s

recruitment strategy. Inmost cases, the interviewswerewith the head of recruitment or

2NotethatrevenueinformationisnotavailableforCryexandAnima,whoaretoorecentlyfoundedforthiscriteriontoberelevant.

18

with one of company’s recruiters. However, interviews were also conducted with HR

managers(inDICE)andCEOs(ofKing.comandCryex).

The listof interviewsaswellasmore informationontherespondentscanbefound inthe

appendix(see8.1).

Aninterviewwasalsoconductedwithanexternalrecruitmentconsultantinordertogetthe

perspectiveofexternalrecruitmentagencies.

3.6Methodfortheanalysis

Thetranscriptionoftheinterviewswasdoneatmostonedayaftereachinterview,allowing

for a continuous analysis and a better understanding of the recruitment processes and

strategies in tech start-ups. The relevant data for the research question was sorted into

commonthemesacrossthecompanies,andlateranalyzedespeciallywithregardstoexisting

theoryonthetopic(SeeTheoreticalFrameworkabove).

3.7CredibilityandAuthenticity

Thereisadegreeofsubjectivityinaqualitativestudyanditislikelythatthestudyhasbeen

affectedbytheinterviewee’sandtheinterviewer’ssubjectivity.Thereisalsoariskthatthe

intervieweemighttrytotakeintoaccounttheanswerstheythinkthattheinterviewerwants

togetoutofhim/herandthuschangehis/heranswersaccordingly.Thereisapossibilitythat

the study being conducted by a business school student could have influenced the

respondents.Althoughthequestionsweredesignednottobeleadingquestionsthereisalso

apossibilitythattheinterviewercouldhaveaskedquestionsthatwereperceivedasleading

whichcouldalsohavehadanimpactontheresults.

Validityandreliabilityaretwofactorsthataretypicallytaken intoaccounttomeasurethe

qualityofa study.Thedefinitionofvalidityaccording toKvale (1995) ishowwellonehas

measured that which one wants to measure. Reliability has tried to be achieved during

19

interviewsbymakingsurethattheintervieweeunderstandsthepurposeoftheinterviewas

wellasunderstandsall thequestions thathe/she isasked.However, thestudycan lack in

reliabilityduetoeverchangingsocialcontext3(Bryman,2002).Nevertheless,Brymanpoints

outthatvalidityandreliabilityarebetterforjudgingaquantitativestudyandthatcredibility

andauthenticityaremoreappropriateforjudgingaqualitativestudy.

3.7.1Credibility

This study is credible in the sense that the dates of all interviews are shared in the

attachment, transparently documenting where the information comes from without

impeachingontheanonymityofcertainsubjects.Transcriptionswereobtainedbyrecording

alltheinterviews,enablingtheinterviewstobequoted.Themostrelevantquotesareused

in the empirical evidence section of the thesis to support the data.When collecting and

writingdowntheempiricalevidence,closeattentionwaspaidtosticktotheexactwordsof

theinterviewsinordertoavoidusingpersonal interpretationsthatmighthavebeenmade

duringtheinterviews.Thishasbeendoneinordertokeeptheempiricalevidenceanddata

asscientificandcredibleaspossible.

3.7.2Authenticity

Inordertomakesurethattheessayisauthentic,particularattentionhasbeenpaidtomake

sure to differentiate between factual data provided by the interviewee, and conjectures

formedby the interviewee andby asking the respondent to stick towhat they knowand

avoidguesswork.

3.8Ethicalconsiderations

BrymanandBell(2013)pointoutthatthereareaseveralethicalconsiderationsthatmustbe

accountedforwhenperformingaqualitativestudy.Theseethicalruleshavebeentakeninto

considerationinthemethodofthethesis.3Socialcontext:”referstotheimmediatephysicalandsocialsettinginwhichpeopleliveorinwhichsomethinghappensordevelops”(Bryman,2002)

20

The first of these rules is the information requirementwhichmeans that the interviewer

must explain the point of the study to the respondent. A second rule is not to provide

misleadingorinaccurateinformationtotheinterviewee.Athirdruleisthattheparticipation

shallbevoluntary.Fourth, the informationshallonlybeused for this research.And lastly,

therespondentsshallbekeptanonymousiftheysodesire.

Alltheseruleshavebeenfollowedinthethesis.Withregardstotherespondent’sanonymity

it been respected in the cases where he/she wished to be anonymous. All interviewees

exceptonehadnoissuewiththeirnameorcompanynamebeingused.

21

4.EmpiricalEvidence

Inthissection,Ipresenttheempiricalevidencecollectedinthe12interviewsof11Swedish

techcompanies.Thisevidence incombinationwiththetheoreticalframeworkallowsmeto

answertheresearchquestionofhowSwedishhigh-growthtechcompaniesmanagetorecruit

theamountofemployeesthattheyneed.

4.1Companies

Companydescriptions,informationonthecompanies’growthandotherdatapointscanbe

foundintheAppendix(See8.2).

4.2RecruitmentStrategyandProcesses

Advertisements, referrals and headhunting are the three main channels available for

recruiterstofindsuitablecandidates.

Therearesignificantdifferencesbetweentheinterviewedcompanies’useofadvertisements

asarecruitmentchannel.Advertisementsareusedbysomecompaniestodriveawareness.

AccordingtoDICE“weadvertisetoincreaseawarenessandwehavecampaignsforemployer

branding”.However,mostcompaniespointoutthatadvertisementsdonotattractthebest

quality applicants who are precisely the persons that the companies want to recruit. As

companyXstated“Throughadvertisementsandapplications,thereisn’t[much]quality,with

toomany applications for every candidate we employ”. Referrals on the other hand, are

used by almost all the companies and are much appreciated as they provide strong,

technicallyskilledcandidatesthatalsoareagoodculturalfit.King“weusereferralsasmuch

aswe can”, Tictail “When youwork inHRor recruitment you have to prioritize […] If you

don’thavethetimetodoeverything,youfocusonreferralsbecausetheyhavesuchagood

hit rate.”, Company X “Referrals are really good, people thatwork here are familiarwith

whatisneeded”.Klarnadescribesitsreferralsystemas“priceless”,andKingsaysthatthey

“rely on” referrals. Kambi would not say that referrals are the best channel, but that

22

“candidates that come here [via referrals] already know a lot about us. They are already

excitedwhentheycomehereandwedon’thavetosellthecompanyasmuch.”

However, implementing a referral system is not always straightforward. For smaller

companiesaformalreferralsystemwilltakesometimetoimplementbecauseitrequiresa

minimum of structure, processes and rules to work. This does not mean that referral

systemsarenotinplace,butthattheyareinformal.Infact,networkingisacentralpartof

recruiting,includingforthesmallerstart-ups.

The thirdchannel for recruitment isheadhunting.Mostof the interviewedcompaniesuse

externalhelpbutopinionsdivergeonthevalueofexternalrecruitmentagencies. iZettle is

workingquiteaggressivelywithheadhunting.Accordingto iZettle,“recruitment inthetech

industry forces you to work proactively rather than just waiting for applications”. Spotify

explained that “we do use external parties in some cases.Whenwe feel thatwe need to

improve capacity.Maybe there is amarket thatwedon’t knowwell enoughandweneed

helptounderstand it.”Kambi,“A littlebitbefore I startedworkinghere,mostapplications

camethroughexternal recruitmentagencies”.Klarnastatedthat“therearemanydifferent

reasonswhywedo it. Itcouldbethatwehaveaworkloadthat is toobig[…]but inmany

casesitisaboutverynichedcompetenceswhenitisactuallymoreefficientforustotakein

externalhelp”.CompanyXexplainedthat“theaveragetimeforsourcingforeveryinterview

andcandidateisapproximately12hours[…]andsoIdon’thavetheresourcestofindallthe

candidates by myself”. Smaller companies like Anima and Tictail do not use external

recruitment agencies because “we can do a much better job in-house than by using

consultants”.

Headhunting is thus a good tool for proactive recruiting, finding candidates who are not

activelylookingforanewjob,aswellasforsearchingforveryspecificcompetences.

An interestingobservation is thatallof interviewedcompaniesbelieved that their current

recruitmentstrategyisoptimalfortheircompany.iZettlesaidthat“thisis,themostoptimal

(strategy). It is about being thorough but quick too”. Klarna believed that “we are very

efficientatwhatwedo.IfwecomparetootherfastgrowthcompaniesinSweden,wearea

23

smaller team working with recruitment and we are growing faster than the others”.

However,Klarnapointedoutthat“itworksforus,butIdon’tthinkitwouldworkverywell

forothers”,basedonthereasoningthatcompaniesarefundamentallydifferent.

