We are #1 in our industry. However because we aren't a hot startup anymore some workers leave. How to manage this?

Question

We were a hot startup and, long story short, we've become a slow-growth (mature?) company being more or less #1 in our industry.

However there are workers which are leaving our company. Asking them in one-on-one talks "why?" they answered (almost) invariably "because I want more money".

However, in the exit questionnaires only 10% talk about a higher wage. The rest invoke other reasons, the most frequent being the lack of future enhancement of their career and/or the capping risk (they feel like they will be in a pigeonhole - something like that).

What can we do in order to retain the good people?

Answer 1

The people you attract as a startup will go for the smaller no nonsense highly volatile environment that a startup often has. These people will be more likely be pioneers and not people who like continuing the status quo. Once your company transitions from the start up phase to a more stable phase your company often changes. More layers of management become necessary to manage the larger amount of people. In addition, some products go more into a maintenance mode in stead of quick dynamic development.

So, in part you cannot keep the people you started with. If they prefer the startup environment, they will move on. The trick here is to then find new talent that thrives not in the dynamic startup phase, but people who enjoy the more stable mature phase. Trying to keep your talent from the startup phase is not necessarily a good idea.

To keep some of the startup minded people happy you can let them handle the R&D of new products. In that department you try to mimic the startup environment. In addition, keep tabs on how your people want to develop, and actively support them in that.

Answer 2

Trying to get good information from exit interviews is generally pointless. Very few people will tell you the real reason they are leaving. What you need to do is talk to the employees who aren't leaving right this minute about what they would like to see improved.

However, if the people are mostly leaving for new start-ups, they are the kind of people you probably have no hope of retaining because you aren't a start-up anymore. If they are mostly leaving for other companies at your maturity level or somewhere even larger and less exciting, then they could have been retained had you done something differently.

It is to be expected that many start-up employees leave as the organization gets larger. Some people like the inherent risk in a start-up and others prefer the more stable environment. Some like the stupid hours of a startup and the excitement of doing something new and cutting edge. Those people are not happy doing maintenance (although they should do it some anyway, any dev who had never had to maintain what they wrote generally writes code that is is hard to maintain and doesn't consider what is needed over time.) Many go to start-ups because they think they will get rich, when it doesn't happen they look for another start-up. Many like the no rules cowboy or frat party atmosphere of a start-up and no amount of money will keep them in a organization that is getting large and consequently more bureaucratic.

Answer 3

First things first - remember the old saying: "People join a company, but they leave their managers". Most likely, your management is failing your employees. They are not providing the right work, the right career growth, the right sort of working environment for them. Individuals are different, so there will not be a catch-all solution for retention.

What can we do in order to retain the good people?

By satisfying their needs from their job. The common refrain for motivating/engaging people is three parts (popularized by the book "Drive: The Surprising Truth About What Motivates Us"):

• Autonomy
• Mastery
• Purpose

Are you giving your best and brightest the freedom to do what they need to do, without hassle or headache? The old-west of startups provide a lot of freedom, compared to bigger companies. But even as a bigger company, there's a difference between necessary interaction to work with the larger pool of resources and overhead caused by this unweildy beast.

Are you letting them learn and grow their areas of expertise? Startups tend to be challenging environments, pushing the boundaries of employees' skills. Big companies can get complacent - trying to maintain their status rather than pushing the boundaries.

Do your employees understand what they need to do, and how that helps the company go? When there's only a dozen employees, it's really clear about how your contributions help; it's really clear what needs to be done, because you see what everyone else is doing. In larger companies, it's not readily apparent. Without good communication (often via 1 on 1 meetings with their manager), employees can lose sight of that, along with there sense of purpose in the workplace.

But again, different employees have different needs. Your management should be working with employees constantly to determine those needs and address them individually. Some will want more responsibility. Some will want more training and learning opportunities. Some will want different/more challenging work. And it takes skilled leaders to fish out those desires from people who rarely realize consciously what makes them happy.

Answer 4

Pay them more money. They obviously feel that they're being underpaid, since they're telling you that specifically. But "future career enhancement" looks better on paper.

If people are quitting over low salaries, that's a sign that you've been underpaying them for too long already.

Answer 5

We were a hot startup and, long story short, we reached to be a slow-growth (mature?) company being more or less #1 in our industry.

I'm not an expert on this, but having listened to the StartUp Podcast, it sounds like your company has turned into what they're calling a "Lifestyle Company", as in it's not going to make anyone crazy rich and it's not going to be growing by leaps and bounds (the "slow-growth" you're referring to).

