In the fast-paced tech sector, many startups struggle to hire and keep good employees. With Ethos, Alida Miranda-Wolff wants to change that.
On April 16, Wolff and her co-founder Kaleb Dumot launched Ethos, a talent strategy firm specializing in tech companies. Wolff, formerly the director of platform at Chicago VC firm Hyde Park Angels, created the Chicago-based company to help structure employee interviews, hire a diverse team, and create retention and development plans for employees. These efforts, Wolff said, will help startups keep value-adding employees and save money on high-turnover costs.
Ethos currently has three companies signed up for its services, but Wolff declined to name them. The Ethos team currently consists of Wolff and Dumot, who oversees the company’s finance and business development functions. At the moment, the company isn’t looking for tech companies of a specific size or niche. For now, Wolff said the company is focusing on determining what the market will bear and finding the right clientele.
During her time in the tech industry, Wolff saw several areas where the tech recruitment process needed to be fixed. She noticed that some small startups and rapid-growth startups struggled to attract and retain diverse employees because they either felt it was more important for the small team to “get along” or they failed to invest in employee growth early on.
It’s not just small tech startups that aren’t hiring diverse candidates or facing high turnover. Top-tier tech companies like Facebook, Tesla and Salesforce have average employee tenures of less than 2 years, a 2016 Payscale analysis found. Plus, Facebook, Intel, Twitter and Amazon have less than 10 percent of Black and Hispanic employees.
Statistics show that hiring diverse candidates is beneficial for companies’ bottom lines. According to a 2015 McKinsey analysis of 366 public companies across various industries in Canada, Latin America, the United Kingdom and the United States, companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. The analysis also found that companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
Despite these figures, “You get folks that say, ‘That’s their company. That’s not my company,’” Wolff said. “The best salesperson could be that African-American woman that you didn’t market to, that you didn’t bring into your processes, or that you were discriminatory against unconsciously in your interviewing process. She could’ve been the difference between a million dollar sale and no sales.”
While hiring diverse candidates can boost company profits, losing employees is a significant drain. On average, it costs about $4,129 to hire a new employee, and the average time it takes to fill an opening is 42 days, according to 2016 Human Capital Benchmarking Report by the Society for Human Resource Management.
While Ethos doesn't touch the recruiting process, the company makes sure startups have the right interviewing process, diverse talent pipelines and employee development strategy in place before the hiring begins.
“Ultimately, we're an internal partner focused on building up the talent infrastructure from within, as opposed to putting bodies in seats,” Wolff said. “Putting bodies in seats is critical, by the way, but we're just more focused on keeping them there than our recruiting counterparts.”