Another interestingobservation is thatall thesecompaniesalsobelievethattheirstrategy

would probably only work for their own company. As Klarna stated “every company is

involvedinfundamentallydifferentareas”.Thecompaniesareindifferentstagesofgrowth

withdifferentnumbersofemployees.Althoughtheircurrentstrategiesmightbeconsidered

optimal today, there has previously been a significant portion of trial and error work

followed by an optimization of the recruitment strategy as the firms have grown, as

describedinthefollowingsection.

4.3EvolutionofRecruitmentStrategy

Alltheinterviewedcompanieshaveevolvedtheirrecruitmentprocesswiththeexceptionof

thesmallestcompanieslikeCryexandAnimawhicharetoorecently-foundedtohaveseen

anynoticeablechange.Spotify lackedanHRdepartmentand recruiters in itsearly stages,

“witharound100employees”.“Idon’tthinkthattherewasanofficialstrategyatthattime

(priorto100employees)”andwhenarecruiterwashiredinSpotify,he/shehadtodealwith

otherHRtasksaswell.HRstrategieshavebeenputinplaceonly“duringthelasttwoyears”.

Structure isanecessarypartofacompany’srecruitmentstrategyas itmaturesandgrows

intoalargercompany.Tictail,“Wehadaquiteaggressiverecruitmentperiodlastspringand

lastautumn[…]I’mhappythatweareslowingdownbecauseweneedtotakeabreak,we

needtomakesureteamsareefficient,weneedtomakesuretheyworktogetherandthat

they do the right things”, “Once these things are in place we can double the amount of

employeesagain[…]“butitisimportanttodothesethingsintherightorder”.NetEntagreed

mentioningthat“whenasmallcompanystartstogrow,differentrequirementsareneeded

[like]havingawellthought-outstructure,aplanforhowoneshouldreceivepeople”.iZettle

alsoagreedthatmorestructureisneededwhenacompanygrows.iZettle,“duetothefact

thatwearegrowing,wewill have tohavea certain typeof structure thatwasn’t needed

whenweweresmaller”.

24

Some of the interviewees could observe a development of their respective company’s

recruitment processes compared with those in the early stages of the company. Spotify

explainedthat“thedevelopmentof therecruitmentprocesswent fromfiring fromthehip,

thenusingalotofhelpfromexternalrecruitmentagencies,totakingcareofthingsonour

own”.AsSpotifygrew,processesbecamemorecomplexbutalsomoreefficient.Klarnasaid

aswell that they“definitelyhaveadifferent recruitmentprocesscomparedtowhen[they]

started”.

Companies like Spotify and iZettle said that they are also working on improving their

recruitmentprocesses.Spotify,“Wearetryingtomakeitslimmerandmoreefficient”.iZettle

has developed a more rigorous screening session in order not to waste anybody’s time.

iZettle,“it isgoodtocheckoffcertainthings immediately.Because if they(thecandidates)

havetoohighofasalaryrequirementthenwewanttoknowasquicklyaspossiblesothatwe

can avoid going through the entire process and then not being able to come to an

agreement.”

Theempiricalevidenceshowsthatcompaniesarecontinuouslyupdating their recruitment

strategiestomakethemslimmerandmoreefficient,butwithalong-termviewinmind.To

be able to establish these new strategies companies establish more structure in HR and

recruitment.

4.4CandidateAttributes

Mostofthecompaniesshowedastrongdesiretorecruitthebestpeople.Itisimportantto

define what companies mean by ‘best’. ‘Best’ is these tech firms’ way of describing

technically talented persons, but also personswith a flexiblemindsetwho canwork in a

start-upenvironment.King’sCEORiccardoexplainedthat“onlytherightpeopleintheright

placecanmakethecompanygrow”.King,“Ouroverallapproach isobviouslytofind inthe

highest level the best people as quickly aswe can”, “only the best peopleworking at the

company”.Kambi,“Wehaveagoaltorecruitthebest.”DICEexplainsthat“thereisaquality

25

focused culture”. DICE said that “if there is a basic talent and competence that is good

enoughthentheorganizationmakesroomforthatkindofperson.”

Tech companies require engineers, system developers, programmers and in general

technically skilled IT/tech specialists.NetEnt explained that it is extremely difficult to find

people in IT and all the interviewed companies mirrored Company X’s thoughts on the

subject: “Supply is very limited.Thereare some talentedones,buteverybodywants them.

Competitionisverytough.”iZettlebelievedthatitdependsabitonthetypeofcompanyyou

areandwhatdivisionyouworkin.“Itishardestonthetechside.That’swherecompetitionis

the fiercest”. NetEnt believes that “there is definitely [talent] in Sweden, but they are so

courtedthatthesepeoplesitwith10alternativesandit’sveryverydifficulttoreachthem.”

Kingexplainedthatnotonlyisthesupplyoftechpeoplequitelow,butitisalsoveryhardto

reachout to thesepeopleby traditionalmeans suchas LinkedIn. “Techpeoplearenotas

visible asmost other roles. Formost other roles you find candidates on LinkedIn, you can

sendtheman in-mailandoffyougo.Butmanytechpeopledon’tbotherwithLinkedInand

theyblockoutanytypeofadvancefromanybody.Sotheonlyrealwayofgettinggoodtech

peopleisthroughreferrals.”

Thelargerinterviewedcompanieshaveaninternationalviewonrecruitmentsincetheyhave

been forced to recruit talent internationally. Spotify stated that they cannot fill all their

positions only using talent in Sweden, NetEnt also found it hard to find all the necessary

people in Swedenand those theydo find in Swedenarenotnecessarily Swedish.NetEnt,

“WefindafewpeoplehereinStockholm.Manyespeciallywhodon’tspeakSwedishandthat

can’t finda jobbecause theycan’t speak the language.”Whenasked if therewasenough

competence in Sweden, Spotify answered, “Not in Sweden, not for all roles”. Kambi, “We

offer relocation packages to those that come from other parts of theworld […]We’re an

internationalfirm”.NetEnt“worksveryinternationallytoo,activelylookingforinternational

collaborations, recruitment partners, and always on the lookout for countrieswhere there

arehighlyeducatedpeople thatcouldbeprepared tomove”.Klarnasays that“itdoesnot

matterwhereintheworldthesepeopleare.Themostimportantthingistogetthemhere.

Thatiswhywehavesuchagoodsourcingteam[…],backedbyahumanservicesteamwhere

26

we have a dedicated person working with relocation.” King, like Klarna, also works with

relocation in order to attract more international talent to their offices in Stockholm,

Barcelona,andLondon.

The smaller interviewed companies like iZettle and Cryex have until now found the

necessary talent that they need in Sweden. iZettle, “So far, we don’t need to recruit

internationally.Recruiting inSwedenisenough.”ButAnimaandTictailbothexplainedthat

even small companies like themselves have actually already started recruiting

internationally.

Theinterviewedcompanieslookforthemosttechnicallytalentedpeopleaswellaspeople

with the right fit for a start-up and high-growth firm, who are able to work in a flexible

environment.ThecompaniesfinditdifficulttofindallthepersonstheyneedinSwedenand

themajority of the larger companies also look for talent abroad. Smaller companieshave

smallerrecruitmentneedsandaremoresatisfiedwiththetalentpoolinSweden.

4.5Inspirationfromothercompanies

NetEntsaidthat“There’saconstantcoverageofthecompetition”.CompanyXrevealedthat

“Wekeepourearsopenonhowotherswork,whatisworkingwell,andlesswell,andwhat

onecandrawlessonsfrom”.DICEstated,“ofcourseweareinterestedbywhatourindustry

colleagues are doing, both here and internationally.” Klarna explained that companies

alwaysneedtobeontheirtoesandreadytoadapttochange.

Theinterviewedcompaniesallinspirethemselvesfrom,oratleastcomparethemselvesto,

their industry colleagues on a regular basis. The companies also adapt their strategies to

their specific structure and needs. However, when asked if the recruiters believe that

processesaresimilarbetweencompaniestheyall tendedtoagree.Thiscanbeduetothe

companies’ similarity in terms of industry and size, but perhaps also to a possible lack of

innovationinrecruitmentstrategies.

27

4.6WorkDescriptions

Achallengeencounteredwithworkdescriptionswasthatonlyafewoftheintervieweeshad

beeninthecompanylongenoughtoobserveachangeinworkdescriptions.

Therewere nevertheless some interesting takeaways from the interviewswith regards to

workdescriptions.Oneofthese ishowflexiblerolesareattheserapidgrowthcompanies.

iZettleexplainedthattheir“workdescriptionsarequiteflexible.Inthissortofcompany,they

have to be.”DICE explains that “There are very rigid requirement for knowledge that one

needstohavebuttherolecanbeabitmoreflexible”.Kambialsoexplainsthat“wetrytobe

quiteopen,butthereisknowledgethatyouhavetohaveaswellastoolsandsystemsthat

youneedtoknow,andthat’sarequirement”.

