Written by Lilian Gorriz, a People Ops specialist and Samaipata Operating Partner, currently Head of People at Gitbook. With 13 years of global leadership experience in People operations, she has held positions at Dataquest, Ironhack, and Honeywell.
In a rapid-growth startup, demands can be high, budgets can be low, and processes can be lacking. There’s also strong competition for top talent in the startup environment and it can be challenging to keep talent as other companies also look to acquire people with specific skills, many of which can afford higher salaries, so it’s no surprise that the average employee tenure in that environment is roughly two years.
It’s also clear that retaining talent is less expensive than hiring new talent. There are many costs associated with hiring, like salaries or fees of recruiters, advertisement of the roles, cost related to time spent doing interviews, limited productivity during the first months, to name a few. Investing on retention will save you money in the long run.
On a more positive note, recent statistics show that employees who make it past that critical two-year mark tend to stick around, so we are sharing our 5 key tips to retain your top talent in a startup and how you can put it to action.
Although these may sound straightforward in theory, the biggest challenge is implementing them! We find staying disciplined and setting out a plan with structure is helpful to keep Founders on track.
1. Set Clear Expectations Early
One of the best things you can do to retain talent in this environment is to be honest during the recruiting phase. An interview is a time to assess a candidate's skills, experience, and culture fit. However, don't neglect the opportunity to tell candidates what they should expect as your employee. They also need to determine if your company is the right fit. The more you know about each other’s wants and needs, the more successful your employer-employee relationship will be.
Some things you should be explicit about from the beginning are compensation and how it can increase over time, the good, bad and ugly aspects of your culture, what it’s like to work with you as their manager, what the role entails and how it will evolve over time. One thing that comes up often with candidates is the possibility of career advancement. If you don’t have a clear framework for this (which most likely you don’t and shouldn’t be thinking about at an early stage), be clear about how likely it is that they will change roles and in what timeframe. Also make it explicit that there are no guarantees and this will depend on the company achieving their goals, their performance and opportunities arising.
Taking this to action: During the recruitment process, ask candidates two key questions: what they value most in a company culture and what they’re looking for next in their career. Based on their answers, clarify what they will find in your company and what they won’t, also be sure to mention what they can expect in the future and when!
2. Create a Great Culture and Work To Keep It
Speaking of culture, it’s easy to lose the company culture you’ve created as your startup grows. To avoid this, establish cultural principles or values early on and integrate them into every business decision. Each time you add a new process, function, or position, ask yourself how it fits into your company values and the culture you want to maintain. It’s common for early employees to feel uneasy about the growth pains that come along with a larger team. As you grow, focus on how you can scale current employee-focused initiatives, such as recognition, celebrations, and more.
Need some inspiration? Check out the cultural principles that guide our day to day at GitBook. A great example is Netflix’s and how explicit they make their culture (for a more detailed read, check out the No Rules Rules book) We use these to assess candidates in recruitment, highlight them during onboarding, as criteria during performance reviews and to share feedback and recognition.
Taking this to action: One thing you can do is to establish a dedicated culture keeper team. Ask long-term employees and people who are great examples of the culture you’re trying to build if they’d like to serve on a culture committee. Their experience and feedback will be vital to retention as your company grows. A culture committee is a diverse group of people from your team that meets regularly to work on shaping the company culture. They don't fix cultural issues, instead focus on enhancing culture, surfacing key topics that should be addressed by leadership, acting as agents for change and organizing events that enhance “how we work around here”. They also act as a bridge between team members and leadership.
3. Ask, Listen, and Respond
Surely you listen to your users and use their feedback to make product decisions, don’t you? Why wouldn’t you do the same with your team members! A key action to retain great talent is to ask for - and respond to - feedback. If you notice an increase in employee turnover, there is a reason; and it’s your job to find out what that reason is. Surveys, exit interviews, and other feedback cannot be one-sided. They are a starting point for a conversation and change.
Whatever the problem and whatever your solution, employees need to know they were heard, action is being taken, when that action is being taken, and what that action is. Circling back to the action plan and progress you’ve made against it will be the most important thing to drive engagement and retention.
Taking this to action: Have you heard of stay interviews? They are 1:1s that help managers understand why employees stay and what might cause them to leave. I recommend that you do them with a large sample of the team (or the whole team if manageable!) once a quarter. You will be amazed at the amount of valuable information you will gather. You can read this article for more on stay interviews and a list of questions to ask
4. Give opportunities to learn and upskill
One of the main reasons why people join a startup is to develop their skills. Regardless of how talented your team is, roles may become tedious or may be impacted by new processes, programs, etc. As your company grows, provide opportunities for employees to continue learning. Give them something to strive for, whether that’s a new position, a mentoring opportunity, or the chance to learn a new skill. All these things contribute to higher employee engagement scores. They also help employees to feel recognized, create a culture of growth, increase teamwork, and boost productivity. And the best part, they help have the right skills in your team that will lead to you achieving your company goals!
A question I get often is how early should we have a clear career pathway for employees? In my experience, for earlier stage startups, career discussions should be personalized. Make sure you take time to understand what each team member strives for and help create spaces for them to learn the skills that are aligned with their interests.
Taking this to action: It’s clear there can be budget constraints in a startup, the good news is that the best way to learn is on the job! One of the best ways to provide learning opportunities is to give team members stretch assignments and empower them to make decisions. Have a new project coming up? Don’t be afraid to have one of your high potential employees lead it! Not only will this increase retention, it will help you nurture your high performing team members and create a culture of hiring from within.
5. Make sure there’s internal consistency in how compensation decisions are made
During my 15 years of experience in HR, one of the main drivers of disengagement is the perception that other team members are being paid more for a similar role. To retain your people, make sure you have a system to make compensation decisions and stick with it! Be transparent with how you make salary decisions.
Transparency in compensation comes in a wide spectrum. You don’t need to be 100% transparent with what each person is making (although some companies do this! Buffer is a good example). What you should be transparent about is the decision making process and the compensation model you use to make salary decisions. It should be clear to people that decisions are being made objectively and fairly.
Taking this to action: Review your team’s salaries at least once a year to make sure the compensation criteria applies to everyone equally. If not, bridge any gaps proactively, particularly for your top performers.
The main takeaways
With the significant amount of time and money involved in recruiting the right talent, leaders need to factor retention strategies into their overall human resources planning from day one. Now is the time to plan for success. Implement these key strategies so you can retain top talent in your startup:
- Set expectations early, starting with the recruitment process
- Create a great culture and work to keep it
- Ask your employees what they want and need, listen to their answers, and respond
- Give opportunities to learn and upskill
- Make sure people are paid consistently within the team