What Do You Owe Your First Employees?
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The allure of joining a startup can be intoxicating. The dream of lucrative rewards associated with being in on the ground floor draw many people to smaller firms, where they are willing to take a smaller salary in exchange for promises of wildly unbridled success as the firm grows.
Sadly many of these idealistic workers find themselves leaving the company, disillusioned and empty handed. This begs the question: What does an entrepreneur owe the people who helped build the company?
This question has got some of you thinking: "nothing." They were paid for their services, and nothing was ever promised beyond that. Others among you are thinking that were it not for these people’s hard work and sacrifices at subsistence wages the company would never have been successful.
I’ve had my fair share of jobs where I was paid in rainbows and empty promises. I have been cheated out of hundreds of thousands of dollars by an unscrupulous and greedy entrepreneur, who I still affectionately refer to as the devil.
I’ve also found myself left empty handed by well-meaning entrepreneurs, whose grandiose visions of becoming the next Google never came to fruition. But all that aside, what is truly owed, from an ethical stand point, to the first generation of a startup's employees?
From my perspective, it all depends on the level of contribution of the employee. It’s one thing to grant an equity stake to someone who invented something that essentially defines your company (but hey, it’s a work-for-hire so it’s yours to keep, and legally you don’t owe him or her beans), and quite another in cases where the only thing the worker ever contributed was loyalty.
There has been a great deal of mourning and sense of true loss over the lack of loyalty of companies toward workers and vice versa, but I have seen too many deeply loyal employees, who have contributed little more than carbon dioxide and occasionally methane to the workplace. These employees are the corporate equivalent of seat fillers at award shows.
Let us not mistake laziness for loyalty.
Some people see the founder’s vision, and it drives them. It keeps them at a company, when they could easily find a position that pays more money working somewhere else, but far more are just too lazy to go get another job. Some feel genuinely lucky to have a job because of everything from a lack of adequate education to felony convictions. Still, others have worked at a firm since high school and don’t want to give up all the corporate karma they have banked. In other words, there are a lot of reasons that people stay at their jobs that have nothing to do with company loyalty.
How do we measure loyalty? For many companies it’s measured by the size, depth and breadth of the butt groove in the worker’s chair. I have seen workers more dysfunctional than meth-addicted howler monkeys get promoted to jobs for which they were unmistakably unqualified, simply because of some misguided sense of fair play.
These people lack the skills, business acumen, experience or education necessary to excel in the position, yet they are given it for their years of service.
If the founder of a company owes anything to long-term employees it has to be based on the employee’s contribution.
Unfortunately, it’s tough to quantify contribution and even more difficult to monetize it. In the final estimation, it’s really up to the entrepreneur to determine what, if anything, he or she owes to the people who made it happen but that tends to end with bitter ex-employees, who feel cheated out of something they never really deserved.