During the dot com era, everyone involved in a startup company was
after stock options as employee incentives …with good reason. With the
easy accessibility to venture capital, the public’s ravenous appetite
for IPOs, and the opportunity to go from startup to exit in a year or
two, stock options became the way to cash in on the gold rush.
However,
times have obviously changed. Post-bubble, there are fewer IPOs,
capital of all kinds is harder to come by, and the time from startup to
exit has been returned to a more traditional pace. Therefore, if stock
options aren’t what they used to be, how do you provide incentive for
employees to burn the midnight oil and put in the extra effort that it
undoubtedly takes to achieve success? There are ways to do it. While
the promise of financial riches has value, there’s a variety of
appealing alternative employee incentives that have more do with a
quality of life that comes with working in an entrepreneurial business
startup.
Create unique employee benefits
Make
the notion of working for your startup business better than working at
any alternative by offering other employee incentives, such as health
care packages with broad coverage, a company car or even a membership
to the local health club. These subtle benefits, while not directly
monetary, have a big impact on the depth of commitment and appreciation
expressed by employees.
Promote a team environment
Perhaps
the least obvious, but most powerful, employee incentive and benefit
you can offer to your team is to create an environment where the group
is strong. We’re talking about a true team, comprised of individuals
who are each critically important to each other and to the overall
success of the company. When people know they’re important, they’re
more dedicated and take pride in the overall success of the business. A
clever way to build teamwork is to organize a day trip or a friendly
contest among employees. The contest could have to do with sales
achievements, customer satisfaction achievements, product development,
or even a competition that has nothing to do with your business. Go
play volleyball!
Be sensitive to varying employee incentives
Remember
to be sensitive to the fact that the team will not be treated equally
with many employee incentives. For example, some employees may receive
a higher level of equity, and while this is completely justified, it
should not be highlighted by the company or by the employees. Each
employee’s package should be tailored to the individual based on level
of importance of the position, the tenure at the company and the
performance of the employee. However, at no time should the individual
packages and employee incentives become “public” information to the
rest of the team.
Leave room to grow employee incentives
Make
sure you always leave room to continue to give employee incentives to
particular individuals as their time at the company grows. For example,
if you provide annual raises as an incentive, don’t price the employees
out their jobs by raising their salaries so aggressively that there is
no room for growth.
Offer financial rewards
There
is no denying that the opportunity for a financial windfall is a
powerful employee incentive. Even with the changing business
environment, stock options, direct equity ownership, profit sharing
plans, and/or bonus employee incentives should be part of the incentive
package you provide to your team to keep them motivated and dedicated.
Providing
employee incentives and benefits to the team is a must for
entrepreneurial businesses. Many times it’s hard for the small business
to match the salaries that can be offered by big businesses for a
similar position. So it’s essential to find other ways to attract and
retain employees, and most important, keep them motivated and
dedicated. You’ve got to achieve that through the extras – the employee
benefits that the team member can get through the unique offerings that
a small business can provide, particularly the unique lifestyle advantages of the entrepreneurial culture. So put a little Sis! Boom! Bah! in your new business. And remember – give your team an “I” for employee incentives.
