For Startups Recruiting Talent, Money Really Isn't Everything
Entrepreneur's New Year’s Guide
As the market changes, so do worker expectations. Startups, perhaps more than any business today, are fighting to attract and keep talent by providing employees the support they seek -- especially when it comes to compensation.
Nearly half of all employees expect a pay raise in the next 12 months to offset cost-of-living increases, Glassdoor’s July 2015 report shows.
Compensation is an important piece of how startups offer employees value, but it’s certainly not the entire package. There are stock options, of course, but there’s more to keep in mind when ensuring employees’ jobs are truly valuable to them. After all, employees can’t live on stock options alone.
Here are some ways companies, startups especially, can ensure employees are well-compensated and happy:
1. Educate employees about stock options.
Offering employees stock options both encourages commitment and creates performance incentives. They actually have a stake in the company. But, if employees don’t understand how stocks work or what options are available, they won’t see the value in them.
Help employees understand what’s being offered and how it relates to the market. For example, explain the difference between common stock and preferred stock. But most importantly, tie those stock options into the discussion of the company overall (see below) and what they mean to employees today.
2. Provide valuable benefits.
Benefits are an important way to add value to an employee’s compensation package. In fact, benefits have been rated a top aspect of job satisfaction by more than half of employees consistently since 2002, according to SHRM’s 2014 Workplace Visions Report.
Provide employees with customizable, affordable benefits plans. Also, equip them with the tools and resources they need to understand what’s offered, what each plan covers and how to enroll. Beyond healthcare, consider offering health and wellness benefits employees care about -- like gym memberships or catered healthy meals -- to kick the company’s benefits package and culture up a notch.
3. Sell employees on the company mission.
Money alone doesn’t guarantee employee happiness. Employees want to feel fulfilled and validated in the work they do. They want to feel they are a part of something bigger than themselves, that their function has actual impact on the dream that the company is building.
Define and consistently remind employees of the big-picture goals the business is working to achieve. This needs to resonate deeply with employees’ personal values. Southwest Airlines was widely praised when it launched its new purpose statement in January 2014: “We exist to connect people to what’s important in their lives through friendly, reliable, and low-cost air travel.”
It’s easy to see how employees can relate to this statement and how their job furthers the company’s mission. They want to be a part of connecting people to what’s important in their lives. And for many, that’s worth as much as the compensation you provide.
4. Still, provide a competitive salary.
A startup founder might make the mistake of paying employees below their market value as the company is still getting its legs. Stock options do offer great value for employees, but they can't substitute for the compensation employees need day to day.
There’s no way around giving employees the salary they deserve, especially when it’s high-performing, creative talent that fuels the company.
The balance is making sure the company provides value to employees in many more ways -- stock options, meaningful work and a worthwhile company mission -- so compensation is far from the only consideration. In the end, a startup’s values and culture should be truly worth taking to the bank.