Over 99% of the UK businesses are small businesses, owning three fifths of the employment in the private sector. There are about 5.82 million small businesses.
Not only are the SME responsible for employing a huge portion of the workforce population, it also is responsible for 50% of turnover, amounting to £2.2 trillion. The competition for good talents in this sector is fierce. As startups often do not have the same levels of budget as that of the Fortune500 companies, there’s often a pay downgrade for highly sought-out talents they want to attract. As it is widely known that only 40% of startups or so survive their first five years, there is a risk that probably make at least some candidates hesitate the move.
If you recruit on behalf of startup clients, these factors may be common roadblocks for you. How do you set realistic expectations yet still convince them to make that jump?
Put Things in Perspective – High Risk, High Reward
First of all, there is always a risk of losing one’s job – whether from being ‘fired’ or from the company going bankrupt. There is no such thing as certainty. Steve Jobs was very publicly removed from his position at a company he had founded; that company was Apple. In his famous commencement speech at Stanford University, he said “ We had just released our finest creation, the Macintosh, a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started?” You really never know what could happen.
Then help the candidates understand the risk vs. long-term reward in their decision. Yes, it is risky to work for a startup with little brand value and there could be an initial pay cut, which is another risk. However, the reward is going to be hundreds of times higher. If there is an equity payout after a round of funding, you will be highly rewarded for the risks you’ve taken.
These candidates must be interested in the mission of the startup if they applied. So the recruiter’s job is to encourage them not to base their decision on fear and trust the instincts that got them to take the first step. Nobody ever regrets pursuing their dreams; they only regret not doing it when they had a chance.
Take Daniel Richmond, for instance, the founder and Managing Director of Tic Watches. He was at the lowest point in his life- he had just been fired as a graphic designer. Instead of panicking and chasing for another paycheck, he decided to take the adversity as a sign from the universe to pivot and pursue his dream. That’s how Tic Trading was created. What started out as selling watches in his own home soon grew to reach £1 million turnover in just four years.
Present the Financial Package as a Whole
Whilst it is not easy to offer competitive market salaries for many of the startups, there are benefits and perks that they can offer to counter the balance for the candidates. These perks often include lunches, snacks, shuttles, commuter benefits, and drinks. Even a simple gesture of allowing dogs in the office may be enough to make many candidates solidify their commitment to the company; it reminds them that the benefit of having a great working environment and culture is worth the sacrifice and risk.
When you combine the perks and valuation of autonomy and differentiated culture, the overall financial package might be much higher. There are also other ways to negotiate – promise of salary increase in the event of funding, additional shares in lieu of salary payments, etc.
A survey found that in the UK, 44% of people believe meaningful work that helped others was more important than salary levels. Candidates and employees prioritise job satisfaction over compensation to a reasonable degree; they just need to really buy into the company’s mission and how it aligns to their values and goals.