Klarnastatedthatwe“can’tbetoopickywithsuchalowsupplyoftalent”.Klarnaexplained

that“[for)someroleswewanttoremainmoreopenbecausewedon’twanttomakeittoo

niched if we think that it can attract people from broader backgrounds”. In some cases

Klarnastatedthattheyknowexactlywhattheyneedandcanaffordtobeveryspecificwith

theirqualificationsandroledefinition.

DICE’s strategy with regards to work descriptions – having a high barrier of technical

requirements – has not changedmuch through the years as the companyhas grown and

developed.SpotifyandNetEnthoweverhaveobservedchanges intheirworkdescriptions.

Spotify,“Iwouldsaythatthey(thejobdescriptions)becomemorelimitedwhenthecompany

grows.”NetEntagreedthat“peoplebecomemorespecializedintheirroles,butatthesame

time the flow of information about these job descriptions and roles should still be

valid/working”.Ifthecommunicationisn’tworkingproblemscanarise,“whenthereafewer

peoplethentherearesomeresponsibilitiesthatcanbesharedamongseveralpeople.When

thecompanyislargerandgrowsthensomethingscanbeleftunattended.”

The smaller companies tend to havemore flexiblework descriptions. As companies grow

larger, these work descriptions get more well-defined and unadaptable but some of the

largercompaniesstilltrytokeeptheworkdescriptionsbroad.

28

4.7Stagesinthecompany’sdevelopmentandemployerbranding

All interviewedcompaniessharetheirfastgrowthincommon(exceptforCryexandAnima

whicharetoorecently-foundedtohaveexperiencedanysubstantialgrowth).

Thissectionhighlightscommonproblemsandobservationswhenaskedaboutstagesinthe

company’sdevelopmentandhowthishasimpactedrecruitment.Ananalysisontheimpact

ofbrandawarenessonrecruitmentisalsoincluded.

WithregardstoemployerbrandingSpotifyisacompanythathas“succeededinestablishing

astrongbrand–insomemarkets.Onothers[Spotify]isnearlyunknownexcepttoindustry

peopleandthelike”.OnereasonSpotify’sbrandissowellknown,accordingtothem,isthat

itis“easierifonehasabrandthatisassociatedwithsomething.Thesexinessoftheproduct

isimportant.”SpotifyisalsooperatingintheBusiness-To-Consumermarket,addressingthe

whole population of each geographical market that they target. NetEnt, which is also

growing very quickly, believes there is a “challenge to reach out with employer branding

whenthecompanyworkswithBusiness-to-Businesswhichimpliesthatwedon’tbecomeso

wellknowntothewiderpublic.Wealsoworkwithincasinoswhich isalsoan industrythat

not everybody can relate to.” King has experienced issues with both their brand and the

industrybrand,butexplainedthattheirbrandhasimprovedenormouslythroughsignificant

investmentsthroughcareersitesandevents.

NetEntareforcedtofindotherwaysofbuildingtheiremployerbrandinordertogainmore

interestfrompotentialfutureemployees.IncomparisonSpotify,withtheirstrongconsumer

brand,andeveniZettle,thatalsohasastrongbrand,receiveplentyofapplicationswithouta

comparableeffort.iZettle’srecruitersaidthat“Wehavesuchastrongbrandandaresucha

hotcompanythatweareluckyenoughtogetsomanyapplicationsviaadvertisements.Itis

verynice”.However,evencompaniessuchasCompanyXthathavea“quitestrongbrand,

and good processes” are struggling with recruitment which implies that there ismore to

recruitmentthanjustemployerbranding.

29

A larger size andmore defined processes can be unattractive for prospective candidates.

Kingexplainedthat“Therearepeoplewhodon’twanttoworkforacompanythissizeany

more”.Kinghastriedtokeepastart-up/smallcompanyfeelingbydividingthecompanyinto

smaller offices around Europewith smaller teams, instead of placing everyone under the

sameroof.“We’reopeningnewlocationssothatwe’respreadingpeople,sowe’renotallin

onebigbuildingfor instance.Thathelpspeoplefeeltoanextentthatthey’restillpartofa

smallishcompany.”Kingalsomentionedthatbeingabigcompanywiththesortofimpacta

big companyhas on its customers is very attractive for prospective talents.DICE has also

encounteredtheabovementionedproblemwithregardsto itssize. Ithasmoreprocesses

than“indiegamecompanies”butlessprocessesthanlargertechcompanies.iZettleisstilla

smallercompanyandhasmanagedtoattracttalentfromlargerSwedishcompaniesbecause

it has less processes, less bureaucracy and less middle managers. Tictail thinks that it is

actuallyveryhardforacompanytokeepthesamedynamicandentrepreneurialcultureasa

companygrowswithseveralculturalaspectsofasmallerstart-updisappearingas itgrows

intoalargercompany.

Tosummarisethissectionthe interviewedcompaniesworkhardontheiremployerbrand,

which includes targeted work to keep a “start-up” culture in the company. This is

increasinglydifficultasacompanygrowsandbecomesmoreformalinitswaysofworking,

rules and processes. Some of the interviewed companies try to prevent this by creating

smallerteamsandsplittinguplargersitesandteamsintosmallersitesandteams.

4.8Summaryoftheempiricalevidence

There is a beliefwithin all of the interviewed companies that they all have a recruitment

strategyandprocessesinplacewhichareoptimalforthespecificcompany.Thefactthatall

of thesecompanieshavebeenverysuccessful in termsofcompanygrowthsupports their

statement.However,thispathtosuccesshasnotbeensmoothasthecompanieshavegone

through stages of trial and error to find out what works and does not work, and have

adaptedtheirrecruitmentstrategies.

30

Manythemesandwaysofworkingareincommonbetweenthecompanies.Firstofall,using

a mix of recruitment channels but with a preference for referrals and advertisements.

Secondly, internationalrecruitment isusedtoextendthesearchforthebestcandidates in

thelargerstart-ups.Reachingouttotechpeopleisdifficultandreferralsareoneofthebest

ways to contact them, but sometimes a lack of internal bandwidth makes it easier to

outsourcesomepartsofrecruiting.Recruitingisverycompetitiveforhigh-growthtechstart-

ups, and recruiters andHRmanagers keepa vigilant eyeonpeers and competitorswhich

leadstosimilarrecruitmentstrategiesandprocessesacrossseveralstart-ups.Oneofthese

strategies is to have broader work descriptions but withmore specific requirements and

qualifications. Lastly, as companies grow, there ismore structure and organization,which

leads to faster processes and more effective recruiting, but which also leads to more

impersonalityandapotential lossofthestart-upculture.Companieshavetoworkhardto

maintainastart-upbrandimageinordertocontinuetoattractthebestcandidates.

31

5.Analysis

Inthischapterweestablishamodelforrecruitmentinhigh-growthSwedishtechcompanies,

andcomparethismodeltoboththeempiricalevidenceandtothetheoreticalframework.

The model provides an answer to how Swedish high-growth tech companies manage to

recruittheamountofemployeesthattheyneed.

5.1ModelforRecruitmentinSwedishHigh-growthTechCompanies

Amodel for recruitment in Swedish high-growth tech companies has been formed in the

thesis which explains how start-ups should act with regards to recruitment in order to

achievesustainablegrowth.Thecoreelementsofthismodelandtheirrespectivebenefitare

describedinthissection.

The model is based on best practices from either the theoretical framework and/or the

empirical evidence. In some cases, the model is fully aligned with both theory and the

empirical evidence, in others only with the empirical evidence across most interviewed

companiesandinafewcasesonlywiththeempiricalevidenceinsomeoftheinterviewed

companies.

Themodelisbasedonthefactthatstart-upsseesignificantvalueindefiningarecruitment

strategy as a part of their overall Human ResourceManagement strategy. Recruitment is

clearlyoneofthemostimportantHRtasksacrosstheearlystagesofstart-upcompanies.

One of the first steps in such a strategy is to hire an HR specialist with recruitment

experienceandresponsibility,orpossiblyevenafull-timerecruitmentspecialist.Thisperson

needs to have recruitment experience from other start-ups in order to define a tailored

recruitment strategy for the company. Usually tech entrepreneurs do not have HR or

recruitment competence and need guidance with regards to HR in order to apply best

practicesandavoidunnecessarymistakes.

32

Companiesshouldadjusttheirrecruitmentstrategyandprocessessothatitisthebestfitfor

thecompanybasedonthecompany’spositioning,objectivesandstrategy.Inspirationfrom

othercompaniesisaverygoodideabutacopy&pasteistypicallynotaviableoptiongiven

thespecificrequirementsofeachcompany.Anotherimportantaspectforthecompanyisto

keeptherecruitmentstrategyflexibleinordertoadaptthewaysofworkingwheneverthisis

required.

