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What incentives can startups offer candidates that big businesses can't?

Justin Lowe Nov 15, 2018 9:00:00 AM

Once the initial people are in place at a startup -- usually the founders and perhaps someone in charge of product, research, sales, or technology -- one of the biggest talent challenges arises. Now you need people. Employees. And if you want to scale to the level of competing with “big boy” players or getting acquired, you need top-quality employees.

Why is this a problem?

Well, there are two main reasons:

  1. You might not be able to offer the same type of salary as they can.
  2. Those “big boy” competitors are going after the same talented people. 

Problem A can be somewhat addressed by venture capital or investment, or by managing your initial stage books with a greater focus towards high-quality talent.

Problem B is a bit harder to solve, though.

How can startups get the people they need vs. established companies?

Let’s break this down into a few logical ways:

Options/Equity: This is the most common option for attracting top talent. It’s controversial in one sense: offering someone equity is a bit like offering them a lottery ticket. If the company hits it big, it’s worth a lot. If the company doesn’t grow or attract money/attention, the equity is worth next to nothing. People need to live in the now and would often have an extra $25,000 or so in base salary, which startups cannot always provide. But, there’s a flip side to this equation. Startups need people comfortable with the general notion of risk and risk-taking. If they’re willing to go in for equity, that implies a degree of comfort with risk. That’s an advantage for startups in terms of attracting the sometimes unique type of talent they need.

Pro-Tip: Check out our free hiring for growth ebook written specifically for startups

Better work-life balance: Big firms/companies notoriously don’t have great work-life balance. The Onion has even gotten into this game while parodying AmazonIf you’ve ever worked for a big company, you know that 9 pm nights can become more normative than you want. A startup is different. Now, look -- there’s still a lot of work. There might even be more work, because fewer people are juggling more roles. But there’s often an ethos of “work when you can” or “take care of your stuff,” because a more corporate ethos hasn’t set in yet. Startups will often recognize that someone might be more productive at midnight or 6 am, and if they want to be at a movie at 2 pm, so be it. The work getting done productively matters more than what time it's actually happening. In large enterprises, on the other hand, oftentimes it's more about control.

Ability to work on something cool, new, or disruptive: Startups emerge to fix something wrong with the market -- something inefficient or a product/category that isn’t helping people. When you work for a startup, you have a chance to get in on the ground floor with something that might matter, whereas large enterprise you might get thrown into lots of task work. Startup life often comes more direct access to the end product/service. In a larger company, dozens to hundreds of people might be working on different aspects of the core product. In a startup, you may be 1 of 2-3 who can weigh in and make changes.

You know the owners/founders directly: If there’s less than 10-15 employees in a startup context, you usually operate on a first-name basis with the actual stakeholders. That’s very important in getting stuff done. When you have a great idea, it's easier to walk in an open door than schedule complicated meetings months in advance just to get in front of your CEO.  It gets far harder to maintain the same level of access once you grow over 50-100 employees.

Read More: Why should people work for you instead of one of the big mega companies?

Shared meals/open office: Many startups are organized in this way contextually, or operate out of a co-working space where there’s food, alcohol, alcoves to collaborate in, and a bigger sense of “community” and “connection” than, say, rows of cubicles. Some startups pride themselves in their unorthodox work-spaces and boast pool tables, video game centers, sleep pods, massage chairs, and more "fun" features to keep their employees engaged and happy throughout the day. 

An Important Distinction

When it comes to startups and big businesses, neither approach to work is necessarily better than the other. What they offer and how they offer it can be widely varied, however. It comes down to a personal decision from a prospective employee about what sort of person they are, what stage of their career and life they're in, and what their working style is. It's also not generation specific, with all Millennials craving the startup life. We’ve seen people in the middle of their careers decide startups would be a better fit for them, and people right out of school who only want the stability of a large enterprise. It completely varies by person and how  they prefer to work. The trick is more about how startups can sell their value proposition to future employees when they might not have the fiscal resources to directly compete on salary. Being small doesn't mean hiring whoever you can get. Spend some time taking stock of what unique benefits your startup can offer someone and use that to attract the right employees. 

Have you seen any other unique ways startups attract powerful workforces? Let us know by leaving a comment below.

Topics: Startup Development, Hiring Strategies

Justin Lowe

Written by Justin Lowe

Director of Marketing and Sales