Employee Turnover

'Turnover' Doesn't Have to Be a Dirty Word for Startups

The foundation of all startups is change
'Turnover' Doesn't Have to Be a Dirty Word for Startups
Image credit: Ronnie Kaufman/Larry Hirshowitz | Getty Images
Guest Writer
CEO and Founder of Envested
6 min read
Opinions expressed by Entrepreneur contributors are their own.

There's a pervasive attitude in startup culture that companies will cycle through employees as they grow. But this doesn’t have to be a negative. In reality, all startups are built on change, and this is a great asset. To create something where nothing existed before, growing companies need to experiment, to give new ideas a chance in order to fuel exponential growth.

It’s no surprise that the entire startup world is obsessed with disruption.

But there’s an inherent tension between the exponential growth that new companies aim for and the linear growth of their employees. When people develop at a constant rate -- they are biological, after all -- it’s only natural that businesses will outgrow their employees, and their executives in particular, as they become more competitive. Compared to established corporations, where the cost of replacing talent can have a significant impact on the bottom line, startups see turnover as a necessary, even driving, part of their growth.

But, as much as hiring new talent at a startup can bring a new level of skill and expertise, if that turnover isn’t intentional -- and if you aren’t making the most of the talent you have at each stage -- it can have a negative impact on your company.

Related: 3 Ways to Keep Company Morale Up During High Turnover

Business growth is fueled by human growth.

The exponential growth of a startup is only made possible by the combined growth of the company’s employees. If each individual isn’t developing at a steep slope, the company as a collective will be slower to get to the next stage of expansion -- at which point it becomes necessary to turn the team. No single hire, no matter how talented, will create that curve on her own. Instead, you’ll actually see greater ROI from your employees if you invest in the talent you have and support their growth. After all, when someone levels up their skills, they demonstrate that new competency before you fully pay them for that.

At my company, Envested, we supported the growth of one of the first UX designers on the team by giving him increasing opportunities to expand his role -- and permission to fail throughout the process. Combined with his history and familiarity with the product, stretching his capabilities allowed us to iterate our product even more quickly and to work more collaboratively across the engineering and design teams.

But the answer here isn’t to hang on to every employee from seed to IPO. The question becomes how, as an entrepreneur, can you set your company up for positive, growth-minded retention and turnover?

Related: Thanks to These 3 Values, This Startup Has Shockingly Low Turnover

Hire only when it becomes painful but before you're desperate.

Your retention strategy needs to begin with hiring. You don’t want to add new people to your team, only to realize that you don’t have enough for them to do after you finish the latest batch of features -- or that you could outsource what needs to get done. Instead, you should only start thinking about adding to your team when you get to a serious pain point, when there’s no other way for your current team to get the work done.

That said, when you get to that point, there’s no excuse for desperation hiring. Recognize that as much as you need someone to be doing work yesterday, it’s more important to hire right -- and to hire beyond the often misguided or cliquey idea of culture fit.

Related: 11 Crucial Interview Questions to Ensure a Culture Fit

Flex up your talent.

Once you hire the right people, you then need to commit to the individual growth of your employees. Not only will this allow you to make the most of the talent you have, but it will also heighten your team’s engagement and investment in the mission of the company.

One way to do this is to think about “flexing up” certain employees -- finding ways to expand the scope of someone's role in a way that continually stretches her and is also in service of the company's needs. Flexing up can also be an opportunity to train up those high-potential employees who can handle the challenge. And rewarding these high performers with the opportunity to develop within the company will promote the retention of the right types of people who can grow as your startup skyrockets.

Related: If This Is How You're Doing Workplace Engagement, You're Doing It All Wrong

Be honest about your growth philosophy.

While you are hiring and developing the talent you have, you also have to be honest with your team that the company will evolve as it grows. After all, the foundation of all startups is change. Both the business and its people will go through different stages. Ask any of the employees at Envested, and they’ll tell you that I like to think of each member on my team as having his or her own superpower. We’re not a family -- we’re a championship team, each with our own unique talents and opportunities to contribute.

Some superpowers are needed across stages, while others are stage-specific -- and those are the ones you’ll especially want to flex up. But all superpowers are valuable and needed to get to the next stage. Being clear about this up front will inspire your team to go all-in and make the big plays needed in the moment -- but it’ll also make any needed future transitions much smoother.

No matter where you are in development, defining and creating a clear talent strategy is necessary for the growth of your company. “Retention” and “turnover” don’t have to be dirty words. Instead, you should focus on doing the best you can at the moment while keeping a perpetual line of sight on the ultimate reward of a startup: immense growth for everyone who decides to take part.

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