As the company grows, the HR department needs to incorporate more formality and

structure.All interviewedcompaniesconfirmthattheyhavetobecomemoreformal/ less

informalastheygrow.

However, this really should not go against one of the best selling points to potential

candidateswhichisthestart-upworkculturedefinedbyindependence,empowermentand

arelative lackofrulesandprocesses.Start-upsshouldstrivetokeepthesecharacteristics,

even when they growmuch larger. Talent acquisition is already hard due to the lack of

supply, so there is no point in making it even harder by making the company more

traditional.

The start-up feeling is strongly linked to the companies’ respectiveemployerbrandwhich

representsasignificantpartinthemodel.Companiesmusttakegoodcareoftheiremployer

brandandofhowtoimproveit.Acompanycandeveloptheemployerbrandbyorganizing

events and communications. King.com is an inspiring example – they recently released a

video showing their new Stockholm office, demonstrating both the office and how the

company’s ways of working resemble a start-up. And yet, King.com with their 1,400

employeesisalistedcompanyandoneoftheleadingtechcompaniesintheworld.

So, althoughwe stated that companies aremoving towards formality and structure, they

shouldtrytoavoidimpersonalityatallcost.Oncemore,wecanlooktoKing.com’spractices.

Kinghasmadesuretocontinuouslysplitgrowingteamsintosmallerandindependentteams

(or“studios”asKingcallthem).

33

Withregardstothespecificrecruitmentchannelstobeused,thereareargumentsforand

againstallofthem.Themodelshowsthatthepreferablewayofworkingisamixofdifferent

channels.Advertisingisvitalduetotheimportanceofemployerbranding.Butreferralsare

an effective and cheaperway of finding candidates. Balancing cost and benefits, external

recruitmentdoesnotseemtobethebestchannelforsmallercompaniesbutinsomecases

largerfirmscanreallybenefitfromexternalrecruitmentservices.

Asastart-upgrowslarger,abestpracticeistoestablishasearchteamwithinthecompany.

Klarna is a good example with their small but highly capable internal sourcing and even

relocation team. A key strength of this approach consists of the internal search teams’

capabilityinunderstandingandqualifyingtherequirementsofopenpositions.

It isessentialtolookabroadfortalentwhichissomethingpracticedbyall largerstart-ups.

Theyshouldnotandcannotlimitthemselvestoonlyonecountrywhentheywanttoattract

thebestpeople.

And finally an aspect that should be avoided ismakingwork descriptions too specific. To

attract the best candidates, both the empirical evidence and theory infer that companies

shouldusebroaderjobdescriptionsspecifyingthemostessentialtechnicalskills.

Themodelencompassesamixofalltheseninefactors.Ahighgrowthfirmshould:

1. EstablishanHRdivision,includingsomebodyresponsibleforrecruitmentearly.

2. EstablishanHRand recruitment strategy, specifically adapted to the companyand

evolve it in linewiththecompany’sdevelopment.Get inspiration fromotherstart-

ups.

3. Avoid bureaucracy while still establishing structure and rules. This can be

accomplishedbykeepingteamsandofficessmall,insteadofalargeinonehub.

4. Use a mix of the recruitment channels, but mostly referrals complemented by

advertisements.Referralsshouldnotbecompensated.

5. Avoid outsourcing recruitment to agencies as a smaller company and instead

establishsearchteamswithinthecompany.

34

6. Lookfortalentinternationally.Hirethebestpeople,regardlessofwhethertheyare

abroadorathome.

7. Advertisetobuildtheemployerbrand.Advertisingismoreeffectiveasanemployer

brandtoolthanforrecruitment.

8. Trytokeepa‘start-upculture’withinthecompany.

9. Usebroadworkdescriptionstoattractmoretalent.

Figure3:Modelforsustainablegrowth

SustainableGrowth

Hirerecruitmentspecialist EstablishHR

&RecruitmentStrategy

Morestructureand

rules

Tailoredrecruitmentstrategy,

emphasisonreferrals

InternalRecruitmentandSourcing

Internationalrecruiting

BuildEmployerBrand

Startupculture

Broadworkdescriptions

35

5.2Comparisonofthemodeltotheoryandtheempiricalevidence

This section compares the above model with the empirical evidence and the theoretical

framework.

5.2.1Hirearecruitmentspecialist

Galbraith(1985)explainsthateverystart-upbeginswithahandfulofpeopleandaninformal

organizationmanagedbyface-to-faceinteraction,andasthecompanygrows,changestake

place and formal HR departments are created. According to Heneman et al (2008) and

BarrettandMayson(2008),high-growthcompaniesareforcedtochangethewaytheywork

withHRandrecruitmentastheygrow.

Alltheinterviewedcompanieswithmorethan100employeeshaveestablishedaformalHR

department.HRandRecruitmentspecialistsarehiredoncethecompanyhasstartedtogrow

quicklyandthecompanycannotavoidhavingthemanylonger.

In addition to theory and contrary to most of the empirical evidence, the model

recommendsaccelerating thedecision tohireapersonwith recruitment competenceand

experiencefromotherstart-ups.Withrecruitmentbeingsocriticaltoastart-up,andstart-

ups with a recruitment manager on board being so clearly in control and reaping the

benefits from a customised recruitment strategy, smaller start-ups would benefit greatly

from bringing a recruitment specialist on-board earlier. Tictail appears to be the only

companyacrossallinterviewedcompaniesthattookthisdecisionveryearly.

5.2.2EstablishHR&RecruitmentStrategy

Asdescribedinthechapteronthetheoreticalframework,Rutherfordetal.(2003)aswellas

Barrett and Mayson (2006) recommend companies to establish HR and Recruitment

strategiesinordertoachievesustainablegrowth.

36

The empirical evidence confirms the theory, with practically all companies except the

smalleststart-upshavingdefinedaclearrecruitmentstrategy.

Themodelisthereforefullyinlinewithboththetheoryandtheempiricalevidenceonthis

point.

5.2.3Tailoredrecruitmentstrategy,butwithanemphasisonreferrals

Themodelalsohighlights the importanceofhavinga tailoredrecruitmentstrategy. In this

case the model is based on both the empirical evidence and the theoretical framework.

Companies shouldchange their recruitmentstrategy inorder to tailor it to thecompany’s

evolvingprofileintermsofthecompany’sindustry,theirbusinessarea,aswellas‘intime’,

tailoredtothestagetheyarein,growth-wise.

Severalstudies(Clevelandetal.,1989;Jacksonetal.,1989;Saarietal1988)foundthatHR

strategies vary as a function of industry, business strategy, technology and organizational

structure, and suggest that HR strategies need to be tailored to the strategy, structure,

processandpeopleintheorganization(LawlerIII,1996;Henemanetal,2008).Researchby

Cleveland,Jackson,Saarietal.suggeststhatseveralaspectsofcompanies’HRstrategiesvary

asafunctionoftheorganizationalstructure.

Theempiricalevidenceisinlinewiththesestudies.Theinterviewedcompaniesbelievethat

their recruitment strategy works only for them “because every company is different” as

stated by Company X. Klarna explains that there are very unique things that Klarna does

whichmakes itharderoreasier for themto implementandsupervisecertain recruitment

processes that appear to beworking verywell at another company.What the companies

defineasanoptimalstrategywouldnotbeoptimalforothercompanies.Theinterviewees

alsoexplainedthattheirrespectivecompanyisalwayschanging.

Inthecaseofreferrals,themodeladvocatestheuseofreferralsasarecruitmentchannelfor

high-growthcompanies.Themodelisinthiscasebasedonthepraisereferralshavereceived

fromboth theory and the interviewed companies. Referrals are highlighted as one of the

37

bestwaysofworkingforallsortsofcompanies,butperhapsmore importantly forsmaller

firmsthatdonothavemanyotherchoices.

Theorystates that referralsareveryuseful foranykindofcompany (BohlanderandSnell,

2013;MondyandMondy,2013),largelyduetothefactthatthequalityofreferralsismuch

higher thanother channels andalso reducesemployee turnover (Shuit, 2006;Mondyand

Mondy,2013.

The empirical evidence showsus that the quality of employee-referred applicants is high.

Manyfirmsactivelyprioritizereferredapplicantsbecauseoftheapparentfactthatreferred

employees tend to have a better cultural and technical fit to the profile required by the

company.However, referralsarenot thewaymost jobpositionsare filled.Forcompanies

withastrongeremployerbrand,advertisementsdrawalargenumbersofapplications,and

for companies with a need for very specific technical expertise – which applies to the

majorityoftheinterviewedfirms-headhuntingplaysanimportantrole.

