Employee turnover plagues businesses of all sizes. For startups, it’s particularly costly. Employees are a startup’s biggest asset and losing an employee (voluntarily or not) can jeopardize the entire business. In fact, one of the reasons startups fail in their first year is due to high turnover. With only a few employees, startups can’t afford the loss of productivity or the time and resources to find a replacement.
For startups, keeping employees long-term have many benefits. Retaining high-performing employees can be a competitive advantage. As the company builds value, it’s important to have employees with intimate knowledge of the business to help lead the growth.
While startups offer challenges and opportunities for growth, working at a startup can get frustrating due to lack of funds and a small staff. People leave startups for a variety of reasons, many of which are avoidable:
- Feeling unappreciated/No recognition for efforts
- Burnout/Lack of work/life balance
- Individual differences
- No faith in startup’s long-term success
- Disagreement with management on company trajectory
- More lucrative offer
Sometimes, employees leave involuntarily. the startup itself finds the employee is not a good fit and fires them. Reasons you may need to fire an employee:
- Not a fit for workplace culture
- Poor job performance
- Disrupting team dynamics
- Ethical issues
If they don’t fit the workplace culture and aren’t pulling their weight, it may be time to let them go.
When striving to decrease turnover in your new business, try not only the standard methods out there but try out some creative ones, too.
Make great hiring decisions
Hiring is critical for any organization but is particularly important in a small business where each individual has a strong impact on the future of the company. Startups are not for everyone: Rapid change, minimal supervision, multitasking, plenty of challenges to overcome… but when you find the right people, they thrive.
Fine tune your hiring process
The best way to prevent employee turnover is to hire the right people. Startups are not for everyone. You want employees who will thrive in a high-growth environment. A thorough hiring process can aid in finding candidates who are less likely to leave. Some things you can do to ensure you find the right employees:
- Define the profile of a successful candidate and adjust your recruitment strategy to match.
- Share the startup’s long-term vision with them.
- Show candidates around the office during interviews and describe the workplace culture.
- Ask behavioral interview questions to see how the candidates react in certain situations
- Invite candidates to work on a mock project with several team members to see how their skills and personality fit.
- Engage employees in hiring decisions by having them meet with candidates and provide input.
- Test a candidate’s skills and knowledge by asking them to complete a quick assignment related to the job.
Implement an Onboarding Program
Almost 20% of employee turnover occurs in the first 45 days. An onboarding program can help provide clarity and set expectations for newly-hired employees. Giving new employees opportunities and guidance during the first few weeks makes the transition much smoother and improves the chances they will perform well and be a productive member of the team.
- Make employees feel welcome by holding regular events to introduce them to the rest of the team.
- Provide guidance on what they should be concentrating on doing during their first day, first week, first month, etc.
- Schedule weekly check-ins with new employees to check progress and answer any questions.
- Collect feedback on onboarding and adjust accordingly to ensure the program’s value.
- Produce an employee handbook with policies and procedures
Develop an Effective Employee Screening Policy
An employee screening policy can protect your business and reduce risk by ensuring you are hiring the right people. Your screening policy should include:
- Background checks
- Criminal history
- Social Security
- Credit history
- Employment history
- Driving records
- Drug testing
- Reference check
Let go of employees who appear to be a bad fit
Regardless of how effective an employee may be, if they are bad for morale then they are bad for the company. Startups rely on everyone working together as a team to build success. If an employee is a hindrance, remove them from the company.
Involve employees in decisions
Including employees in decisions affecting their jobs and the overall direction of the company helps keep employees engaged and motivated. Encourage employees to speak up, identify obstacles to the company’s growth, and otherwise provide an honest critique of the business.
- Have employees join in on interviews and offer their opinion on which candidates they think are a good fit.
- Allow employees to provide input on company vision, mission, values, and
- Ask employees to submit ideas on improving workflow and execution.
- Provide a communication platform to capture feedback.
- Act on suggestions and implement any relevant changes.
