What to Do When Employees Wonder Where All the New Funding Will Go

Guest Writer
Founder and CEO of Namely
4 min read
Opinions expressed by Entrepreneur contributors are their own.

All the hard work has paid off as funding continues to roll in. The startup seed has sprouted into a growing beanstalk, and it seems much-needed upgrades are now affordable.

Employees wonder, “How will we use the funding?” Whispers abound. “Do we get a raise?” “Are we finally getting new computers?”

To dispel any rumors right from the start, here are a few things to be transparent about with employees regarding how funding will be used:

1. Bonuses and raises

With all of the new money coming in, the first thought employees might wonder is, “Am I going to see any of this?” After all, launching a startup is no easy feat. These employees may have worked 10-12 hour days for several weeks developing the startup’s website, products and brand -- all of which were strong enough to attract the funding.

Let employees know right away if they’ll be receiving any bonuses or raises as a reward for their hard work. Define a budget for allocating bonus money to employees and determine rewards for top performers first. Communicate to each employee individually about the raise or bonus they will receive as soon as allocation has been determined.

Related: Radical Transparency Can Re-Energize a Company's Culture and Deliver Results

2. Company structure

Sometimes, employees appreciate a promotion or a new title more than financial rewards. Research shows main factors considered essential by employees were promotion and a feeling of involvement. If there’s room to promote any existing hardworking employees with a new job title and responsibilities, do so.

If signs forecast a massive growth spurt, it might be time to hire new employees to support more projects. Allocate some funding toward onboarding and training new employees. But before throwing a large portion of money in that direction, ensure current employees feel taken care of. No matter the promotion or hiring decision, tell employees ahead of time so they don’t feel out of the loop.

3. Office changes

Still sharing the same closet-sized office with four other employees? It might be time to move to a bigger office space to accommodate the growing business. It might not seem like a problem now, especially if the team gets along well and no one suffers from claustrophobia, but it could become tight as the team expands and future employees might prefer their own space.

Tight-knit teams might be a little averse to change at first. Choose a space that best accommodates the needs of current employees and complements the company culture. For example, if your startup values transparency, go for an open floor plan with plenty of windows.

If a move is in order, tell employees right away. Involve them in the search for choosing a new office space. Work environment plays a big role in productivity, so ensure the team likes the new space.

Related: How to Find Investors for Your Startup

4. Tech upgrades

If there isn’t enough funding to support salary raises, bonuses or new hires, fun new tech gadgets to help employees work might be a great substitute.

Has the team been using the same old computers for a decent time? Maybe everyone’s been working from their own personal laptop. Tell employees about any plans to upgrade current office equipment or add new programs that will streamline processes.

5. Product development

Perhaps there’s an opportunity to grow in another area of the market by developing a new product. Maybe a current product could use a new feature or upgrade to keep up with evolving technology. Get the team involved in product development ideas from the very beginning. Decide on the direction the company is going together and ensure everyone’s on board with the decision.

Keep the team engaged by helping them to see the big picture. Show them the projected growth of the company and explain all the more they could receive from the return on investment.

Related: 4 Reasons Not to Confuse Early-Stage Money for Success

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