Insummary,themodelconformstotheoryandtheempiricalevidencewithregardstothe

needofatailoredrecruitmentstrategyaswellasthequalityofreferrals.

5.2.4BuildEmployerBrand

Concerning the employer brand, the model bases itself on a mix of theory and best

practices, but is more inspired by the empirical evidence. Of particular significance are

companies such as Kambi that have shown the importance of advertising for employer

branding.

Theemployerbrandisparticularlyimportantsinceitinfluencesallrecruitmentchannels.Ifa

brand is lesswell known, itwill beharder for a recruitment agency tomatchprospective

candidates with the firm since candidates typically want to work with a brand that they

know.Morework on the employer brand has to be donewithin B2B firms or firms that

operate in less-known markets, such as the casino industry, while on the other hand,

38

companies working in B2C markets, like Spotify, do not need to sell themselves to

candidatesasmuch.

On this point, the model goes beyond theory which recommends advertising mainly for

recruitment,andinsteadinspiresitselffromthebestpracticesoftheempiricalevidenceto

useadvertisingtodeveloptheEmployerBrand.

5.2.5InternalRecruitmentandSourcing

ThereisatrendintheempiricalevidencewherebySwedishtechcompaniesmakelessuseof

externalrecruitersandinsteaddevelopin-housesearchteams.

Theoryexplainsthatthequalityofagenciescanvaryandthatitisvitaltofindanagencythat

fitsthecompany’sneedsthebest.Butthesituationisactuallyworsethanthataccordingto

theempiricalevidence.

All of the interviewed companies that use external recruitment agencies explain that the

quality isusuallysubpar.Applicationsareonlyuseful insomerarecaseswherecompanies

haveworkedcloselywitharecruitmentagencyforalongerperiodoftimeandestablished

goodcommunicationandrelationshipswiththeagency.Externalagencieshaveahardtime

finding the right fit for the company, and in particular in recruiting tech people. In an

industrywhere the technical competencyof a candidateplays suchamajor role, it is not

surprising that external recruiters have such a difficulty understanding exactly what their

clientsneed.Themodelrecommendsusingexternalrecruitmentagenciesasacomplement

forlargercompaniesbutnotforsmallercompanieswhichshouldusebetterchannels.

Externalagenciescanbeputincontrastwithin-housesearchandrecruitmentteamswhich

naturally get to know the company and the teams really well and whose only task is to

recruit in the tech sector. Klarna isoneof the companies thathasbuilt a strong in-house

teamstohandlerecruiting-theteamevenincludesarelocationexpert.Themodelstrongly

recommends the approach of building an internal recruitment early on in a company’s

development.Themodeldoesnotdisregardtheoryandactuallymakesaconcessionthatin

39

somecases(larger,moreestablishedcompanieswithalongrelationwithexternalagencies)

externalrecruitmentcanbeverybeneficial.

5.2.6Internationalrecruitment

Oneofthemodel’skeypartsisinternationalrecruiting.Thereisagreatvalueinlookingfor

talentinternationallyforSwedishcompanies.Thisbeliefisbasedontheempiricalevidence

that Sweden has a limited supply of talent and firmsmust adapt to their situation.With

international recruitment there is the added bonus of diversity which is also something

pursuedbyalltheinterviewedcompanies.

Theempiricaldataidentifiesanotherpointthatisnotincludedinthetheoreticalframework.

The interviewed companies all said that they want people who are a good cultural and

personality fit to the company, but a recurring theme is that they want to find the best

peopleandtalent.Kambiforexampletalksaboutrecruiting“worldclass”people.Thereisa

significant demand for these technically talented people and they are in a relatively low

supply.RecruitinginternationallyisseenasamustforlargerSwedishtechcompanies.

Onthispoint, themodelgoesbeyondtheoryand inspires itself fromthebestpracticesof

theempiricalevidence.

5.2.7Morestructureandrules

Withregardstoformalityandstructurethemodelarguesthatcompaniesneedtoestablish

structure and rules as they grow. This is particularly important for high-growth firms. The

importanceofstructureishighlightedbyboththetheoryandtheempiricalevidenceandso

thisfactorinthemodelisduetoamixofboth.

Thetheoryconcludesthatmoreformalizationisneededforsustainablegrowth(Barrettand

Mayson, 2006; Galbraith, 1985; Greiner, 1972). Rutherford, Buller, and McMullen (2003)

explain that formalization and the development of systems provide a platform in which

sustainablegrowthcanoccur.

40

Theempiricalevidenceconfirmsthatthereisamovetowardsbothformalityandstructure

as smaller start-upsgrow larger.As thenumberofemployeesgrows, the structurewitha

bare minimum of rules, regulations and processes becomes more detailed and defined.

iZettle,Klarna,andevensmallercompanieslikeTictail,pointoutthattheyhavetoworkwith

morestructuredprocessesinordertobeabletogrowinacontrolledandsustainableway.

Tictail talked of pausing their recruitment in order to give them time to establish more

structure, and re-starting recruitments thereafter. Spotify becamemorebureaucratic as it

grewandespeciallyafteritsexternalrecruitmentofmiddlemanagementwhichledtosome

staffleavingcompanieslikeSpotifyorKlarnatoworkforsmallerfirmssuchasiZettle,who

thereby profit from their relative lack of processes and structure. Some of the larger

companiesaddress this challengeof sizeand impersonalityby creating smaller teamsand

spreadingthemselvesovertheadditionalsites.

Themodel is aligned to both theory and the empirical evidencewith regards to both the

importance of structure and formality as a vital part of a company’s growth and of

maintaining an informal culture in the company to attract more talent. The key here is

managingtobalancetheinformal,start-upculture,withsomeformalityandstructure.

5.2.8Start-upculture

Themodel suggests thathigh-growth firms should strive to keepa start-up culturewithin

the company because it is a greatway, togetherwith a strong andwell-known employer

brand,toattractmorepeople.

Theorydoesnotpaymuchattentiontotheimportanceofmaintainingastart-upculture.

The best practices of someof the interviewed companies show that trying to sustain the

start-up culture is an integral part of the companies’ strategies. The interviewed tech

companiesallexpressadesireforasocial,openworkingenvironment.Tictail,CompanyX,

andCryexaregoodexamplesofcompanieswithaninformalorganizationwhereemployees

workcloselytogetherinlooseandinformalnetworks.Somecompanies,suchasKing,work

41

hardtokeepaculturewithmore likenesstoastart-upthantoa largepubliccompany. In

KingHRactivelyworkstoensurethatthe“start-up”feelingremains,i.e.thefeelingofhaving

aninformalorganizationandonlyworkinginasmallteam.

Thispartofthemodelisthusbasedonbestpracticesofthefirms.

5.2.9Broadworkdescriptions

Althoughworkdescriptionsbecomemorespecificasacompanygrowsaccordingtomostof

theempiricalevidence,firmsshouldstrivetokeepworkdescriptionsasbroadandflexibleas

possible.Thetheoretical frameworkexplainsthat jobdescriptionsare lessdefined inhigh-

growthcompanies.

Henemanetal(2008)explainthatjobdescriptionsarelessdefinedinvisionaryhighgrowth

companies. The empirical evidence shows that in some larger companies, such as Spotify

andNetEnt, jobdescriptionswhichoncewerebroadlydefinedarenow significantlymore

well-definedandspecific.Inthesmallercompaniesjobdescriptionsaremostlyveryflexible,

motivatedbytheirincreasedabilitytoattractawiderpooloftalent.Thesepotentialtalents

mightbeputoffbytoospecifictasksandrequirements.

Thusthemodelclaimsthatcompaniesshouldtrytohavebroaderworkdescriptionsinorder

toattractmorepotentialcandidates.

42

6.Discussion

InthissectionIdiscusstheresultsandtheir implications.Theyareputintocontextandare

criticallydiscussedinordertodeterminetheirreliability.

6.1ResultofthestudyandpracticalconsequencesforCompanyandHRManagers

Theoutcomeofthisthesisisamodelthatdescribesninebestpracticesforrecruitmentfor

high-growth tech firms. This model has been created by enhancing the theoretical

frameworkon recruitment inhigh-growth firms.Thepracticalapplicabilityof themodel is

themainbenefit,contrastingtoamoredescriptivepurposeofotherstudies.

Listedbelowarethekeytakeawaysfromtheproposedmodel.Akeytakeawayforcompany

managers andHRmanagers in tech start-ups is the importanceof assigning somebody to

recruitment early in a company’s development. As soon as a start-up company starts to

growrecruitingisthemostimportantHRtasktofocusonandinvestresourcesin.Managers

should not shy away from establishing some structure and processes in a start-up even

thoughtheyconsiderthatthisgoesagainsttheircorevalues.Thisstudyshowsthatworking

ad hoc will not suffice in order to achieve sustainable growth. With companies evolving

rapidlyanotherkeyfactorforsuccessistheimportanceofalwaysbeingreadytoupdatethe

recruiting strategy. There is no right or wrong with regards to using certain channels.

