I like to preach that Silicon Valley no longer has a monopoly on tech innovation. Startup ecosystems around the world have emerged and have produced many game-changing innovations over the past couple decades.
Yet in one area several of these communities (not all, but many) remain in the dark ages relative to North America: employee incentives management.
Readers of my blog know that one of my recurring gripes is the regulatory difficulty in granting equity to stakeholders of French startups. France, however, is not uniquely guilty. The government in the Netherlands, for example, has made granting stock options in startups so fiscally unappealing that the instrument is useless.
Between bouts of complaining though, I had also promised to expand on some of the lessons I’ve learned over the years on establishing non-monetary incentives in venture-backed startups across Europe. Many of these lessons could be applicable to innovators in any geography.
A personal story
First, a detour into a personal anecdote. When I first graduated from university with a degree in Electrical Engineering, like most clueless 22 year-olds I didn’t know which career to pursue. I just knew that I didn’t want to become an electrical engineer for a living. This was in the 90s, a period in which the default career step for new grads who didn’t know what to do was… consulting.
Despite not really understanding what management consultants actually did, I miraculously received a handful of job offers from the main firms and decided to join one which seemed like the best fit for me. No offense to this firm, which is world-class, but within three months of my first job out of college I realized that I was not the best fit for consulting.
I began spending spare weekends (spare evenings were non-existent) with a former classmate brainstorming on new business ideas. The positive energy from these sessions drew a stark contrast with my day job. I almost resigned in anticipation, but then my employer pulled a jedi mind trick on me which completely shifted my momentum:
They gave me a prize.
The partners of our firm’s office presented me with an award of recognition for my purportedly extraordinary efforts on a client engagement. It was a glass trophy, with no monetary award attached, but a plaque inscribed with my name and the words, “extraordinary achiever” or something like that.
And you know what, it worked. This glass trophy (which probably cost a mere dollar to manufacture in China) re-energized my motivation and loyalty to my firm for another year. Crucially, I was presented this award during a quarterly all-hands meeting, on a stage to the applause of the entire office. This event motivated me more than any bonus or raise ever could have. Even when I try to look back on the occasion with detached hindsight to laugh, I can still sense some of the residual pride I had felt that day.
With this demonstration of human psychology as a backdrop, and in the spirit of spurring creativity among all company-builders reading this, here are a handful of ideas to attract, motivate, and retain your employees on a startup budget.
12 cost-effective ideas to motivate your team:
- Give awards. Recognize performance in a manner visible to the whole company. Prizes could take the form of inexpensive trophies, French Open or Stade de France tickets, Michelin restaurant vouchers, etc.
- Hold internal competitions. For example, create an 8-week internal hackathon comprised of cross-functional teams (1 salesperson, 1 developer, 1 designer) to produce a viable new revenue line for your company. Teams present their creation in front of the company at the end of the period. Allocate one hour every Friday morning on company time for teams to collaborate. Pride and ego will probably encourage teams to work on their project outside of company time. The winning team receives a prize, but the real winner will be your startup.
- Invite a star performer to join a board meeting on occasion (for those whom would enjoy this and not feel intimidated by it).
- Grant extreme flexibility in work arrangements: let employees work the hours they wish, from the location they wish, and measure them solely on deliverables, not “office time”.
- Create a warm and fuzzy office environment where employees enjoy spending time. Let employees decorate their own desk, provide free monthly catering from a company like GoCater (in France & Germany) or an original private chef experience with La Belle Assiette (I’ll even give you a 40€ voucher if you’re in Belgium, France, Germany, or the UK). Or consider relocating your office to a place like Station F. I recently visited one office that put a barbershop in a side room with a barber on-demand which I thought was really cool.
- Invite a visiting speaker once a semester, such as a Silicon Valley type on vacation, or a developer to talk about the latest techniques in Rails, or anyone that might be of interest to the staff.
- Be creative in granting job titles. Job titles cost the company virtually nothing yet can deliver immeasurable perceptual value to the employee.
- Give employees the latest iPhone. As with job titles, there’s an arbitrage opportunity here between the perceived value vs. cost of free smartphones.
- Hold periodic company retreats to brainstorm on strategy in a remote environment like a wine-tasting outing, a farmhouse, a kayaking trip, etc. The key is that everyone be invited to contribute to the discussion. You can abandon company hierarchy for a day.
- Empower your employees. Give them some autonomy and the ability to fail without repercussions. To the extent possible, allow them to control their own budgets up to a certain limit.
- Communicate as openly as you can about the opportunities and challenges facing your business. Twitter and Medium founder Evan Williams is frequently praised by his employees who remain fervently loyal to him. Keeping employees in the dark is a recipe for underperformance.
- Make your employees feel that they’re a part of something big. Treat your employees like fonctionnaires if you want to run your startup like a government agency and go nowhere.