Obviously you can't give us too much context and have your company remain anonymous but I can't help but wonder if some of your people were doing the typical sweat equity bit where they were working for low wages in exchange for stock in the company but now that you have (perhaps) shown that there's no huge payoff to be had, they're bailing. I think some people here would read your "because I want more money" bit and think that you're just not paying market wage or that your employees are greedy but it could be that they really want the big payoff that comes with being in a startup that explodes and if you've proven that there's no giant acquisition in your future then there's nothing you can do to stop these folks from leaving. In addition to the other reasons stated here, one of the things happening is that they took a gamble that they could win big by working for you and now that that's not looking likely they're going to go try somewhere else. And since you were a "hot" startup, having you on their resume could be gold depending on location.

To some extent my answer is the same as everyone else's here with the additional wrinkle that if these people wanted the big payday that comes with being in a gangbusters startup, they're going to bail. Whether or not it's correct most people think that startups either get huge, plateau or crash. It could be they figured your company would either get huge or crash, but plateauing is similarly unacceptable for the risk taker.

Answer 6

Consider these statements:

1. they answered (almost) invariably "because I want more money".

2. the most frequent ones being the lack of future enhancement of their career

These two sound exactly the same to me but in different contexts. When you ask in a head to head talk they will most likely think about their future (where do I want to go next?) job then answer, but in a formal document about their current (how could they have kept me?) job, they won't want to sound like they want to make more money without adding more value to the company (unless they are feeling underpaid) so the same problem (wanting to make more money) will be pointed out as "lack of growth".

I don't think people will say "I want more money" in an exit questionnaire unless they felt paid unfairly.

So addressing the "growth" issue is likely to increase retention, as long as you don't present them with a very slow growth path that will get them to quit sooner.

Answer 7

Based on what I can glean from your description of the situation, my assessment is your company is hemorrhaging talent because it doesn't stand for anything and therefore no longer engenders any loyalty. You've achieved the what and the how but you haven't yet found the why for accomplishing either.

You say your company is number one in your industry. Getting to number one was the likely incentive for the people who said yes and joined up early in your company's life. They took on the risks and other pitfalls of working at a startup because it afforded them an opportunity to achieve a trophy other established companies could not offer.
But that was last season. What new championship is your company offering to these top performers this season?

Top leaders forge a company culture: a reason to win. The culture is what gives members of a team something to go after beyond material compensation. Without culture -- without a reason to earn a big win for the cause (instead of just the numbers) -- there's nothing unique on offer, nothing to sacrifice for. It's the difference between being having a task and having a purpose; between having something to do and having a passion to pursue; between repeating the same things and making a difference in the world.

I know that may sound very "motivational-speakery", but all human endeavor really comes down to fulfillment. We do that which we think will bring us satisfaction. Money only motivates up to a point. If all you have to offer is more cash, there's always someone else who can out-spend you for the specific slice of talent that matters more to them, and your company gets carved up over time.

I recommend the work of

• Simon Sinek -- TED talk
• Daniel Pink -- TED talk / RSA animate video
• Tony Hsieh -- Harvard Business Review article

as primers.

Some practical advice:

1. Who is responsible for retention? Unless certain individuals are tasked with and actually empowered to turn the issue around, it's spread will only accelerate throughout the company. Eventually your innovative start-up will be hollowed out at its core and replaced from the inside with a safe, complacent middle-of-the-road staff.
2. Who is setting the company culture? Every company has a culture, but a good culture is only crafted by intention from the top with purposeful leadership. Somebody has to say "This is what our company is, and this is what it isn't," and that person who says that needs to carry enough weight and authority to make those statements stick.

Both of these areas of responsibility are mission-critical, full-time work.

Answer 8

Well, if growth potential is really an issue, maybe you could try providing

• education reimbursement
• allocating a set percentage of time to personal projects
• institute a performance management process to help employees manage personal growth
• allow some level of cross-training with other jobs in your business, so that employees understand what other people do and/or get to learn new skills

If money is an issue, maybe do some research to make sure you're competitive. If you really cannot pay people more, maybe focus on the soft benefits like gym memberships, office parties, outings, etc.

Might also be a good idea to look at your culture. I agree with the other comment that people leave their managers. Think about whether or not the company is promoting a culture that is unsustainable in the way managers and employees interact.

Answer 9

People who work and like to work for slow growth established companies are different than those that work for established companies.

Certainly look at the factors mentioned in other replies like work culture, pay, benefits, etc.

But more importantly, you need to start hiring people who are looking for stability. These are different people than you hired when you were a startup, don't pretend, don't advertise 'startup feel'. Advertise #1 in your field, well established, and most importantly profitable.

You need employees that like digging into messy code, and enjoy the challenge of small wins over big fiascos. Not to stereotype, but these are going to be older employees, possibly in the later years of their careers, but still up on the technology. These are people with families, kids headed to college that want the stability of a company that is #1 in their field. They don't want a startup that might not make payroll next week.

You are going to have to pay for these kinds of people though, they tend to have senior in their title and have 20+ years of experience and the salaries to go with that. But they will be very loyal and will trudge through the muck with you.