Why keeping your top talent is so important in a start-up

Keeping top talent and employee retention is important in every context and company, yet it is often overlooked in lieu of so many other things.

Your employees are the reason your business keeps on running. They’re also your word of mouth marketeers, number one sales people, and the whole culture of your company. If you’re not convinced about the value required to keep them happy and working for you, we’re going to break down the flow on effect in a not so subtle attempt to convince you, especially looking at the impact and importance for start-ups.

Cost reduction

We don’t like to think of employees in terms of profit and dollar signs, but it is also a lot more cost effective to keep your existing employees than it is to continuously look for new ones. Factoring in recruitment fees, job posting and advertising, time spent looking at applicants, interviewing them and training them- all these factors are taking budget and time away from your core mission - which at a start-up is so much more meaningful than for a large corporation. Average recruitment fees in the UK are about 20-30% of the employees salary, and average job posting and advertising costs are around 200-300 pounds. If you’re having to spend these amounts every couple of months because you can’t keep your staff, then that becomes a very expensive turnover rate to control and balance against profits or investor money.

These costs and the time can increase ten fold if you’re also looking for a niche role or someone with specific qualifications (if you’re a tech or science start-up, this is even more applicable for you.) This also doesn’t factor in the time and money it costs to train new employees and get them up to grips with the ins and outs of the company.

IP retention

With any business, your team retains a lot more knowledge than you probably realise. We’re not strictly talking about your business IP either (though for a technology or science based start-up this is definitely a truism as CTO’s and CSO’s are integral to your functioning as a business). Every person retains a certain level of IP attributed to their role and the processes in place to get business activities from A-B, for every person you lose your IP gets more diluted - and in a worst case scenario gets lost. Even a well documented process and information storing system can still have holes.

Morale Improvement

As we touched on earlier, employees ultimately make up the culture of a business. Although the boundaries of culture are set from the top, the maintaining and creation of culture comes from the team. Having consistency in the faces people see every day results in bonds, friendships and a comfortable work environment. You’d much rather see new talent entering your business because you’re growing, rather than employees seeing their fellow colleagues leave and be replaced with new faces - simply because they were unhappy with the culture and business. Of course regardless of how well you do with employee retention, people will naturally leave anyway, but managing it so it’s not a mass exodus and that they’re leaving on good terms for a new adventure, rather than because they’re not content with their situation is a big difference. Having a level of consistency with the team you create does wonders for the overall morale and team building experience.

Experienced Employees

Having your team grow with the company means they maintain levels of experience with your product and business that no new team member can rival. Fresh perspectives are of course also a good thing, but again wouldn’t it be better if they came to you for growth reasons? Keeping and maintaining your key employees means keeping their knowledge and experience working with you, their colleagues, your clients and your business overall. A high turnover results in lost institutional knowledge, skills and relationships - with both customers and fellow employees. With every employee lost the company loses the potential value that employee could have delivered, which is considered opportunity cost. They know how to do their job with confidence which adds a level of professionalism to the company that start-ups absolutely need as they tackle the daily challenges they’re constantly facing. Organisations that prioritise retaining their more senior team members see significant returns as these employees are more equipped to solve complex issues on their own and don’t need as much management.

Increased productivity

Productivity is the immediate loss with high employee turnover. On average it takes a new employee approximately one to two years to reach the productivity of an existing employee - factoring in the learning, autonomy and relationship building elements together. The latter of this can be one of the most underestimated elements, having built rapport with suppliers, customers and co-workers makes the running of projects and every day activities of a business not only more enjoyable, but also more efficient.

Better customer experience

There’s nothing worse as a customer than dealing with a company where your key point of contact is constantly changing. It not only reflects poorly on the organisation as a whole, but it also creates a disconnect as the customer will most likely need to get new people up to scratch, no matter how great a handover will be. There’s also an element of trust when you slowly build up a strong customer relationship with someone, they can typically get new ideas and directions across the line faster and easier, as there is more to the relationship after time has passed.

Having this consistency for suppliers and customers alike is so important when you’re building a customer base from scratch - which most start-up’s are doing.

So, now that we’ve convinced you why it’s necessary to keep your top talent, you’re probably thinking “okay, so how do i keep them?”

The fact is there are many ways to keep employees motivated and retained with some of the top being;

Pay them fairly

This should be a given, but making sure you do your research on market rates and understand what your competitors are paying. If they can jump ship and get a 20% raise then you’re really doing something wrong. It's very easy to say you pay competitive salaries but actually doing so and benchmarking what you think is competitive against the market is key.

Accurate Job descriptions

It’s often that in start-ups job descriptions can explain a particular role in the company, which may be the core job of the role for sure, but let's be realistic, start ups require a little more flexibility than that. Being honest about workload, flexibility and the tasks that everyone has to chip in to get across the line is only going to help you find a candidate that is looking for that diversity and learning experience in the role. Make sure you talk as much about the company and the job itself in the interview as you ask them about their past and experience. It needs to be a two way street and you both need to be happy with the decision at the end of the day.

Give them flexibility and autonomy

No one likes a clockwatcher, and time based work benchmarking is also not the best measure of productivity anyway. Giving your team the flexibility to go to doctors appointments, sneak away early if family is town or have the odd long lunch with their colleagues is only going to result in them being more motivated when they are working. Success should always be measured on output, and we’re all adults. Trust your staff to know what they need to do to get their job done and give them the ability to plan and manage their days accordingly - which includes letting them have a life outside of work.

Have career planning and development opportunities in place

One of the main reasons people leave a company is because they feel they’ve got all they can from the role. A key to mitigating this is to create a framework for them to see how their career can progress, and also what they can do to ensure it does - giving employees a tangible goal to work towards. The other side of this is also allowing them development opportunities from courses, seminars, conferences etc - this can be on a big or small scale and either directly applicable to what you do as a business or more general learning for interest's sake/ to broaden their skills in a different way.

Cultivate and set time aside for culture and team building

Make sure you, as a founder, are allowing time in the work calendar to build the team morale and environment. From monthly company events - to long Friday lunches these elements can start small. There are so many ways to foster team building and a great company culture but the framework and parameters do need to come from the top down - so make sure this is something that sits relatively high on your priority list.

Equity plans

You knew it was coming, but the fact is Equity packages and plans are the number one way to keep your employees engaged, motivated and working for your overall mission.

If you’re still not convinced on this you can check out our article here, that breaks down why exactly start-ups should give away equity. Basically having an Equity scheme set up will help them understand how their efforts directly impact not only the company, but also their stake in it.

Do you have any other ideas about how to keep teams happy? Or want to chat about Equity stuff some more? Then get in touch as we would love to hear from you!