How To Use Perks and Rewards in Startups to Get The Best Talent

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We all know that hiring top talent for startups is hard. In a recent post I weighed in on the debate about whether or not startups should hire workaholics. Within the comments on that post, Jeff Nolan said something very interesting (which may appear a bit out of context, but that’s OK):

…the best employees are motivated by a combination of working on something intellectually stimulating, working with smart people, and making money… in that order, based on my experience.

The rewards angle is interesting to consider, but I believe that the best employee satisfaction strategy is to constantly remove barriers that get in people’s way. Google is really good about this with their engineers, they create an environment that is as friction free as possible for people to exercise their creativity, while at the same time working in concert to execute on Google’s mission.

I definitely agree with the first point. And if you don’t offer employees something intellectually stimulating and smart people to work with, I’m not sure it matters how much you pay them … the best people won’t be motivated.

And for the most part what this really means is that it’s very difficult to motivate people.

It’s very hard to truly motivate employees. Yes, working at startups can be hugely rewarding. But ultimately, most of the motivation has to come from within.

So what about all the perks and rewards that companies offer? What’s the point?

The Value of Perks & Rewards for Startups

The most obvious way of leveraging perks and rewards is for hiring people.

But do they really work? They can, but they’re far from being the best answer to hiring top talent. Fact is, if your startup is in a hotbed of activity like Silicon Valley or Boston, you’re offering all the same perks and rewards that everyone else is offering. It becomes very hard to differentiate yourself … especially if you’re competing against the behemoths like Google and Facebook. In places where there are fewer startups and less companies offering the perks that might attract startup employees, you’ll have a better chance of being able to use those perks to your advantage.

Over the last year with Standout Jobs, I’ve spoken to a lot of companies – big and small – about their recruiting efforts. And what I discovered is that a lot of big companies offer many of the same perks and rewards as Google (or similarly well-documented companies) but they do a horrible job of promoting that fact. I find this very strange, but it just goes to show you how little some companies do when it comes to developing their employer brand and promoting themselves as kick ass places to work.

And that really leads to one of the key benefits of having perks and rewards for your startup — and that’s developing a strong employer brand.

What Google does so well is promote its perks and benefits. Google tells a great employer story so that it stands out from the crowd. Lots of companies offer similar perks but don’t do nearly enough marketing, brand-building and selling to prospective candidates.

The importance of having a strong employer brand and telling a good story isn’t just that you trot out your laundry list of perks and rewards to potential candidates — the key is that others do it for you. Once you’ve built up such a positive vibe around your company, people do the selling for you, just for the heck of it. They start to evangelize your company. They say things like, “Oh ya, I’ve heard that’s a great place to work.” “Did you know they offer free lunches? Very cool…” Everyone offers free lunches! But that’s not the point. The point is that startups can build up their employer brand and positive vibe so strongly within their local community that their free lunches are much cooler than someone else’s free lunches.

Rewards Don’t Necessarily Improve Retention

Retaining employees can be as hard as finding them. And many companies will use rewards in an effort to keep employees from jumping ship. I don’t think it works. Rewards are very often fleeting, and they also come with an ever-increasing price tag. You can’t give a $5,000 bonus one year and get away with giving a $1,000 bonus the year after. You generally have to up the ante.

But rewards can be very effective at building your employer brand. If an employee is self-motivated, happy with their work and their being rewarded, you can be sure they’ll tell others. And the positive story will spread.

What Perks Work Best for Startups?

Jeff Nolan’s comment highlights something important about perks and rewards within startups, because he talks about creating a frictionless environment. Honestly, I’m not so sure Google does that anymore, given its size (and I’ve heard their “20% time for doing your own projects” is quickly becoming a myth), but that doesn’t take away from the importance of Jeff’s comment.

I consider a frictionless environment a perk. You might argue it’s a necessity (and now we’re into a semantic debate which isn’t useful), but the key is that a frictionless environment is the gift that keeps on giving. Free lunches are nice, but employees don’t spend all day eating. They do spend most of their time working (hopefully!) and providing a work environment that’s designed to make their work time effective is critical. Think about things like:

  • comfortable chairs (obvious)
  • any software they need
  • any resource materials they need
  • great computers
  • sound-blocking headsets
  • quiet work environments
  • a killer infrastructure (proper source control, bug tracking, chat spaces, backups, hosting, etc. — all the stuff that really helps increase productivity)
  • minimizing meetings (but you can’t eliminate them, just make them effective and quick)

Other great perks / rewards:

  • $$ to attend conferences
  • gadgets (developers love gadgets)
  • more vacation time (2 weeks is silly)
  • massages (probably not given by you specifically, hire a professional!)