Referrals can be recommended for companies with a smaller budget, but a mix of the

differentrecruitingchannelsisnecessarytoreachouttothemosttalent.

6.2Evaluationoftheresultsvis-à-visthemethod

Theresultsofthestudymustbeevaluatedinrelationtothechosenmethodaswellastoits

actualexecution.

The choice of using an explorative method and performing qualitative, semi-structured

interviews givesmore objectivity and reliability to the interviewees’ responses. However,

interviewswithmorepersonsineachcompanywouldhaveallowedmetobetterjudgethe

43

objectivity of the provided answers. Given its reliability the choice of working with an

abductivemethodwas the best fit for this sort of study. But secondary datawhich could

havebeengatheredthroughasurvey,wouldneverthelesshaveprovidedmorereliabilityto

thethesis.Someofthedatacollectedthroughtheinterviewsisincompleteinthesensethat

severalrespondentswereunabletoprovideadetaileddescriptionoftheevolutionoftheir

company’srecruitmentstrategybecausetheyhadonlyworkedforthecompanyforashort

time.

Another criticism of this study is the relatively small sample size of companies. The

companiesthatagreedtobeinterviewedabouttheirrecruitmentstrategiesweretheones

witharecruitmentstrategy.Someofthecompaniesthatwerereachedouttodeclineddue

to their lack of a recruitment strategy. This is not amajor problem in itself, because the

objective of the thesis is to understand best practices and not to describe the state of

recruitmentinSwedishhighgrowthtechcompanies.

6.3Suggestionsforfurtherresearch

ThemodelthatwascreatedisbasedonarelativelysmallsamplesizedstudyofSwedishtech

companiesinStockholm(andMalmöforAnima).Inordertobetterjudgethevalidityofthe

study itwouldbethereforebenecessary toperformfurtherstudiesonotherhighgrowth

firmsinothercountries,especiallyincountrieswithatrackrecordofhigh-growthtechstart-

ups.

An additional take-away from the interviews is the use ofmetrics in the tech companies.

Mostemployeesattheinterviewedcompanieshaveatechnicalbackgroundandappreciate

thatrecruitingdepartmentsinthestart-upscommunicatewiththemthroughstatisticsand

othermetrics.Thefindingsarethatallinterviewedcompaniesbelieveintheuseofmetrics

tobeabletoimproverecruitmentstrategiesandprocesses.Thisisactuallycontrarytosome

otherstudies(e.g.CIPDRecruitment,RetentionandTurnoverSurvey2009).

44

7.Conclusion

7.1AnswertotheResearchQuestion

Inthethesis,bestpracticesforrecruitmentinhighgrowthfirmshavetriedtobeidentified

withafocusonthefollowingresearchquestion:

Howdohigh-growthSwedish techcompaniesmanage to recruit theamountofemployees

thattheyneed?

The question has been answered through a review of applicable theory and an empirical

study of eleven high-growth tech companies in Sweden and has led to the creation of a

model(see5.1)includingninerecruitmentbestpractices.

Whathasmadethisthesisparticularlyinterestingisthattheinterviewedcompaniesdonot

addressrecruitmentinthesameway.Insomeareastherearehighlysimilarviewsandways

onrecruitment,butinseveralothersthecompanieshaveverycontrastingopinions.

Several factors impact a tech start-up’s recruitment. One of the most, if not the most,

important factors to being able to successfully recruit the number of employees that a

companyneedsisthroughtheearlyestablishmentofaHRandrecruitmentstrategy.Andthe

bestwaytodothisistohirearecruitmentspecialistwithexperiencefromotherstart-ups.

Asthestart-upcompaniesgrow,sevenadditionalbestpracticesaretouseamixofreferrals,

headhuntingandads,touseadstoreinforcetheemployerbranding,toestablishaninternal

search team, to recruit internationally, toestablishmorestructureandprocesses, tokeep

work descriptions broad instead of too specific and detailed and to actively work on

maintainingthecompany’sstart-upculture.

By following these best practices tech start-ups have a much better chance to achieve

sustainablegrowth.

45

7.References

Aldrich,H.E. andE.R.Auster (1986). “Evendwarfs started small: Liabilitiesof ageand size

and their strategic implications”, in B.M. Stuart and L.L. Cummings (reds), Research in

OrganizationalBehavior,GreenwichCT:JAIPress,pp.165-98

BanfieldP.andKayR., (2013). Introduction toHumanResourceManagement.Oxford,UK:

OxfordUniversityPress;p.103

Barrett and Mayson (2008). International handbook of entrepreneurship and HRM.

Cheltenham,UK:EdwardElgar

BarrettandMayson(2008).“TheformalityandinformalityofHRMpracticesinsmallfirms”

in Robert K. Heneman, Judith W. Tansky, and S. Michael Camp (reds) Human Resource

strategiesofhigh-growthentrepreneurialfirms

Bell,J.(2006).Introduktiontillforskningsmetodik.Gylling:Studentlitteratur.

Bernard, H.R. (2006), Research methods in anthropology, qualitative and quantitative

approaches.4thedition,Lanham,MD:AltamiraPress

BohlanderG.W.andSnellS.A.(2013).PrinciplesofHumanResourceManagement.16thed.

Stamford:Cengagepp.306,179

Burrows, C. (2004). “Enriching the talent pool: Injecting new blood from outside the

industry”,InternationalJournalofMedicalMarketing,4:4,pp.390-2

Bonoma, T. (1985). Case research in marketing: opportunities, problems and process.

JournalofMarketingResearch,vol.12,s.199-208.

Breaugh J., (2008). “Employee Recruitment: Current Knowledge and Important Areas for

FutureResearch,”HumanResourceManagementReview18:114

Bryman,A.(2002).Samhällsvetenskapligametoder.Malmö:Liberekonomi.

Bryman, A. & Bell, E. (2013). Företagsekonomiska forskningsmetoder. 3rd edition. Polen:

Liber.

Cardon,M.andC.Stevens.,(2004).Managinghumanresourcesinsmallorganizations:What

doweknow?HumanResourceManagementReview,vol.14,p.295-323.

ChoG.etal.,(1994)“OrganizationalSocialization:ItsContentandConsequences,”Journalof

AppliedPsychology79,no.5,pp.730-743

DesslerG.,(2013).AFrameworkforHumanResourceManagement(7thed.).NewJersey,NJ:

Pearson,p.132

46

DysartJ.,(2006).”NewDirectionsinInternetRecruiting”,ContractorMagazine53,no.7;pp.

33-36

Fernandez, R.M. E.J. Castilla and P. Moore (2000), “Social capital at work: Networks and

employmentataphonecenter”,AmericanJournalofSociology,105,1288-356

Fuggetta, R. (2012). Brand advocates: Turning enthusiastic customers into a powerful

marketingforce.Hoboken,NJ:Wiley,“Moneycan’tbuyadvocacy”,p.238

Galbraith, J. R (1982). Designing the Innovating Organization. Organizational Dynamics,

Winter,pp.5-25

Galbraith, J. R. (1985). Evolution without revolution: sequent computer systems. Human

ResourceManagement,vol.24,nr.1.

GarveyC.,(2011).“TheWhirlwindofaNewJob,”HRmagazine,p.111

Goswami, R.M.,G.C.McMahon and P.M.Wright, (2006). “Understanding strategic human

resourcemanagement”,inJ.W.TanksandR.L.Heneman(reds.),HumanResourceStrategies

for theHighGrowth Entrepreneurial Firm,Greenwich, CT: InformationAgePublishing, pp.

13-50

Granberg,O. (1994).Personaladministrationochorganisationsutveckling.Borås:Naturoch

Kultur.

Gratton,L.,(2000).“Arealstepchange”,PeopleManagement,16March,pp.26-30

Heathfield S.M., (2004). “How a talent management plan can anchor your company’s

future,”HRFocus81,no10:7-10

Heneman R.K., Tansky J.W., and Camp S.M., (2008).Human Resource strategies of high-

growthentrepreneurialfirms.Greenwich,CT.:InformationAgePublishing:p.167

Herzberg, F., (1968).Onemore time:Howdo youmotivate employees?HarvardBusiness

Review,46(1),53-62.

HicksS.,(2009).“SuccessfulOrientationPrograms,”Training&Development,p.59

Johannisson, B. and R. Peterson. (1984). The personal network of entrepreneurs.