Create a campaign that gives back
Who doesn’t want to work for a company that gives back to the world? People want to feel like they are part of something greater. There are a number of companies out there that practice this. One example is FACT Goods who sell cancer awareness hats. If your business does a little here and there to provide support to charities or for medical research and awareness, then your employees will feel like they’re making a difference.
Teach, teach, teach
If employees are learning, they remain engaged and want to learn more. Feed your employees’ hunger to learn by helping them develop new skills and position them for new career opportunities within the company. Investing in training and development reinforces an employee’s value to the company, leading to improved job performance and increased productivity.
- Identify specific employee growth objectives.
- Implement an online learning system for internal training.
- Offer stipends or tuition reimbursement for business-related training and courses.
- Allow employees to attend industry meetings and conferences.
- Design a leadership development program to enable employees to expand their responsibilities and create a path towards promotion.
- Develop a mentorship program.
Work in an open office
An open office layout is a workspace without enclosed rooms or spaces. Open office layouts are increasingly popular as startups look to boost productivity, strengthen team synergy, improve workflow and increase collaboration. In fact, a recent study by the International Facility Management Association reported 70% of offices had an open office layout. Younger employees are particularly attracted to the open office concept. The new trend for open offices is to provide a hybrid design – open spaces, whiteboard walls, no offices, sit-or-stand desks, huddle areas and phone rooms. This design facilitates the exchange of ideas, encourages teamwork and inspires creativity.
Advantages of an open office layout include
- Opportunity for employees to interact with each other regularly and create tight relationships.
- Removal of hierarchal barriers.
- Improved communication between employees
- Reduction of costs related to construction, utilities, and office equipment.
- Capacity to expand as the company
- Increased productivity
- Flexibility in office design and workstations.
Employees produce better results when given the autonomy to work within the time and environment in which they’re most productive. In a study by the Boston College Center for Work and Family, 65% of managers and 87% of employees said working a flexible arrangement had a positive or very positive impact on quality of work. In addition, 76% of managers and 80% of employees indicated flexible work arrangements have positive effects on retention. Employees will likely appreciate the flexibility and be less inclined to leave a work/life arrangement benefiting their needs. Flexibility appeals most to the younger generation workforce – millennials.
Opportunities to offer employees a schedule to fit their individual lifestyles include:
- Institute “Work from home Fridays”.
- Enable employees to work remotely from a location of their choice
- Allow employees to adjust their work hours
Offer recess time
Recess is not just for schools, companies can use it to inject some fun into the business day. Set aside a time each week for events and activities that have nothing to do with work. Creating social interactions is a great way to relieve stress and let employees have a break from regular job tasks. The recess time will also elevate your company culture and build a sense of community.
- Schedule once a week for about 30 minutes
- Offer fun snacks including an ice cream sundae bar, coffee station, a popcorn machine, a food truck or a potluck lunch.
- Incorporate play and humor by offering fun activities such as a baking contest, games (trivia, video games), karaoke machine, offsite outing (bowling, sporting event, city scavenger hunt).
- Ask different employees to plan the events.
Create friendly competition
Turning everyday employee tasks into a friendly competition can boost morale and motivate employees. Encouraging positive competition can also help your startup’s bottom-line. Any competition among your employees should be built to achieve specific results. Competitions can be individually-based or team-based.
- Communicate what’s driving the need for this competition, anticipated results, and the timeline. Explain why everyone should participate.
- Tout the prizes and rewards. The prize can be something as simple as an afternoon off or a gift certificate to a restaurant or coffee shop.
- Identify a business issue needing to be addressed – it could be to reduce expenses, increase a certain type of sale, improve productivity. One example could be to have a competition to see which employee made the most sales calls. Or a department could be recognized for cutting the most costs.
- Announce partial results at a mid-point. Hold a big event to report final results and recognize the winners.
Hiring the right people is very important for startups. One wrong hire can set you back months or even prevent your business from succeeding. To retain employees, startups need to implement effective strategies to keep employees motivated and engaged.
Last modified: August 23, 2018