While firms spend a lot of money on recruitment, putting a little more effort into retention might pay off big time.
Inside a company, particularly one that is rapidly growing, life is fundamentally chaotic. For many, it might seem like a race against the clock on a track with constantly changing terrain.
Human resource managers face particularly difficult obstacles. Budgets are tight, yet the demands are enormous. You’re always under pressure to help the firm become more professional, implement new benefits, build a pay system, and develop incentive schemes, employee engagement programs, and diversity initiatives. All of these requirements, however, pale in comparison to your top three priorities: hire, hire, hire.
Consider the following scenario. Those fantastic workers you just hired get restless, begin seeking for new possibilities, and eventually quit. You may have had them for two years, one year, or even less. Suddenly, your two-year goal of increasing the workforce from 100 to 200 workers implies you’ll need to recruit 150 additional individuals, not 100. Congratulations, your work just became a lot more difficult.
A venture capitalist mentors and guides companies at various phases of their development to help them reach their full potential.
One-fourth of workers at startups, including a handful of “unicorns,” or private firms valued at $1 billion or more, depart each year. According to LinkedIn, that turnover rate (25%) is almost twice the total industry attrition rate (13%). It equates to a two-year average duration for employees. To make things worse, turnover is highest in fields like as engineering and sales, where talent is scarce, particularly in innovation hotspots such as the Bay Area and New York.
Start-ups are hit hard by attrition.
The cost of turnover is estimated to be six to nine times the employee’s monthly wage when they leave a firm. According to research by the Centre for American Progress, the numbers are roughly:
• 213 percent for senior and elite executives
• 20% for middle management, and 10% for upper management
• 16 percent for junior-level jobs.
The following are some of the expenses that companies must bear as a result of attrition:
1. Replacement costs – it takes about ninety-four days to fill a vacant position for highly qualified workers.
2. Hiring costs
3. The cost of incomplete and delayed jobs
4. Training costs
5. Separation costs
6. Team-building costs
7. Engagement/motivational costs
A company might take use of a Venture Capitalists’ resources, such as its network of contacts, industry experience, and marketing methods.
The actual reasons why companies have a hard time retaining personnel. Some of the causes for significant personnel turnover in start-ups are self-evident:
• Start-ups have a smaller budget than larger corporations. This makes it more difficult for businesses to compete on compensation and recruit top personnel, and employees may leave if a better offer comes along.
• With less funds, perks and benefits packages are less appealing. They may not have on-site amenities such gyms or cafeterias as “older” organizations, or they may not be able to give equipment to remote employees.
• Full-time employees in the early phases of a new firm may be required to work longer hours than in an established company, decreasing their capacity to maintain a work-life balance.
• With less resources, start-ups may not be able to buy the finest or most up-to-date equipment to assist workers in their work. Even anything as simple as a unified communications platform might be included.
• Many start-ups hire remote employees from all around the world. These individuals often use unique communication devices that do not communicate effectively with those of others. This might lead to muddled talks, which could quickly grow into significant problems.
• Given the high failure rates of start-ups, many employees may be concerned about their job security. It is only reasonable that people look for a safer position if they are scared that the firm may collapse.
Naturally, each startup is unique. There are likely to be more reasons for team members to quit, but these are the most important to examine for your particular firm.
So, as a startup founder, CEO, or CXO, what can you do to reduce attrition rates in your company? Here are some helpful hints:
During the employment process, set realistic expectations.
Ambiguity is harmful, as it may quickly disengage employees from their jobs. It should be avoided at all costs by new businesses. First and foremost, ensuring that the new employee knows exactly what to anticipate from the business and what is required of them. It might range from giving them an overview of the corporate culture to discussing job and performance goals. The important conclusion is that you should not keep your new staff in the dark or expect them to figure things out on their own.
Working on good HR practices from the start might help you get off to a good start. Chumbak, situated in Bangalore, for example, has a specialized staff of professionals that analyze resumes to determine applicants’ cultural bend of mind in order to match individuals with the proper mental fit. Other start-ups, meanwhile, provide thorough training for new workers to help them adjust to the corporate culture. Software Advice, located in the United States, offers “a day in the life” events for new hires to understand how things function firsthand.
