How to Avoid Losing Talent to Startups
MAY 06, 2021
Back in the 1960s, when the Baby Boomers were embarking on their careers, everyone dreamed of getting hired by one of the iconic American corporations: Procter & Gamble, General Motors, Lever Brothers, just to name a few. But that all changed during the dot-com boom in the mid-1990s.
Startups — with stock options in lieu of high salaries and promises of get-rich IPOs — suddenly became the companies where young employees aspired to work. And in the midst of another tech boom nearly 20 years later, the number of talented employees looking to smaller, entrepreneurial companies as their employers of choice has only grown.
It's easy to point to the "coolness factor" of startups to explain the shift away from larger, more established companies: What's not to love about a casual work environment, a fully-stocked kitchen and free foosball? But coolness alone doesn't contribute to employee job satisfaction, nor does it ameliorate the scary statistic that 3 out of 4 startups flame out fairly quickly.
So, what explains the continuing trend away from big business employers?
The Corporate Innovation Clog
The true attraction of the startup environment is centered on organizational structure, team dynamics and growth opportunities.
As a career coach helping clients identify their next professional move, I recently realized what a cheerleader I've become for small to mid-sized companies. Why? The matrixed, traditional corporate model can be creatively stultifying, highly inflexible and woefully unconcerned about the people who worked there — all things I experienced during my time as a corporate HR manager, and all concerns regularly brought up my clients.
But it doesn't have to be this way. By emulating the attractive qualities of startups, corporations can compete for young talent. While compensation and benefits packages at established companies are typically more robust than at entrepreneurial businesses, countless studies document other, less quantifiable drivers of employee satisfaction.
Impactful Is the New Iconic
For one, today's employees want to feel that their contribution to the company has an impact. People are happy to work hard, but they want to experience close camaraderie with their colleagues and a personal stake in their projects. They also want to receive recognition in ways beyond raises and bonuses.
Amsale Aberra, writing in The Wall Street Journal, notes that in small businesses "precisely because resources are scarce, everyone needs to pitch in to help in many different areas. Large businesses tend to rely on many specialized teams and individuals often don't get to experience much variety in their responsibilities or to learn different things." Her comments emphasize why small companies are attractive, as well as why they can be great incubators for one's career: You may have one title, but your responsibilities are likely a variety pack, expanding your skill set, your relationships and your mind.
These traits don't have to be unique to small businesses. By focusing on the qualities that make startups appealing, corporate HR Managers can help larger companies provide the same benefits.
Follow in the Startup Footsteps
So, what steps can HR managers take to adopt the startup mindset?
1) Provide more autonomy: Corporate HR can take cue from a startup called Betterment, an online financial services firm, which has turned around the traditional investment company culture and attracted a highly skilled workforce by using autonomy as a way to motivate productivity. Micro-managing is out, and employees — even interns — are encouraged to develop their own solutions to workflow and other tasks. Employees who experience a degree of autonomy and have a role in decision-making are less likely to cherish daydreams of going out on their own.
2) Bring different departments together: HR managers in corporations can mirror the all-hands-on-deck startup culture by creating opportunities for different business units to collaborate and learn about one another's work. L'Oreal USA has a creative, multi-purpose take on this: The company periodically draws employees across every function — marketing, finance, HR, operations — to spend the day together and meet with a consumer focus group, thereby addressing their employees' desire to understand the broader mission of the company, as well as what their individual customers think.
3) Detach employee reviews from the bonus cycle: At Lear, a Fortune 500 company, HR replaced theannual performance review with interactive quarterly sessions between employees and managers to focus on gaining new skills and addressing weaknesses. This not only improves communication, but allows employee recognition to be explored year-round and in non-compensatory ways. However, Lear is an exception; according to The Harvard Business Review, only one percent of American companies have rejected traditional reviews, and those are startups.
The bottom line: Corporate HR can't complain about a dearth of talent and simultaneously refuse to respond to how employees themselves have changed. It's time for corporations to take a page from the startup playbook in order to compete for top talent.
Photo: Creative Commons
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