PrincePerelson & Associates

5 Reasons Why Startups Struggle to Retain Top Talent

For better or for worse, startups have a reputation. Founded on brilliant, new ideas and fueled by entrepreneurial passion, these companies can be an employee’s ticket to working for the top company in their industry. Or, it could be a short-lived venture that barely registers on their resume and leaves them hunting for employment once more.

For those lucky enough to take a position with one of the successful startups, working for a startup often includes a degree of uncertainty and change as the company grows and employee roles and responsibilities are in flux. Long hours and a heavy workload can be par for the course. And a price many are willing to pay to solidify their position in a great up-and-coming company.

These ambitious, hard-working employees are potentially the greatest resource a startup has. Retaining them through the challenging growing stages of a startup can be an essential contributor to the business’s overall success. Let’s examine why employees jump ship on a startup in favor of other opportunities.

1. Poor Management

Employees perform best with a combination of autonomy and support. Well-intentioned managers overseeing everything on their watch can quickly stifle opinions and innovation through micromanagement. Likewise, employees with uninvolved managers may need more tools and support to keep tasks on track. Without it, productivity suffers.

Managers should stay apprised of progress and be available to employees while giving them space to develop their problem-solving and decision-making abilities. This approach will not only keep employees engaged and happy in their work, but it will help them develop their skills. In time, they will become a greater asset to the company.

2. Resistance to Advancement

Like the entrepreneurs they work for, many individuals choosing to work for a startup have a desire to be at the forefront of their area of expertise. A startup that chooses to use antiquated technology or business practices may not be appealing to these early adopters. Employees frustrated with the slow advancement may be tempted to take a position where they have opportunities to use cutting-edge protocols or software. Startups would be wise to keep up with industry trends at the very least. Offering employees exciting new opportunities can help ensure retention in the future.

This principle holds true for employee packages and expectations as well. If competitors are offering work-from-home flexibility or family-friendly work hours, these are options to explore. Your company’s benefits will be compared to those of similar companies. Do your homework so your employees won’t think to go elsewhere.

3. Long Hours

As the company grows, the workload will inevitably increase. While you may not want to hire another full-time employee when you only have enough work to justify someone part-time, adding the work to the plates of your current employees may be more than they can handle. Piling the work on is risky. Employees may not complain at first, but they are sure to burn out if it carries on. Consider hiring temporary employees or contractors can help take the load of your key employees and bridge the gap until you have enough work to justify another full-time team member.

4. Poor Communication

Communication is a two-way street. Managers who communicate less than they should leave employees in the dark. The lack of information can leave them feeling directionless and isolated. Employee engagement largely hinges on an employee’s belief that their job is important and that the work they do is contributing to the achievement of company goals. Thus, communicating what those goals are and progress towards them is vital to keeping employees vested in the outcomes.

The flip side of the communication coin is all about how well managers listen to employees. Are they approachable? Do they listen to opinions and suggestions? Are they taken seriously? Two heads are always better than one, and managers who value every employee’s thought and contribution can draw on the best ideas gathered from many individuals. When these individuals feel heard and valued, they feel a part of the team and are more likely to stay.

5. Flawed Recruitment

Hiring and retaining top talent for a startup begins with recruitment. Are you recruiting the best people for your organization? You may hire brilliant people, but if they don’t fit the culture or don’t agree with the mission, you will likely lose them. Recruiting the right people requires more than vetting skills and verifying qualifications. It begins when you begin advertising open positions.

Start by setting clear expectations about the duties and responsibilities both for the employee and for the company. False advertising happens on both sides of the table. Be honest and open with those you interview about what they can expect and what you would like in return. Hiring an employee is a contract, one that should work well for both parties. When expectations are not met, one or both parties will end up wanting out sooner than anticipated.

Staffing for Startups

The overwhelming majority of startups fail many within the first year. Hiring stellar employees is a great way to hedge your bets against failure. The first few rocky years are challenging, and retaining your employees is vital to success. Begin by recruiting the right people to join you on the journey of growth and expansion. A Utah recruiting firm can help you attract top talent to get your venture off on the right foot.