Hey, Startup Founders: Take Better Care Of Your Employees

When hiring as a founder, one of your goals is to take care of people. A higher level of responsibility to your employees exists when you’re leading a startup compared to when you’re a leader in a big corporation. The last thing any of us wants is to have someone quit his or her job because they can’t pay their bills, or to get divorced because a pay cut creates marriage problems. 

If you believe that other people are hired only to serve you then that needs to change. Employers should be more concerned with ensuring a job is the right fit for everyone involved. In a corporate job, severance packages and job-placement services create a soft landing for an employee if a position doesn’t work out.

By The Numbers

At startups, there’s far less security and far more turbulence; sometimes employees flat out don’t get paid. Some companies go after employees currently making a quarter-million dollars and think they can pay maybe half that. They’re hoping to sell the candidate on the excitement of entrepreneurial life. It’s more advisable to ask good questions when it comes to how the potential employee is going to be able to afford a 50 percent pay cut. Saying yes to the job won’t mean he knows exactly what he’s getting himself into.

Let’s kick you a scenario. Brent was a vice president at a multibillion-dollar media company. He was a self-proclaimed intrapreneur—an employee at a big firm who believes he or she runs an internal division like a startup, launching different products. Brent was excited about the possibility of working for a real startup, and after making the rounds, received multiple offers. A number offered Brent a CEO title plus equity that would pay off big if the company went public.

Most people in this pickle are told they should take the leap and jump into a startup. But when the financials are laid out they often take the warning of staying in their corporate world to heart. If an executive is making $250,000 a year at his corporate job, he’ll probably take a 50 percent pay cut to work at a startup. Startups often promise a big hire that the company will “probably” have an exit in three years. But of course, there are no guarantees. Let’s assume the executive jumps and works at the startup for five years, but it fails.

That’s $625,000 he lost in salary.

When hiring, startups aren’t always honest about the potential risks involved, and it’s a boon for founders to lure a top dog away from a big corporation. Such a hire legitimizes the business, investors love it, and the value of the company usually rises after the press release comes out. The company wins whether or not the new hire is successful. If he or she excels, the startup benefits; if they don’t, the person is deemed “too corporate,” and their failure is attributed to an inability to adapt to startup culture.

What To Expect From Your Employees

As a founder, it’s also critical to remember employees are continually trying to adjust to the different stages of a startup. In the beginning, no organizational structure exists. There are usually five to ten people, and consensus rules. Employees tell you what they will and won’t do. Since they’re with you because they want to be, often making great sacrifices of their time, you’re accountable to them. What founders forget is employees expect the company to stay the same way after investors arrive, and that’s not feasible.

Employees are either in a position to ride the waves or get pummeled by them.

Leaders often forget that as a company evolves, workers become reluctant or even scared to say “no” to any request. That means overwork is a constant. There’s a balancing act between obtaining value from employees and pushing so hard they leave. It’s important for leaders to check in regularly and find out if employees are happy, because talented people have plenty of other options.

One day, they might wake up and decide to leave, and you won’t even know why, unless you’ve been taking stock. Leaders must possess or develop the emotional intelligence to recognize it is difficult for employees to say no in an environment that breeds childlike enthusiasm and rewards go-go-go attitudes.

Leading a startup is tricky because to do so, you must have a personality that inspires people to work for you. You’re like Moses telling everyone to follow you across the Red Sea. Yet you also have to be the one looking out for their interests.