Startups focus on pitch decks and products – but forget the people

Startups often throw everything they’ve got into building the product, pitching to clients and chasing investors – but they forget one of the biggest drivers of growth: their people. It may come as a surprise, but many startups don’t stumble because of flawed products – they fail because of poor hiring decisions. The issue with neglecting HR at early stages is that the fallout isn’t immediate. It builds quietly and often surfaces at the worst possible moment.

Why bad hires are so costly for startups

In a startup with 50 people, one bad hire isn’t just a miss – it’s a multiplier. The consequences ripple out: team’s morale dips, delivery timelines slip and leadership spends time dealing with people problems instead of focusing on scaling the business. Investors notice too. These knock-on effects can easily lead to £200,000 – £300,000 in lost opportunity and stalled momentum. Imagine the damage when there’s more than one misstep.

The financial and operational reality

According to the Recruitment & Employment Confederation (REC), a single bad hire can cost up to four times the employee’s annual salary. In concrete terms, a hire on £42,000 could end up costing your business as much as £132,000. That figure includes recruitment fees, training time, lost productivity and disrupted team dynamics.

Here’s how those costs break down:

• Recruitment costs: UK startups often spend 15% to 30% of an annual salary on recruitment alone, including advertising, agency fees and internal HR time.
• Training and onboarding: The average cost of recruiting and training a poor hire in the UK is £9,730, with another £9,625 lost due to reduced output.
• Productivity loss: A single toxic hire doesn’t just underperform – they impact others. The broader team can lose productivity worth up to £29,160.
• Turnover and morale: The biggest cost of all may be staff turnover. Poor hires often push out good people. Replacing those who leave can cost two to two-and-a-half times their salary.

And yet, despite this, hiring is often done in haste. Startups are under pressure to grow and roles get filled quickly – sometimes at great long-term cost.

Four hiring mistakes startups keep making

Drawing on years of advising venture-backed UK startups, I’ve seen these same hiring mistakes made time and again – often just before things go sideways.

1. Rushing to fill roles without clarity

When a startup suddenly gets a big cash injection, the pressure to grow fast can be intense. Founders often feel like they need to hire quickly to keep up – but without a clear process, that can backfire. Many early-stage companies still see HR as a corporate function rather than a strategic necessity. The numbers back it up too: a Protocol survey found that one in three UK companies admitted to making bad hires because they rushed. And Harvard Business Review points out that 60% of bad hires happen when there’s no structured hiring process in place.

Fix: Before writing a job spec, define what success looks like. What outcomes should the hire achieve in their first 90 or 180 days? Focus on results rather than job titles. This creates alignment between what you’re hiring for and what your startup actually needs.

2. Hiring for skills and ignoring mindset

The startup journey is anything but predictable. You need people who can flex, pivot and problem-solve under pressure. And yet, most hiring decisions still focus too heavily on technical skills. Leadership IQ found that 89% of hiring failures were due to poor attitude or values misalignment – not a lack of technical ability.

Fix: Conduct behavioural interviews to explore how candidates handle failure, give and receive feedback and operate in ambiguity. Curiosity, resilience and learning agility are just as important as any line on a CV. You’re better off with someone a little less experience in technical skills but hungry to learn than someone with top-tier skills and a toxic attitude.

3. Hiring ‘mini-me’s’

Founders often instinctively hire people who think like them-those who “get you” and share your perspective. While this feels comfortable, it limits your startup’s ability to innovate and solve complex problems. Cognitive diversity, which brings together different ways of thinking and problem-solving, is essential to scale effectively and avoid blind spots.

In Think Like a Rocket Scientist, Ozan Varol illustrates how diverse teams in rocket science achieve breakthroughs by combining varied expertise and reframing problems. For example, the Mars Rover Curiosity’s successful landing was made possible by a team from different disciplines collaborating to invent the radical “sky crane” maneuver. This solution emerged not from a group thinking alike, but from robust debate and blending of diverse cognitive approaches.

Fix: To avoid hiring “mini-me’s,” involve multiple team members in interviews to bring fresh perspectives and challenge your biases. Hire people who complement and challenge your thinking, fostering a culture where questioning assumptions and reframing problems -hallmarks of the rocket scientist mindset – drive innovation and faster problem-solving.

 5. Ignoring employer brand

Many startups think employer branding is a later-stage problem as they don’t think about their reputation as an employer – until they need to hire fast and great candidates pass them by. Research shows that 75% of candidates research company culture before applying and  startups face fierce competition for top talent. Without a compelling employer brand, startups risk losing mission-aligned candidates to more established companies.

Fix: Share your startup’s mission, values and team successes publicly. Showcase day-to-day culture and employee stories – not just to fill up your social media calendar, but because candidates do their research. These small but authentic insights help attract people with the right mindset who truly resonate with your vision and culture. Building this employer brand early can reduce hiring costs and improve retention by drawing in candidates who are motivated and aligned with your startup’s purpose.

Hiring isn’t a nice-to-have – it’s a strategic lever

Here’s what that means: Start hiring intentionally, even at seed stage. Create structured processes, define what good looks like for each role and prioritise both cultural and cognitive diversity.

Final word

Startups run on energy, vision and momentum – but those come from the people, not just the idea. Bad hires don’t just slow you down – they can change your culture, cost you money and put your reputation at risk. By building better hiring habits early, startups can create teams that not only execute the vision – but elevate it.