Guest author Scott Gerber is the founder of the Young Entrepreneur Council.
In the beginning stages of your business, you can’t always offer competitive salaries. So as you’re trying to get off the ground, you have to find other ways to structure your business so that early-stage employees have a different reason to be excited about their jobs.
To find out how successful entrepreneurs were incentivizing, I asked a group of founders from YEC what they build into their company’s DNA that would attract, and keep, top talent.
1. Build in Learning Opportunities
Many early-stage companies can’t pay competitively, and we were one of them. However, you can provide your employees with big projects that offer tremendous learning opportunities. For example, one of our early customer-help employees took on a lot of responsibility for support processes and frameworks, learning a lot along the way, and now leads a team of 20. This change happened in less than two years from his start date. While employees may not be able to optimize for salary in the short-term at your company, they can optimize for learning if you give them the chance, and that will not only make them happy but also improve their long-term salary potential. —Bhavin Parikh, Magoosh
2. Offer Everything but Salary
While you might not be able to financially compensate just yet, that doesn’t mean you can’t offer good benefits. Try to build in features that make coming to work enjoyable: free lunch, a library of business reading, flexible summer hours, “Feedback Fridays” for one-on-ones, etc. You can also give incentives like $50 gas cards, train passes, “Idea of the Month” awards, or beer-pong competitions. Do not, however, embellish on what’s to come. Nothing is worse than a golden carrot; employees wise up to this very quickly and know that you’re actually handing out empty promises. To be a great leader, try to recognize everyone and make them feel valued so they remain loyal to you, even when the money isn’t there yet. —Nicole Munoz, Start Ranking Now
3. Create an Exceptional Community
The long hours and high stress of startups means that people get to know each other very well—for better or for worse. In the best-case scenario, this leads to a team that cares about one another and will go the extra mile to help the company succeed. However, cultures like that don’t happen accidentally. It’s crucial to invest in building the type of culture where people feel connected, heard and valued. Taking the time to learn about each employee and discover what motivates and challenges them is imperative, as well as proactively encouraging employees to form healthy, collaborative relationships by creating opportunities for them to share experiences outside of work and stepping in to mediate when conflicts arise. —Martina Welke, Zealyst
4. Foster a Great Atmosphere
You really have to create an atmosphere at your company of a place people would want to work. We try and have a very open working environment where employees can work from couches, desks, or fun locations outside. We order lunch daily for everyone from nice local restaurants and food trucks. We’re in Silicon Valley and will never be able to compete on salary with Google, so we have to create an atmosphere where people are still applying left and right to our business and we’re keeping everyone around. Next, we make every person an owner and give shares. They feel like part of our business. To date, the only two people who’ve left our company were because one was having a baby and the other followed his wife who got a job out of the country. Create an environment where people want to work—it’s not always about money. —Peter Daisyme, Hosting
5. Create a Vision Program
When we first started, we had a visual map of how each person would play a part in our big mission of being the best presentation company in the world. This shows how important each person is, and how their roles are important for attaining the vision. While we may not be able to compete financially, we can compete purposefully. —Kenny Nguyen, Big Fish Presentations
6. Be Present
Working hard alongside your employees will show that you are dedicated, excited, and believe in the business. It gives some sweetness to the struggle. Schedule some down days for group trips or activities so you can get to know each other as well. We’ve visited a friend’s goat farm, had movie nights, grilled out on our loading dock, etc. and it’s really helped to bond our little group together! Also, be as transparent and open with them as you can about where you see the company going and how you are trying to get there. That will give people a common goal to work towards. —Bailey Spaulding, Jackalope Brewing Company
7. Be Open and Honest
I meet monthly with every employee for a 20-minute one-on-one session. Each employee tells me three examples of how they showcased a core value, what they appreciate, what they would improve and the status on their goals (which are tied to bonuses). What I’ve seen time and time again as an appreciated aspect of our company is “how honest I can be with you.” Our culture is focused on constant improvement, and suggestions about how to improve the company, our leadership, our structures and so forth are openly given and well-received by myself and management. Most people just want to be heard. If you give a consistent opportunity to listen and objectively hear their concerns, it can mean a world of difference. —Beck Bamberger, BAM Communications
8. Give Them Interesting Work, and Credit Them for Successes
What you can’t give in compensation, you can more than make up for in valuable opportunities that will pay off down the road. If you involve your early-stage employees in big projects with a very visible impact on your company’s success, and then let them take credit publicly for that success, you’ll be boosting their career development. By helping to make them more marketable, you’ll be investing in their future growth as professionals—and savvy employees will know that in the long run, that sort of investment pays off much more than a higher starting salary. —Dave Nevogt, Hubstaff.com
9. Offer Stock Options
The key to getting long-term buy-in from employees that aren’t receiving competitive salaries is to offer stock options. Stock options act as deferred compensation, which frees up resources now to help you grow your company. Stock options tend to vest over time (typically several years), which helps to create better alignment between employee commitment and some future company milestone (like a company acquisition). In addition, giving your team stock options makes them feel like stakeholders. Stakeholders tend to work harder because they feel that their performance will directly impact how much money they are likely to get out of the business when it sells. Stock options also have the power to accumulate considerable value, which makes the trade-off of a lower salary more reasonable. —Kristopher Jones, LSEO.com
10. Promote a Remote Workplace
Allowing your employees to work remotely is the key to providing them with the flexibility needed to justify a noncompetitive salary. If your business requires employees to be on site for specific events like team meetings and client visits, make sure to select specific days of the week to have scheduled meetings and provide remote options the rest of the time. One other related strategy is to offer work hours outside of the traditional 9-to-5 timeline. Leveraging both a remote workplace and allowing employees to put hours in on their own time will be more than enough for employees to accept lower compensation during the startup phase of your business. —Obinna Ekezie, Wakanow.com
11. Have Flexible Job Descriptions
Part of the excitement of an early-stage startup is that each team member can have a huge impact and work on projects that they normally couldn’t. If you combine flexible job descriptions with coaching, each employee can play to their strengths and take the lead on projects that interest them. This means your team will take ownership over their work, and as a result, come into the office happy. —Shradha Agarwal, ContextMedia
Photo by Mack Male
