How startups can attract and retain talent for longer
It’s no secret that high employee turnover costs time and money. Large companies can mitigate such costs, but startups? Every penny counts when you’re new to the game.
And then there’s what money can’t buy; reputation. Poor retention can harm a company’s reputation, impact team morale and ultimately stunt growth. Not what a burgeoning business needs.
Ideally, companies want to hold on to talented team members for as long as possible.
And as the Great Resignation rages on, it’s clear that employees won’t hesitate to up sticks and leave if they find a better offer elsewhere.
So an effective retention strategy is essential. Not only to attract talent in the first place but also to encourage employees to stick around.
With this in mind, we’ve put together a few tips for startups.
But first things first…
Find out why people leave
If team members are coming and going rapidly, it’s worth investigating the reasons why. Hold an exit interview to better understand why the person is leaving.
Are there any recurring themes or obstacles? The hope is that employees feel comfortable enough to share their thoughts in complete confidence.
And if for whatever reason that’s not the case, that’s a concern in itself. It may be worth sending out an anonymous survey to the team to gauge overall happiness levels and gain valuable insight.
We use CharlieHR to send out a weekly survey with a specific theme, focusing on effective teams, leadership and management, wellbeing and so on. It’s easy to set up and totally anonymous.
Streamline the recruitment process
"Retention starts right from the beginning, from the application process to screening applicants to choosing who to interview," Dan Pickett, CEO of Nfrastructure.
Time is precious. So, job hunters don’t want to spend hours reading excessively long and overly descriptive ads. Or jump through hoop after hoop not to get so much as an acknowledgement.
Highlight the need-to-knows about the role, the kind of experience and skills an applicant needs and what they can expect in return. Don't be afraid to show a bit of personality either.
Does your business operate a remote or hybrid working model or offer flexible working arrangements? If so, say so, as flexible working is now a serious consideration for UK job applicants.
Indicate the kind of team player you are looking for. Share the company’s values to attract applicants with the same values.
Also, consider how easy is it for applicants to apply. The initial application stage is the perfect opportunity to impress with a straightforward and seamless process. After all, the prospect of joining a startup should be exciting, not uninspiring.
Hire the right people
While that sounds fairly obvious, it's not always obvious at the time.
Providing that your recruitment process is optimised, it should be much easier to shortlist promising candidates and invite them to attend an interview.
Remember, the interview stage is as much about them liking you as it is about you liking them. It’s also about sharing realistic expectations of what the role entails and having a mutual understanding of what both parties bring to the table.
And whether you both feel the role is right for them. It might be a match made in heaven now but what about in two or five years’ time? You’re looking for loyalty and longevity to reduce the likelihood of the right person leaving sooner than you’d like.
And ultimately, whether the individual fits your company culture and will work well with the rest of the team. Have they worked at a startup before?
The best person for the job on paper isn’t always the right person for the job. But, what one person may lack in experience, they may make up for in aptitude!
Invest in training and development
When a candidate joins the team, do they have all the training materials and resources they need? An effective onboarding process will not only help the new employee feel welcome but set the tone for the rest of their tenure. Never underestimate the impact of day one.
As time passes and the new hire begins to contribute, be sure to schedule regular catch-ups to see how they’re feeling, if they’re meeting objectives or if they need further support.
Regular one-to-ones are also an opportunity to ask the employee for honest feedback regarding onboarding, training, as well as general processes and workflows.
One of the beauties of being a startup is that these core processes can be improved as the company grows. Instead of lobbying for change, you can mould the clay.
According to Agata Nowakowska, Vice President of Skillsoft, "Businesses with a strong learning culture have around 30-50% increased retention rates compared to those that don’t".
So, continue to engage employees with ongoing training and provide opportunities to progress.
Instil positive company culture
As Nick Francis, CEO of Help Scout puts it, “Retention is about cultivating an environment where people can do their best work.”
What does company culture mean to you? Will new starters walk into an environment that’s diverse and inclusive? One that welcomes autonomy, honesty, transparency and trust? How would you define yours?
Our core values are trust, collaboration, autonomy, purpose, recognition and diligence.
A startup with great company culture will not only attract new talent but also help to retain talent. At its core, positive company culture should:
- Align teams behind a clear mission
- Drive the business forward
- Set expectations for behaviour, communication and collaboration
- Promote work/life balance and positive wellbeing
- Acknowledge everyone’s contribution to the bigger picture
Speaking of which…
Recognise and reward everyone’s contribution
There are different ways to do this, culturally and financially.
Generally speaking, a lot of startups don’t have the funds to reward employees with hefty salaries or big bonuses, that larger companies might. And in today’s hyper-competitive job market, this can seriously impact a startup’s recruitment efforts.
But there’s another way. Share equity instead. A slice of the action. Share schemes are proven to attract talent, increase engagement, productivity and improve retention rates.
In some cases, shares can be financially more rewarding than just a high salary and more tax-efficient than receiving a bonus too. Plus the company benefits by not having to pay out lump cash sums.
It’s a no-brainer.
Not all applicants will ask, but you can certainly put forward the idea of an employee share scheme. But which one?
Well, there are various schemes available (subject to eligibility) including schemes specially designed with SMEs in mind, like Enterprise Management Incentives (EMI).
The nature of an option scheme like EMI means that equity is released over time, subject to conditions specified by you. So, it’s a long term employee incentive.
Feel free to book a free consultation with us to explore the ways you could share equity with your team as an alternative form of compensation.
And finally, recognition, recognition, recognition.
Studies suggest that companies with a culture of recognition have a 31% lower employee turnover.
Acknowledge all achievements great and small. If a team member completes a task ahead of schedule, celebrate it. If another goes above and beyond to help a colleague or a customer, celebrate that too.
It doesn’t have to be a top-down approach either. We have an internal recognition scheme where colleagues can nominate each other to be recognised and rewarded for their contributions.
So, to sum up, here are six key steps startups can take to maximise employee retention:
- Find out why people leave
- Streamline the recruitment process
- Hire the right people
- Invest in training and development
- Instil positive company culture
- And reward and recognise
Retaining talent and reducing employee turnover is no mean feat. But by putting these practices in place, startups stand a good chance.
Do let us know if you found this article helpful. We’re always keen to hear your thoughts.
This article first appeared on the Vestd blog.