InternationalCouncil for SmallBusiness (ICSBConference). Toronto,RyersonPolytechnical

Institute.

Kotey, B. and A. Sheridan (2004), “Changing HRM practiceswith firm growth”, Journal of

smallbusinessandenterprisedevelopment,1184,474-85

Kvale,S.(1995).Thesocialconstructionofvalidity.QualitativeInquiry,vol.1,s.19-40

47

Lawley III, E.E., (1996). From the ground up: Six Principles for Building the New Logic

Corporation,SanFrancisco:Jossey-Bass

Legge,K. (1995).HumanResourceManagement:RhetoricsandReality.London:Macmillan

Business

LomaB.D.andStClairS.,(1990).Ananalysisofrecruitmentstrategiesinpublicandprivate

organizations,AppliedH.R.M.Research,Volume1,Number2,pp.43-50

MartinezM.,(2001).“TheHeadhunterWithin,”HRMagazine:48-56

Michaels. E., Handfield-Jones, H. and Axelrod, B., (2001). The War for Talent, Harvard

BusinessSchool

Michie J. and M. Sheehan, (2008). “Human resource management and corporate

performance:evidencefromUKandUSfirms.”inRobertK.Heneman,JudithW.Tansky,and

S. Michael Camp (reds) Human Resource strategies of high-growth entrepreneurial firms.

Greenwich,CT.:InformationAgePublishing

Mondy R.W. and Mondy J.B., (2013). Human Resource Management, Thirteenth edition,

Essex:Pearson.pp.28-29

MorganP., (1986). InternationalHumanResourceManagement: Factor Fiction, Personnel

Administrator,Vol.31,No.9,pp.43-7

Neal, A.,West,M.A and Patterson,M.C. (2004). “Do organizational climate and strategic

orientationmoderatetherelationshipbetweenHumanResourceManagementpracticesand

productivity?”,CentreforEconomicPerformanceDiscussion,Paper624

Rioux, S.M. and Bernthal, P. (1999). Recruitment and selection practices survey report.

Pittsburgh, PA: Development Dimensions International, Inc. Center for Applied Behavioral

Research

Rutherford,M.,P.BullerandP.McMullan,(2003).“Humanresourcemanagementproblems

overthelifecycleofsmalltomedium-sizedfirms”,HumanResourceManagement,42,321-

35

Saari, L.M., T.T. Johnson, S.D. McLaughlin and D.M. Zimmerle (1988). “A Survey of

managementtrainingandeducationpracticesinUScompanies”,PersonnelPsychology,41,

731-43

Sels,L.,S.DeWinne,J.Maes,J.Delmotte,D.FaemsandA.Forrier,(2006).”LinkingHRMand

small business performance: An examination of the impact of HRM intensity on the

48

productivityandfinancialperformanceofsmallbusiness”.SmallBusinessEconomics26:83-

101.

ShuitD.P.,(2003).”MonsterBoardGames”,WorkforceManagement82,no.2,pp.37-42

Weller I. etal., (2009). “LevelandTimeEffectsofRecruitmentSourcesonEarlyVoluntary

Turnover,” Journal of Applied Psychology 94, no. 5: 1146-1162Yin, R.K. 2014. Case study

research:Designandmethods.ThousandOaks,CA:Sage

Williamsson,I.O.,D.M.CableandH.E.Aldrich(2002),“Smallerbutnotnecessarilyweaker”in

Welbourne (reds), Advances in Entrepreneurship, Firm Emergence, and Firm Growth,

Greenwich,CT:JAIPress,pp.83-106

Williamson,I.O.,J.Robinson(2012),“Theeffectofsmallfirms’recruitmentpracticeportfolio

composition on recruitment success” in Barrett and Mayson International handbook of

entrepreneurshipandHRM.Cheltenham,UK:EdwardElgar

Wilkinson,A.(1999),“EmploymentrelationsinSMEs”,EmployeeRelations,21,206-17

Onlinereferences:

Creandum.2015.http://www.creandum.com/nordic-tech-is-on-fire-almost-10-of-all-busd-exits-last-10-years/ [2016-05-02] Atomico. 2014. http://www.atomico.com/explore-d3 [2016-05-02] Dagens Nyheter. 2010. http://www.dn.se/ekonomi/jobb-karriar/felrekrytering-kan-bli-dyrt/ isbe. http://www.isbe.org.uk/HRM

49

8.Appendix

8.1RespondentGuide

Company Title InterviewMethod Date

CompanyX Recruiter Face-to-face 12/04/2016

Cryex CEO Face-to-face 18/04/2016

DICE HRManager Face-to-face 04/04/2016

iZettle TechRecruiter Face-to-face 18/03/2016

Kambi TechRecruiter Face-to-face 25/04/2016

King.com CEO TelephoneInterview 06/04/2016

King.com HeadofRecruiting TelephoneInterview 20/04/2016

Klarna DeliveryLead Face-to-face 14/03/2016

NetEnt Recruiter Face-to-face 09/03/2016

Spotify HRBusinessPartner Face-to-face 03/03/2016

Tictail Recruiter Face-to-face 16/03/2016

Anima COO TelephoneInterview 02/05/2016

Twopilot interviewswithspecialistswereconductedpriortothegatheringofdataforthe

thesisinordertovalidatewhichquestionscouldbeasked.Thetwointervieweeswereanex-

CEOofaSwedishtechunicornandafoundingpartnerofaSwedishInvestmentfirmfocused

exclusivelyonNordictechcompanies.Theseinterviewshelpedrefinetheresearchquestion

andimprovetheinterviewguide.

Outof the12 interviewees,10weremen.The intervieweeswere in theirearly thirties for

the most part, and relatively new to their positions/roles in the company as mentioned

earlier. The fact that the intervieweeswere new to the company could havemade them

more inclined to have slightly different views on recruitment strategy compared to the

company’spreviouspolicies.ThemajorityoftherespondentsinHRorRecruitmentroleshad

a university education in human relations or in social studies. Many of them also had

previouslyworkedatrecruitmentagencies.Additionally,mostoftherecruiterswerefocused

onlyonrecruitingfortechnicalpositionsatthecompany.

50

Theinterviewsconductedfortheempiricalevidencewereofapproximately60minuteseach

andwereforthemostpartconductedinpersonatthecompanies’respectiveoffices,with

theexceptionof King.comwhere the two interviewswere carriedoutbyphone. The two

interviewswithKing.comwereinEnglishwithallotherinterviewsinSwedish.

8.2CompanyGuide

DatagatheredfromCompanyannualreportsaswellasfromRetriever.

Spotify

Spotify is a Swedish private company that offers a music streaming service. Spotify was

foundedinApril2006byDanielEkandMartinLorentzon.

2014 2013 2012 2011 2010

Revenue 9393845 5193330 2995697 1108431 172296EBIT -730418 -939947 -522846 -292613 49488NetIncome -818628 -902379 -444822 -300438 45468TotalAssets 8073753 2482276 2420618 1846265 548510NetMargin(%) -9,6 -17,38 -16,01 -27,2 30LiquidityRatio(%) 113,43 181,84 149,72 76,63 1894,45EquityRatio(%) 20,59 52,22 46,89 46,99 94,74Employees 627 469 317 177 96

Klarna

KlarnaisaSwedishcompanyfoundedin2005bySebastianSiemiatkowski,NiklasAdalberth,

andVictorJacobsson.Klarnasimplifiesonlinepayments.Klarna’smainbusinessistoassume

stores’claimsandhandlecustomerpayments,thusfacilitatingtheprocessforbothbuyers

andsellers.

2014 2013 2012 2011 2010

Revenue 2192703 1573993 1177964 751177 356009EBIT 101441 66808 31639 68433 35101NetIncome 75424 54126 23973 50945 25660TotalAssets 7195222 4624230 3626653 2912202 1585342NetMargin(%) 4,64 4,25 2,7 9,14 9,87

51

LiquidityRatio(%) 112,87 117,6 123,66 122,54 136,44EquityRatio(%) 27,75 18 21,47 18,8 13,1Employees 1017 778 672 429 246

iZettle

iZettleisacompanybasedinSwedenthathasdevelopedanappandcardreadersformobile

payments.iZettlewasfoundedbyJacobdeGeerandMagnusNilssonin2010.

2014 2013 2012 2011 2010

Revenue 190435 51505 11150 628 0EBIT -228093 -157642 -108130 -26545 -1882NetIncome -197632 -156367 -109275 -26014 -1882TotalAssets 378210 190673 228437 71661 18889NetMargin(%) -103,91 -303,32 -948,99 -4137,58 0LiquidityRatio(%) 330,89 150,87 604,49 1117,97 1236,87EquityRatio(%) 77,63 45,74 84,97 92,18 93,17Employees 167 115 65 13 2

Kambi

KambiisasportsbettingcompanythatwasapartofUnibetGroup.In2014theKambishare

startedtradingontheNASDAQOMXStockholmFirstNorth.

