Barring very few exceptions, startups are cash poor and remain so for a very long time. But driven founders are capable of thriving in this environment and are not dissuaded by uncertainty of outcome or income. Compensation is rarely the driver in their pursuit of achieving success.
New employees with additional technical, regulatory, and business competencies are required as the startup progresses. The newcomers to the team typically have a different skill set than entrepreneurs and unlike founders, they may require real salaries.
And so, the dilemma--how to attract and retain talent in startups, which by their nature are highly uncertain and cash-strapped enterprises.
Here are 10 important tips that worked for me:
1. Be passionate and share the vision. The goal of what can possibly be achieved must be big enough to employees, i.e., the public good, affecting lives, big monetary payout, and unique or rich experiences that further their careers. Explain the reason why you are here and why you are so inspired in the enterprise. Companies with less than three years of cash will likely attract younger employees and those willing to roll the dice, thereby pre-selecting for a group of employees for whom passion, vision, and other forms of compensation resonate.
2. Ask candidates and current employees what they want. Ask them what they are trying to obtain by being here. I always ask that question on interviews. I also tell candidates that if I can't deliver on what they seek within the first three to six months, I will not offer them the job. I often tell candidates (and current employees when I am new to the team) that I am a "talker" and because of that, they will learn about all the forces on a little company, greatly broadening their experience.
3. Give them something that their friends in other companies are not getting--responsibility, mentorship, exposure, fun, excitement, and a community feeling. Give them something that their parents never got on the job--respect, appreciation, included, a feeling of importance. Employees, especially young employees, talk to their friends and family often. By having their network telling them that they are getting more by being with you, they will realize it and continue to take a chance with a company that is not flush with cash.
4. Over-communicate. Not knowing is frightening; knowing is empowering, even if it is not pleasant. Give them important information about the whole of the business. This will make them vested in the company, as opposed to their own narrow jobs.
5. Say THANK YOU. A lot. When an employee is thanked for a contribution, even if it is part of their job description, they feel appreciated, and they feel like a peer not a subject.
6. Know everyone's name and know what they do. Walk the floors and point out to each employee how what they are doing is critical to the success of the company. This will communicate your appreciation of the work they are doing.
7. Work WITH, not FOR. NEVER introduce or refer to an employee as someone who works FOR you; rather, say this person or that person works WITH me. Believe me, their friends at other companies are not receiving 5, 6, and 7, and chances are their parents have not in their entire careers.
8. Have regular company meetings where you're not the one doing all the talking. Have the managers present about what is going on in their shop. Recognize monthly individual performers who embody a company value, or who perform at a very high level, and give them a small award. Creating a community environment, is crucial when resources are scarce.
9. Own that fact that you need to lead. You cannot trust that your managers are modeling your behavior, rather, you need to touch the lives of every employee regularly. Rotating morning breakfasts with each department is a good vehicle to make sure that employees continue to see and hear the message and invest in the leader.
10. Stress the benefits, regardless of outcome. Make them understand that if things ultimately don't work out for the company or project, they will have benefitted for the experience and be able to build on it. Explain to each employee what they have learned and been exposed to, and how they can leverage it in the future. Reminding employees of the things that they are receiving, apart from a paycheck, gives them reasons to continue to believe and invest themselves in the company and to tolerate the uncertainty that comes with being at a startup.