Turnover at any company is a problem - from a financial standpoint it costs 150 percent of a mid-level employees' annual salary to replace them and it can have a significant impact on employee morale. For startups, however, turnover can be disastrous. With a typically low number of employees - who are many times responsible for business-critical tasks - the ripple effect of one staffer leaving can quickly and dramatically reverberate throughout the corporate culture. This issue has recently come to light with news circulating about Rent the Runway - in the past 10 months, it has lost seven of its top executives, four of which left in the past two months. Other former staffers have created a Facebook group to commiserate together about their time at the fashion brand.
Startups are high growth and inherently stressful. The company's survival is on the line and a growth-at-any-cost mentality can take over. As a result, there are extremely high expectations on individual employees. What the executive level sometimes forgets is that employees are people. Organization leaders love to call employees their team or even family, but often times they treat them like machines. While many of the pressures startups experience are unavoidable, the way leaders and employees handle them can change to help limit turnover and improve overall job satisfaction.
The Resilience Factor
By focusing on developing a strong culture from day one, startup founders can instill values with their first employees to ensure success down the road. Resilience - or the ability to reframe challenges and minimize the negative impacts of stress - is a vital component of any startup culture. There are bound to be set backs, conflicts and struggles with any early-stage company. A resilient culture gives employees the tools to stay strong in the face of challenges and to bounce back from obstacles and the natural roller coaster experience of working at a startup. Organization leaders who take steps to build a resilient culture will reap the benefits in the long-term.
Startup founders who want to avoid high turnover rates and hire employees that will stand the test of time should take the steps below to build a resilient team.
1. Establish a Set of Organizational Values Early in Your Company's Life Cycle and Stick to Them
Think about corporate values as early on as possible - having standards from the beginning will help guide hiring practices and keep culture consistent as the company scales. What is your attitude to work-life balance, for example, and how will it be sustained once your organization hits its 'awkward teenage phase'? As your company grows, keeping these values top-of-mind will help your team - and you - remain true to the core vision of the company and avoid any surprises down the road.
2. Be Transparent and Show Integrity When It Comes to Internal Operations
In its infancy, a startup has almost complete transparency because everyone is 'in' on everything. It's hard to keep things under wraps when you're all in the same room, and everyone communicates with one another on a daily basis. All meetings are 'all hands' because there are only 10-20 hands. But as the organization grows it's neither possible nor desirable for everyone to be involved in everything. Still, your employees need to know how to get promoted, how they get fired, how to be rewarded, and the playing field has to be level. Even the most resilient person will wilt if the situation is unpredictable.
3. Keep up a High Level of Connection
A startup has a lot going against it - too little capital, uncertainty, an anxious and pushy board - but one advantage it does have is that a group of people have come together to grow an idea. Enable your employees to connect and believe in the mission of the brand. Encourage them to look beyond short-term, tactical projects to the big picture, and how what they do each day affects the company and its clients. Organizations that can keep that sense of meaning, mission, and purpose in the lifeblood of the company will be strong and resilient.
Cultivating a strong and resilient culture from the onset of building a company is critical. When you dedicate time and truly care about the environment you're building, the end result will be an engaged, satisfied and productive workforce.