Startup life is like a roller coaster. It’s varied, novel and a sensationally-intense experience only some people like and choose.
When it comes to its employees, most people join to make a tangible impact, learn by doing and stretch their legs with a modicum of autonomy. They don’t want to be a cog in a big machine.
But for all the satisfaction and thrill the startup life brings, there comes a point where some people want to get off the ride.
When people leave large companies, the recovery isn’t a big deal -- especially if the business has built a brand that talented people want to work for [^1]
But when employees leave growing companies, that’s an important part of the workforce gone.
In this piece, we’ll uncover why employees depart, three tactics to boost retention and why the best investment founders can make is to create the kind of company culture and roles that are too good to leave behind.
When good people leave
There’s a popular truism that startup employees will gladly work 80 hours a week to avoid a 40-hour week.
When people are working that hard to build something faster, better and more groundbreaking, it can fast-track them to burn out -- a consequence of factors such as unfair compensation (41 percent), unreasonable workload (32 percent), and too much overtime/after-hours work (32 percent).[^2]
As much as 50 percent of talented and ambitious people quit jobs because of it [^3] and you see burnout more often in environments that have poor leadership -- cultures that lack effective communication, transparency, and professional development.
“This can lead to low morale and fear-based company culture -- people are either bored with little to do, overwhelmed with too much responsibility or simply out of tune with the company’s vision.”*
Why build a high-retention culture
Employee turnover is a significant pain point for growing startups because those departures can send big shockwaves across the business.
“When things at the company seem to be going astray and it looks like the ship might sink, [without communication from the top down] employees panic and start looking for a job before they're actually out of their current one.”*
This is a challenge for founders who now have to worry about scaling operations up, replacing departing employees, and managing internal speculation and fears.
Keeping a low burn rate means proactively cultivating trust, loyalty and employee happiness well beyond when they were hired. From the minute you consider filling a role, there are some key steps to take to increase the chances of hiring people who’ll be with you for the long ride. Here's how to do it:
Give people room for success or new challenges
Most people who join a startup are thirsty for success. They’re self-driven, looking for big wins in work and in life -- literal success junkies addicted to the dopamine hits that come with accomplishment.
These individuals need stimulating work. One of the best things you can do as a leader is to identify your employee’s strengths and match those to opportunities where they can achieve a lot of work that is meaningful -- outside of things they directly do.
There are fewer rules at startups and more space to foster this type of development. Your people may already wear many hats, but consistently find ways to pull them into special projects like marketing planning sessions or product feature sprints.
People who are more engaged and feel empowered in their work are more productive and effective -- up to 20 percent more than those who aren’t.[^6]
Compensation is more than money -- it’s the training and upward trajectory
While the great recession may have flattened out compensation, it’s time to start giving employees an annual salary bump again! In bigger companies, this looks like traditional quarterly or annual bonus periods.
Startup employees, however, aren’t just in it for the cash-money.
Depending on your business you may be able to offer a bonus at the end of the year. But a more valuable carrot is routinely checking in to see that the opportunities your business offers moves the needle for their careers and aspirations.
If your employees are giving up a traditional bonus, the role and overall opportunity should move their career forward in some material way. Invest in them through training, operational resources, and tools that will help them do their jobs well.
Also, consider instilling a mentorship program that’s focused on your employees’ interests. Or, introduce them to people in your network (e.g., a CTO at another company for your VP of engineering) -- good mentorship goes a long way to keeping people and making sure they know you’re invested in them for the long-term.
You openly show them the future (and they know why they are there)
When building something from scratch, often times the ride will be bumpy and stressful. When you’re moving at breakneck speed, you don’t want employees to ever worry or question why they are part of the team.
“Startups need funding that comes from VC's and the constant search for investment, [in my experience], is usually a source of stress which can impact the office environment.”*
To create a place where your people want to be and everyone is in things together, talk to with your employees about what is going on. Push for open discussions and listen to what feedback your employees have. In a transparent culture, employees never have to guess what’s going on.
Even before someone is hired, it’s incredibly important that your brightest and best employees know where they fit into the company’s vision. After they’re brought on, routinely check in on their future plans and goals -- and show how those align with where the business is going.
Sometimes pulling your people aside and asking simple questions like “What do you want to achieve at this company?” or “What other skills do you want to learn or sharpen, and what can we do to help you with that?” will reaffirm to your people that are truly part of the team and you are committed to them as well.
When people feel like they belong at work, they are more productive, motivated, engaged and 3.5x more likely to contribute to their fullest potential.[^7]
In the end
If a startup has a difficult time retaining people, they either aren’t providing ways for employees to create real impact and or they aren’t communicating very well. Making sure you give employees new challenges and reiterate their value, will help make sure your people have what they need to be healthy, productive and seated on the ride with you.
Find out how we can help you build a high employee retention strategy for your business, drop us a line.
* Hunt Club surveyed candidates on February 27, 2019 to understand their reasons for leaving previous startup companies. Sources wanted to remain anonymous.