The problem with early-stage firms is that they don’t have the money to pay well, but they badly need the best talent. Here are three strategies to motivate your employees even if you can’t afford to pay them well.
The entrepreneurs do the job at the outset of every startup challenge. Motivation is never an issue at this point – even if you don’t have enough money to pay yourself a wage, it’s clear that the more time you put into the project now, the better your chances of reaping returns afterwards.
However, as your company expands, you’ll need to start delegating some of the jobs to keep up with the increased burden.
Unfortunately, the increase in work that has to be done usually comes before the increase in cashflows. That means you won’t always be able to provide high-mounted pay to your first employees.
Your first hires should often be skilled experts who expect higher pay to make matters worse.
To build a successful workforce of early workers, it’s clear that knowing how to motivate them is essential.
1. Put a stake in the challenge’s success (ESO)
The most straightforward option is to give them a stake in the company. Regardless of the circumstances, this is the reason the founding team is so eager to succeed.
If your project is interesting and has the potential to grow, talented individuals may be willing to work for a lower fixed wage for a set period if they know they’ll be a part of the company’s success.
For them, this might be an opportunity to earn a significant sum of money in a short period that would not be possible through traditional firm career advancement.
This might be a win-win situation because experienced and well-motivated employees with extensive regional knowledge and a linked community could significantly impact the course of your project.
Giving your first employees a stake in the company is commonly done through an employee stock options plan (ESO) – name options offer employees the right, but not the obligation, to purchase shares in the company at a predetermined price. If the value of your company rises, the options could be exercised, and your employees could become shareholders.
It’s good to include a vesting timeline in the options plan to ensure that employees are committed for a set period before they can become shareholders.
2. Bonuses for efficiency
Suppose you are unable or unwilling to dilute your business further. In that case, you can compensate your employees with variable pay because you cannot provide high-enough fixed pay right away.
One simple way to do this is to include a clause in your employment contract that states that your employees are entitled to a yearly bonus if the company’s revenue reaches a certain level. You could make the bonuses tiered to make it more intriguing.
In fact, for this to work, it’s necessary to ensure that the bonus is substantial and that when combined with the mounted wage, it amounts to a total bigger than the chance value of working in a firm job.
3. Alternatives to Skilled Development
Last but not least, a startup challenge can provide a lot of personal and professional growth opportunities. Climbing to a significantly high position on a company ladder is challenging — the number of people who rise to a position where their opinions and decisions are respected and valuable to the group may be very small.
This isn’t the situation in a startup. As the company grows, the key employees frequently find themselves in managerial positions. While this may be challenging, particularly for those with no prior experience in such jobs, it also presents an opportunity for significant personal and professional growth.
As an entrepreneur, it’s important to provide these opportunities to employees. They’re personally valued, make a genuine impact, and are progressing with the company may keep them around even when times are tough monetarily.
To summarise, the best ways to attract and promote the most effective experts when you don’t have the funds to properly compensate them are:
- Pay attention to their goals and desires. What may be inspiring to one employee may not be motivating to another.
- Reward them monetarily by sharing the challenge’s upside.
- Assist them in their personal and professional development.