Employee Retention Strategies at the Startup Phase
August 19, 2011
It’s been a rough couple of years. Economic recovery certainly hasn’t been as speedy as we would hope for and the job market is still weak across most industries, despite showing signs of life.
But for all the gloomy jobs reports, the information technology sector seems to be thriving. According to a recent USA Today story, the unemployment rate for technology jobs was 3.3% in June, compared to a 9.2% unemployment rate overall. And according to the Bureau of Labor Statistics, technology employment is expected to grow faster than the average of all occupations through 2018.
So what does that mean for startup and expansion stage technology companies?
As the job market begins to thaw, it will become especially important for smaller companies to remain focused on employee retention strategies that will help prevent their valuable employees from jumping ship.
And, no, that doesn’t mean you have to start forking over big bonuses and cash incentives. As Mike Michalowicz writes for the American Express OPEN Forum, there are numerous (he comes up with 51) ways to reward employees without money. Some of his examples include an extra vacation day, a work-from-home pass, or a public thank you for an employee’s contribution to the company.
But it’s not enough to simply throw out a few token rewards.
Employee retention requires company-wide commitment to creating an open and fair workplace culture. A while back, I came across an article on Entrepreneur.com that discussed the best employee retention strategies for keeping your top people. I think the advice is extremely helpful for anyone involved in startup recruitment and employee retention.
Borrowing from the article, here are seven employee retention strategies for startups:
1. Revisit old promises
As recovery takes hold, make sure you revisit and address any benefit cuts or salary freezes that were agreed upon due to economic conditions. If your company is still going through hard times, it’s still important to have that conversation. The last thing you want is for your employees to feel like they’re being kept in the dark.
2. Take action
Address your employees’ complaints, and if they’re asking for additional responsibilities, involve them in new projects. Employees who feel they are part of a team and that their voice matters are more likely to feel satisfied at work.
3. Have fun
Plan group activities outside of the office — even if it’s just once a month — to help encourage team bonding and employee morale. Startup and expansion stage businesses may not be able to compete with larger corporations on salary, but they should be more able to foster an environment that makes employees look forward to coming to work.
4. Keep talking
Continue to keep employees up to date regarding the status of the company and its prospects. This can go a long way in easing any of their fears about the future. If you leave employees’ questions and concerns unanswered, writes the PRSA’s Lisa Ward, then you risk losing productivity, commitment, and overall engagement — three things that may lead your best employees to look elsewhere for a job.
5. Be transparent
Make sure to communicate company news without “sugarcoating” any negative aspects. Speak to each of your employees individually and tell them how they fit into the company’s plans for growth. As Romy Robitzsky writes for Portfolio.com, that transparency is key. Managers and executives need to share the company’s vision for the future and reassure their employees that they’re an important part of it.
6. Address inequities
Rewarding employees based on performance is a good idea, but if there are pay inequities in your company, your employees are usually aware of them. As the economy recovers and your business grows, it’s a good time to address any pay inequities with raises.
7. Be realistic
As the economy improves, some degree of attrition may be inevitable. But if you’re honest about what’s happening with the company and reassure employees that they’re important to its success, then they are more likely to stick with you.
I’m sure you’ve grasped the general themes: communication, honesty, and fairness are absolutely critical. Compensation is important, but it’s just one factor to most employees’ happiness with a company. So make sure that as the economy recovers and the technology market heats up, your employees know how valued they are and what they mean to the future of your company.
If you can’t communicate that to them, you might see your top talent lured away by your competitors.
Photo by: Thinkpublic