The Price of Glory
Working as an HR Business Partner to a number of Israeli tech start-ups in the US is always thrilling, fast-paced, and often riddled with difficult decisions. The same questions and dilemmas are shared by most companies when opening an office, and as I consider myself an integral part of the team here, I bring the accumulated knowledge base to the management team - whether they are in Israel or operating a relocation.
Although people are key to our business, as a start-up, we need to operate on a lean budget. Legally, we don’t have to give our US employees vacation days in the State of NY, and are not obligated to provide them with health benefits. However, we are competing with a large number of companies in every field for our top talent. Despite the obvious thrill of working at a start-up, these people won’t agree to come on board, and definitely won’t stay if they feel that the deal is not equitable – even with the promise of stock options and a great exit down the line.
There are, actually, lots of well-funded, already marketable start-ups that will give them that promise, together with a really compelling package. It’s a free market, with at-will employment, and qualified employees are always going to get exposed to offers and outside solicitation. If the gap between what they can get somewhere else and what they accepted with us is too large, they will leave and that turnover is going to cost the company a lot of money. I always tell the co-founders to be soft on negotiation skills when dealing with prospective employees.
You don’t want them walking out of the deal – or even worse, take the deal for lack of choice feeling that they could have done much better. To recover their dignity at having been weak negotiators, and to re-establish a certain sense of equity, they will either lower their productivity or look for another job right from their desk. They will share their feelings of discontentment with their network and make recruiting for the company a lot harder in the future, since we want to use employee referrals as a major sourcing tool. Not mentioning the morale issues and the overall spirit at the office becoming so charged with negative particles that you could plug you new iPhone 6 through the electrical current.
Avoiding this gloom scenario does not mean raising another round of capital or taking a bridge loan. In my experience, that means working with the right partners and/or suppliers, like Trinet as a PEO, so to utilize the resources of a much larger organization to obtain extensive, market-competitive benefits and perks. It also means thinking out of the box and creating a unique, compelling company culture.
After all, we only hire people who “get” us and understand the rewards – and pain – of working at a start-up. Most of these talented people are not coin-operated and will look for intrinsic rewards but still…glory comes at a price.