Working at a startup can be a risky career move and at the end of the day, the risk can either be life-changing in the best way possible or an awful move. With technology being in every aspect of our societal living, the demand for tech talent has increased rapidly. According to an analysis of trends in employment by Deloitte, the study revealed that the tech workforce in 2020 was 5.5 million strong and has been growing at an average annual rate of 2.2% since 2001.
Since the move to tech has increased since the pandemic, the market has become even more competitive for salary ranges, perks, company culture, and offering remote opportunities. This trend has been a long time coming, and the pandemic only amplified the workforce’s desire to have control over their workday and cut down the dreadful aspects of going into the office. The Bureau of Labor Statistics projects that employment in computer and information technology occupations will grow at least 11% from 2019 to 2029, this is much faster than the average for all other occupations. With strong demand for tech talent over the next decade, employers will be under pressure to offer more attractive compensation and employment terms.
So how do companies like small start-ups stay competitive against their big tech competitors? You have to incentivize your team. There are multiple ways to do so:
- Allow your team to contribute significantly: One of the greatest advantages that startups have over already established businesses is that new team members are expected to wear multiple hats, along with being able to make innovative and significant contributions without having to climb corporate ladders. Make it a point to let them know that you encourage out-of-the-box thinking and that every idea is important in order to achieve success.
- Show them your culture and values: Culture and values are more important than ever, especially with young Gen Z’s jumping into a booming competitive market. Studies have shown that millennials and gen z will give up their higher-paying jobs for better company culture and values. These young employees have grown up seeing the struggle of a toxic workforce culture that their parents went through, and are determined to demand better for themselves.
- Let your product or service speak for itself: Sometimes all it takes is for someone to see a product or service for them to be a part of an organization. Build a product or service that people can rally around and you’d be surprised at the number of people who want to join in on your solution.
- Offer job flexibility: The old fashioned punch in punch out workday is dead. Today, people desire to have a job that accommodates their needs and interests. Nobody wants to spend hours of their day commuting to a job, dealing with traffic, and losing valuable time out of their day. You should be offering work environments with flexible schedules and location independence. It has become increasingly popular to offer WFH credits to help new hires set up their space at home, studies have shown that giving employees the opportunity to make their own small office space at home increases productivity by at least 32%.
- Talk about the future, especially their future: When you use phrases like “We will,” it displays your confidence that not only your startup is going places, but also that the recruit is going to be a part of the action. When conversing with potential team members, discuss all of the possibilities that you both are going to achieve.
Let’s talk about that last point a little bit more, “talking about the future”. Hopefully, you have a vision of where you want your company to be in 5, 10, 15 years from now. How do you plan on sharing the wealth of your growth? How much equity does your company provide to its employees? Although that’s not on the forefront of some people's minds when it comes to starting a new position, making sure you keep a fair, ethical, and transparent plan for equity is very important in retaining your valuable talent.
Employee option pools can range from 5% to 30% of a startup's equity, according to Carta data. Steinberg Media recommends establishing a pool of about 10% for early key hires and 10% for future employees. But relying on rules of thumb alone can be dangerous, as every company has different cash and talent requirements. Founders need to be sure that sharing the ownership of their business is done thoughtfully and productively, especially as you scale your team.
When a startup enters a growth stage, you want to make sure you’re not just thinking about the numbers, you also need to think about customers, users, and headcount. You need to have the right mindset for your current phase of development, and you need to make sure the people you’re working with are on the same page. Especially since startups are especially vulnerable to mindset mistakes. There is no straight route to scaling a company, it's a deeply personal process for founders and the company.
At the end of the day, it’s important to remember that your team not only adds value to your company but how your company and its value adds to the daily lives of your team. Being mindful of the culture you perpetuate to your team will help in the long run for retaining your best people and getting the cream of the crop talent to be onboarded. Make it a win-win for everybody.
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