Lenskart, Udaan, Mamaearth, Zomato, Swiggy, Meesho, PharmEasy, Cred, RazorPay, Byju’s, HealthifyMe, Unacademy, and others are among the biggest Venture Capitalists deals.
Encourage a feeling of belonging (especially for remote workers)
While you may have critical assignments to finish in a short amount of time, a frustrated employee is the result of all work and no pleasure. Bring a feeling of belonging and togetherness to your workplace by including fun and camaraderie.
If feasible, schedule team-building activities outside of business hours or set aside an afternoon for an activity. If individuals are unwilling to undertake anything in their spare time, consider leveraging your messaging and communications platform to gamify certain parts of their employment.
This isn’t just about having a good time. It’s about making workers, regardless of their position or experience, feel heard and respected. To a new employee, startups and small businesses may easily seem like cliques, so make an extra effort to be warm and inclusive.
Don’t put off hiring a People Officer for too long.
A People Officer (PO) or Human Resources (HR) is someone who assists in the creation of the ideal atmosphere for employers to be motivated and offer their best, as well as assuring compliance. While most start-ups do not hesitate in choosing the CEO and CFO, they make due with a junior team for their HR needs or attempt to handle it without employing an expert.
The authors of the book Talent Wins recommend employing a Chief People Officer or Chief Human Resource Officer as soon as possible. Reason: While the other two jobs are in charge of financial resources, the CPO is in charge of human capital and, like the other two, must have a key leadership position. The significance of talent acquisition, engagement, and retention has surpassed that of developing business strategy.
It is reasonable to state that the Indian venture capital ecosystem has progressed significantly.
Add some steadiness to the dynamic nature.
Employees typically face difficulties at start-ups due to their dynamic character. There might be a general sensation of insecurity. It might exhaust workers and put a strain on their emotional quotient. To maintain their morale and confidence, it is necessary to weave in aspects of stability. Investing in mental health services is one possible solution. HR should examine attrition rates by department and resolve issues. To boost confidence, consider offering Employee Stock Ownership Plans (ESOPs).
Provide opportunities for study and progress
It’s improbable that any of your workers desire to stay in the same job for the rest of their lives. When it may be tough to grant promotions while your firm is still in its early stages, you can readily provide learning opportunities.
Providing learning opportunities does not have to break the bank. Look into appropriate online learning courses that can help your employees (and you). Inquire with equipment vendors about any online webinar training they give (which is sometimes free). Share an intriguing (and relevant) resource or audio with your team, such as a TED lecture.
Venture capitalists, in my opinion, are crucial because they play a significant role in the growth of small firms and assist entrepreneurs turn their ideas into viable initiatives.
Make employee work-life balance a priority.
Various parts of work have altered as a result of the epidemic. Working from home is becoming more popular. It may also take many varied and creative shapes. One of them is hybrid work. Another example is asynchronous communication. Many start-ups throughout the globe are also providing 4-day weeks. Edify in California, for example, or 3D Issue in Ireland. ProofHub India or RadixWeb India, for example. Alternatively, Bangalore-based FinTech firm Slice offers candidates a three-day workweek in exchange for an 80 percent lower remuneration than the market rate. It benefits them as well as their new staff.
Be open and accepting of your vulnerabilities.
Focus on creating a clear work environment. There’s no shame in informing or alerting your staff about organizational weaknesses. Because start-ups are on a learning curve, it’s a good idea to bring your staff along and keep them informed of the highs and lows. It promotes a sense of belonging, oneness, and solidarity among workers and management.
Angel investors and established venture capital companies provide the majority of Series A investment.
Encourage prizes and recognition.
Not just for start-ups, but also for corporations, complimenting and thanking workers is critical. You must create a workplace culture that actively acknowledges workers. It enhances the link between you and your staff, making them more engaged at work. It increases your workers’ pleasure and emotional quotient by making them feel more appreciated. LetsBuzz, a social recognition platform, encourages a culture of gratitude by promoting peer-to-peer social acknowledgment.
Make retaining your employees a high priority for your business.
High personnel turnover rates are likely more crucial for startups than for established firms. All expenses, from wage limitations to how much you spend on technology, including any communications platform, must be closely monitored.