10 Startup HR Ideas for Founders
tl;dr: Think of how you’d like to be treated, were this your first job out of school
And, if you’re not sure if your company is a startup or not, then it’s not.
- Every full-time employee gets equity. Even if it’s a small amount, everyone should get to be an owner of the business, and all that entails. For me this is actually the key difference between a startup and a non-startup, and what transforms employees >> teammates. You’re all in it together, in a way. (So don’t cringe. That being said, see #9)
- Educate the team about equity. Not everyone knows/understands it, and many people (even those in Silicon Valley) won’t necessarily value it. Make sure to explain simple yet esoteric things like “fully-diluted shares” and liquidation preferences, but also more complicated concepts like 83(b) elections, 409A valuations and the difference between different kinds of stock options, if applicable.
- Share valuation/share count and key financing terms. Especially when hiring someone, it’s not fair to not share the details of the company’s most recent round of funding and valuation. I’ve heard far too many stories of “they offered me 30,000 shares”, and when I asked “how many (fully-diluted) shares does the company have outstanding?” they either say “I didn’t ask” or worse, “I asked and they wouldn’t say.”
- No repurchase rights for vested shares. This is a dick move. Don’t add this term to your employee stock options. It’s just not right. The “current value” from a common stock perspective is seldom a real number (more on that and 409A valuations some other time!).A good article about the above here. Put yourself in your teammate’s shoes.
- Be clear about equity earned when team members leave. I recall a conversation with an attorney about what the correct procedures are when an employee with vested equity leaves the company. “You’re not required to tell them anything, or remind them they have [60 days] to exercise.” was the response I was shocked to hear. I’d wondered why most Silicon Valley startups I’d worked for had included the exercise paperwork as an attachment to the document when I first got the options, but then I understood. If you don’t exercise your vested options, everyone else is diluted just a little less. This should be addressed partially by better education (#2, above) but when someone takes a new job or is terminated and is looking for a new opportunity, it can be a stressful and overwhelming time. Almost all employee stock options agreements have a 1-year cliff, which means that this person has been with your company for over a year — if they’ve been with your company a year and you don’t feel like they are entitled to the equity they have earned, then it’s on you not them! So make sure you explain to each leaving employee that they have [however many] days to exercise, what size check they need to send, and any possible tax implications (yes you should probably include the “*this is not tax advice” disclaimer) they may want to look into. Rule of thumb: think of how you’d like to have been treated, were this your first job.
- Everyone gets the best healthcare we can afford. Before Obama’s Affordable Care Act, I always vowed that this would be a key employee benefit that I would work hard to establish and preserve. Unfortunately with the costs of healthcare this is a difficult element to do well at the best of companies, and there is a surprising lack of good data out there about what the “average” company in your market does — but when you find data to show that you’re doing a lot more than the average company don’t be afraid to say so to the team. Tip: Be sure to investigate whether a vendor like TriNet might be worth working with to streamline everything from payroll to benefits.
- Please take vacation. Encourage your team to take time off every year. And if they don’t, make sure that the time doesn’t expire: some forward-thinking states like California require you to give people an adequate amount of time to take their vacation (and in the past I’ve had to fight for it). Important note deserving of its own post: an unlimited vacation policy is very employer-friendly and disingenuous IMO, as someone on Hacker News said “If vacation was untracked, what that means is that it would be effectively be socially tracked”.
- Get over-involved in who you hire, and less involved in defining how they do their jobs. Hiring is difficult, but senior management needs to set the tone and direction and may be more involved in recruiting than you might expect if you’re coming from a bigger company. It’s an investment: the point of that hiring process should be to find people who are more creative and autonomous at how they get the job done once on the team! Think of it this way: new people hired should be better than the average person working there now.
- Have realistic expectations about work and keeping it engaging. It’s unrealistic to expect most people to truly be on call 24/7/365 unless they’re sitting on a huge chunk of founding equity (as I recall saying to my cofounder and CTO once at 3.30am, debugging a server failure). It’s not unrealistic to expect people to work hard, long hours, sometimes weekends, push themselves especially around big release dates or launches, but realize that the best people work most effectively when the problems they’re tackling are interesting and their teammates are smart and likewise engaged. Every role (including that of the CEO!) has drudge work: so mix it up and keep it interesting — and, honestly, the best way to do that is to hire the best people.
- Have an efficient and periodic (not always annual) formal appraisal process. An *annual* review process for startups smaller than 100 people is probably not often enough. That doesn’t mean don’t do performance appraisal, but in a fast-growing company it probably has to be a faster process at a 3- or 6-month interval. The problem (as Ben Horowitz points out) with not having a formal process, even at a small company, is that you could kill your culture if you give raises only to people who ask for them (and presumably are doing a good job) because plenty of people doing a good job just won’t ask for a raise. “Having a process like that, basically gets people to be more comfortable.” Employees don’t have to worry about missing out on a raise opportunity, because they know your process.
Which of these would you like to know more about? What did I leave out? Comment back or hit me up on Twitter @robleathern.