2014 2013 2012 2011 2010

Revenue 127375 117982 107333 87481 0EBIT 7634 6910 6417 7966 -531NetIncome 6793 7346 3020 5927 -533TotalAssets 44953 36826 34030 23073 1349NetMargin(%) 6,91 6,59 5,99 9,09 0LiquidityRatio(%) 179,67 148,79 127,04 104,41 11740EquityRatio(%) 52,04 44,41 30,59 25,95 4,52Employees 93 81 66 54 0

52

NetEnt

NetEnt is a supplier of digitally distributed gaming systems to online casino operators.

NetEntwasfoundedin1996.

2014 2013 2012 2011 2010

Revenue 1132425 851663 630746 526671 427618EBIT 401611 261665 179748 153057 129713NetIncome 373992 243242 167139 133255 115614TotalAssets 964742 804009 532885 551821 442418NetMargin(%) 35,71 31,28 29,05 28,78 30,22LiquidityRatio(%) 284,12 212,55 190,34 132,01 126,62EquityRatio(%) 74,03 67,93 71,43 52,29 53,79Employees 409 401 328 257 220

DICE

DICEisaSwedishvideogamedeveloper.EADigitalIllusionsCEAB,orDICE,wasfoundedin

1992,andwasboughtbyElectronicArts,Inc.in2006.

2015 2014 2013 2012 2011 2010

Revenue 917338 798936 642451 535338 379112 359377EBIT 67591 58468 46721 39147 27488 26279NetIncome 50583 36164 -34598 24711 25990 19185TotalAssets 380672 368302 295933 261996 244930 212944NetMargin(%) 7,23 7,4 1,12 7,62 7,48 7,41LiquidityRatio(%) 100,64 128,12 108,97 154,18 189,11 200,64EquityRatio(%) 16,13 30,09 25,23 41,71 50,85 54,44Employees 560 560 518 323 237 250

Tictail

Tictailisaplatformwhereindependentbrandscancreatetheirownonlineshop.Tictailwas

foundedin2012byKajDrobin,SiavashGhorbani,BirkNilsson,andCarlWaldekranz.

2014 2013 2012

Revenue 9021 2749 1398EBIT -6426 -4383 -1771

53

NetIncome -6432 -4273 -1729TotalAssets 16349 10895 9757NetMargin(%) -811,1 -205,83 -171,19LiquidityRatio(%) 164,05 917,14 1567,27EquityRatio(%) 86,89 45,27 94,34Employees 25 9 5

CompanyX

CompanyX is a Swedish technology company thathasdevelopeda very successful client.

Foundedpriorto2010andhasmorethan60peopleinthecompany.

Companyinformationandnumbershavebeenomittedforanonymityreasons.

King.com

King develops games, including Candy Crush Saga. King was founded in 2003, and was

acquiredbyActivisionBlizzardinFebruary2016.

Cryex

Cryex is a startup working with the development of a FX market place connected to a

licensedclearorganization,CCP.Cryexwasfoundedin2014.

Anima

Animawas founded in 2015 and develops smart and connectedwearables such as smart

watches.

54

8.3InterviewGuide

Introduction

Askifitisalrighttorecordtheinterview

Explainthepurposeofthethesisanditscontext

Explainwhatcompanieshavebeenandwillbeinterviewed

ExplainwhyIhavechosentotalktotheinterviewee

Intervieweequestions

Askthepersonwhatroletheyhaveinthecompany

Askthemtotellmealittlebitaboutthemselvesandtheirpositioninthecompany

Askthemtotellmewhotheirbossis/whotheyreportto

Askthemhowlongtheyhavebeenatthecompany

Recruitmentandrecruitcharacteristicsquestions:

1. Howmanypersonshasthecompanyrecruitedin:

a. 2013

b. 2014

c. 2015

2. Doesthecompanymeetitsrecruitmentobjectivesintermsofqualityandqualityof

newstaff?Why/whynot?

3. Wouldthecompanygrowevenfasterifthecompanywasabletorecruitevenmore

employees?Why/whynot?

4. Doyouseerecruitmentasasignificantinhibitortocompanygrowthtodayorinthe

past?

5. Whicharethetop3countrieswherethecompanyhasrecruitednewemployees?

a. Whythese3countries?

6. How does a successful recruitment / talent acquisition process look like for the

companyintermsof:

55

a. Time

b. Effort,e.g.numberofinterviews

c. Successratio

7. Canyoupleasedescribethecompany’sstrategyforrecruitment/talentacquisition?

a. Does the companymake significant useof employeenetworks/referrals for

recruitment/talentacquisition?Pleaseexplainwhy

b. Doesthecompanymakeuseofrecruitmentagencies?Pleaseexplainwhy

8. Hasthecompany’srecruitment/talentacquisitionprocesschangedoverthepast5

years?

a. Wouldyousaythattherehavebeendifferent“stages”duringthisperiod?

b. Have these changes in the process been formally decided, or “just

happened”?

c. Havetherebeendifferentpeopleinchargeofrecruitmentduringthisperiod?

d. Hasthecompany’srecruitmentprocessbecomelongerorshorterduringthis

period,orisitunchanged?

9. Iftherecruitment/talentacquisitionprocesshaschanged,canyoupleasedescribe

whyithaschanged?

a. Newpersonsincharge?

b. Thepreviousrecruitmentstrategywasnot“good”enoughintermsofquality

orquantityofrecruitedstaff?

10. Did/doesthecompany:

a. HaveaHRdepartmentorspecialist?

b. Performananalysisofrecruitmentmethodsatleastannually?

c. Havearecruitmentplanfornextyear?

d. Traininganddevelopmentplanfornextyear?

11. Doesthecompanyapplythesamerecruitment/talentacquisitionstrategyacrossall

ofthecompany’sgeographiclocations?Why/whynot?

12. Doyoufeelthatthecompanycopiestherecruitmentpracticesoflargefirms?Please

explainwhy/whynot?

13. Do you think that the company defines recruitment effectiveness differently than

otherfirms?Pleaseexplainwhy/whynot?

56

14. Withthebenefitofhindsight,doyouthinkthatthecompanyshouldhaveadopteda

differentrecruitmentstrategyintheearlierphasesofthecompany?

15. Doyoufeelthatthecompanyhasmorewell-definedjobdescriptionscomparedto3-

5yearsago?Pleaseexplain

16. Whichpersonalqualitiesdoesthecompanyconsidermoreimportantinpersonsthat

youdecide to recruit?E.g. arepersonalqualities suchas integrityandattention to

detail more important than commercial / technical ability, work experience and

credentials?

a. Hasthischangedoverthepast3-5years

17. Doesthecompany’srelativelysmallsize(comparedtoverylargetechcompanieslike

Ericsson,Accenture,…)positivelyornegativelyaffectthecompany’sabilitytoattract

andretainemployees?

Onboardingquestions:

18. Pleasedescribethecompany’sHRstrategyforonboarding?

a. Does the companydoanything special tonew recruits?Donewly recruited

employeesgothroughatrainingbootcamporsomethingsimilar?

b. Doyouhaveasystematicprocess toterminateemployeeswithinthe first3

monthsiftheonboardingisnotsuccessful?

19. Howwelldefinedwere/areyourworkduties?

20. Isthereamentorprogramfornewemployees?

a. Ifnot,why?

Companyculture

21. Canyoupleasedescribethecompany’sculture?(reformulate,badquestion)

22. How does the company define its own culture? That is if The company gives an

officialstatementinthisregard.

23. Hasthecompanyculturechangedoverthepast3years?

a. Ifyes,why?

b. Ifno,why?

57

8.4ExtraGraphsKambi

Correlationfactor:0,989

Graph4:KambiRevenueandEmployees(2010-2014)

NetEnt

Correlationfactor:0,927

Graph5:NetEntertainmentRevenueandEmployees(2010-2014)

DICE

Correlationfactor:0,945

Graph6:DICERevenueandEmployees(2010-2015)

020406080100

0

50000

100000

150000

2010 2011 2012 2013 2014

Omsättning AntalAnställda

0

500

0

1000000

2000000

2010 2011 2012 2013 2014

Omsättning AntalAnställda

0

100

200

300

400

500

600

0

200000

400000

600000

800000

1000000

2010 2011 2012 2013 2014 2015

Omsättning AntalAnställda

58

Tictail

Correlationfactor:0,999

Graph7:TictailRevenueandEmployees(2012-2014)

0

5

10

15

20

25

30

0

2000

4000

6000

8000

10000

2012 2013 2014

Omsättning AntalAnställda