When it comes to creating and capturing value with the entrepreneurial Big Idea, the right people are absolutely critical to the new venture’s success. A good reward system both motivates employees and, at the same time, reflects the goals of the venture directly as a function of its increasing valuation. But empowering and leveraging employees is certainly not as simple as finding, hiring and situating them in a role with defined tasks. They must be motivated and rewarded so that they are effectively committed, productive and even inspired. What’s more, the ability to attract and retain talented employees is of critical importance, and this depends greatly upon the promise of financial and psychological rewards.
So what motivates people in a start-up or other early-stage company? I think the place to begin, at least philosophically, is with Ewing Marion Kauffman’s principle, “Share the wealth with those who help to create the value and thus the wealth.” Knowing how much to share is as much an art as a science, particularly when it comes to the x-, y- and z- axes of human behavior. So, as Robert Vecchio, a top author of b-school management tomes, presents it below, here’s “What Employees Want from Their Jobs,” which I’ve modified with some additional motivators:
1. Interesting, challenging work
2. A feeling of being “in” on things
3. Job security
4. Competent supervisor
5. Good working conditions
6. Tactful discipline
7. Promotion and growth in organization
8. Appreciation of work well done
9. Sympathetic understanding of personal problems
10. Good wages
11. Involvement in plans or decisions
12. Loyalty and support from management
13. Relevant and timely feedback on performance
14. Clear goals and objectives
Rewards systems can include the obvious financial rewards, such as salary, benefits and even equity ownership, but also (as indicated above) personal and/or emotional rewards including education, increased skills, an energized and enjoyable work environment and even self-fulfillment. The latter more personal rewards can be categorized in terms of ‘valence’, defined as the perceived value a person might place upon a particular workplace outcome and/or reward received as a result of the successful performance of a task.
As this is a foremost a business we are talking about, the rewards and motivators are often doled out in compensation (cash and/or equity), and as such must be measurable. Metrics and rewards are essential to serve as yardsticks for performance, and when the measurements are made the organization can and should reward those people who have been instrumental in the accomplishment.
Above all, the overarching task at hand is not to create fierce competition for the size of one’s slice of the pie, but to instead work together to increase the size of the pie. That’s the real but often misunderstood upside to dilution that so many employees and founders of start-ups dread, and a topic for another day.
Posted by: Colin Mangham