You’ll see plenty of articles online giving
advice on how startups can find the right people for their company. But after
you’ve hired these exceptional employees, how are you going to pay them? An
experienced employee might be making five to six figures, which is an amount
most startups can’t sustain even if you raise outside capital.
Startups constantly struggle to entice new
talent and convince them to stay while sticking to their budget. So if you
can’t match the employee’s previous salary or the market rate, how do you
structure a compensation package that won’t drive talents away?
- Boost your non-cash incentives
You can adopt more generous non-cash
compensation since you won’t equal high-performing employees’ dollar value.
Apart from the basics – leaves, health insurance, and federal benefits – look
into incentives not all companies offer.
Take Netflix, for example. The leading
streaming services provider offers unlimited paid vacation days. Netflix’s philosophy is that they don’t have to keep track of
their employee’s vacation leaves since they aren’t strict with the number of
hours their people spend in the office.
You don’t have to offer unlimited paid
vacation days like Netflix. The key is promoting flexibility and work-life
balance for your employees. Consider offering the option to work remotely on
certain days, flextime, or sabbaticals for veteran employees. These attract
employees who carry plenty of personal obligations, especially those who have
families.
Apart from non-cash incentives, consider
startup equity.
- Consider equity-based compensation
Equity compensation is becoming a popular
bootstrapping strategy for startups. Stocks can be attractive to
high-performing employees. Remember, these are people who could be making a lot
more money elsewhere since you can’t afford their market rate. Offering them
part ownership of the company in the form of stock bridges that deficiency.
Stock compensation also help retain your
employees. Most stocks have a vesting period. This means the employee can’t
enjoy the full equity until they’ve worked for your company for a certain number
of years. If, for example, an employee decides to leave before the four-year
vesting period, he won’t receive the full amount of his stock options.
Also, stocks motivate your employees. Being a
partial owner makes them feel that they are part of the company, so they’d want
to perform better.
Then, don’t neglect the value of a cohesive
onboarding process to welcome your new employees.
- Create a decent onboarding process
Many companies don’t properly onboard their
new recruits. The new workers get thrown into unfamiliar tasks they’re forced
to navigate on their own. The onboarding process is supposed to help the new
hires adjust to the functional and social aspects of their job. It also helps
retain job hoppers.
One idea is to give new hires welcome packages
on their first day. Include practical items that help them in their day-to-day
work, like a coffee mug, a pen, sticky notes, and others. But apart from the
usual, look into other unique gifts you can give to new employees.
Dynamic Gift, for instance, offers an extensive range of
corporate branded gifts, such as power banks, flash drives, and more.
Another option to consider is a mentorship
program. This setup is ideal for startups that don’t have the time to follow
through a week-long formal training program. Pair your new hire with a senior
employee who can guide the former throughout his first few months. This way,
your new employee can become productive as soon as he or she starts working.
A strong mentorship program also helps the new
talent assimilate seamlessly into the company, which can boost retention.
Ultimately, what’s important is giving your
employees meaningful work and appropriately compensating them for it. Even if
you can’t meet their market salary, a thoughtful compensation plan is bound to
make your team feel valued. Build one with the welfare of your employees in
mind – and not simply for the sake of cost-cutting – and top talents will be
eager to join your team.