You can probably come up with plenty more, and you may just discover some that are very creative and unique, which will help your startup stand out. But don’t focus so much on using perks and rewards as a means of hiring individual people — use them to tell a bigger story.

March 21, 2008 Posted in Recruiting by

  • http://www.startupforless.org Denny K Miu

    Ben:

    Thanks a lot for a great article. As it turns out, I just wrote another chapter of my book, on Team Building in a Bootstrapping Startup. Hope you enjoy it.

    http://www.lovemytool.com/blog/2008/03/team-building.html

    –Denny–

  • http://www.startupforless.org Denny K Miu

    Ben:

    Thanks a lot for a great article. As it turns out, I just wrote another chapter of my book, on Team Building in a Bootstrapping Startup. Hope you enjoy it.

    http://www.lovemytool.com/blog/2008/03/team-bui

    –Denny–

  • http://soloproject.tumblr.com Michael Rakowski

    I think Perks are all about improving people’s quality of life. In the past, cost cutting and removing perks was used as a tactic to save money on expenses to increase profit. This was done at the expense of worker satisfaction.

    There was an interview on the Podcast “From Scratch” that featured an interview with the founder of Stonyfield yogurt where he talked about refusing to compromise the quality of the yogurt to increase cash flow. It took the company years to become profitable, but they upheld the principle of quality first.

    Ideally, a company provides more value to it’s customers and it’s employees than it extracts from them, and Perks are a way to increase the flow of value to the employees. Of course there are things like working on interesting projects, but stuff is always nice :-)

  • http://soloproject.tumblr.com Michael Rakowski

    I think Perks are all about improving people's quality of life. In the past, cost cutting and removing perks was used as a tactic to save money on expenses to increase profit. This was done at the expense of worker satisfaction.

    There was an interview on the Podcast “From Scratch” that featured an interview with the founder of Stonyfield yogurt where he talked about refusing to compromise the quality of the yogurt to increase cash flow. It took the company years to become profitable, but they upheld the principle of quality first.

    Ideally, a company provides more value to it's customers and it's employees than it extracts from them, and Perks are a way to increase the flow of value to the employees. Of course there are things like working on interesting projects, but stuff is always nice :-)

  • http://www.audiomecca.com/download-music/ Audiomecca Webmaster

    No Ben, I must disagree. While it is true that a lot of motivation must come from within, if your recruitment has been right, you would have already hired a self starter. It still is the responsibility of the employer to find what will motivate the employee to perform at his peak levels and provide that. I however agree that money plays a much lower part in the package that consists of the various elements of motivation.

  • http://www.audiomecca.com/download-music/ Audiomecca Webmaster

    No Ben, I must disagree. While it is true that a lot of motivation must come from within, if your recruitment has been right, you would have already hired a self starter. It still is the responsibility of the employer to find what will motivate the employee to perform at his peak levels and provide that. I however agree that money plays a much lower part in the package that consists of the various elements of motivation.

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  • http://trizle.com/trizoko Benn

    Motivating people can be challenging — if not impossible, I think. Also, it might not be the best way to spend your time, when you could just hire people who are self-motivated, low-maintenance, and will go out of their way to produce something awesome because that’s who they are. Your ROI on those people might come in the form of better work, increased production, and less headaches for you so you can concentrate on what you do well.

    My favorite professor taught me once that you can’t really motivate people; you can only discover how not to de-motivate your best people, such that they’ll continue ticking producing great work.

  • http://trizle.com/trizoko Benn

    Motivating people can be challenging — if not impossible, I think. Also, it might not be the best way to spend your time, when you could just hire people who are self-motivated, low-maintenance, and will go out of their way to produce something awesome because that's who they are. Your ROI on those people might come in the form of better work, increased production, and less headaches for you so you can concentrate on what you do well.

    My favorite professor taught me once that you can't really motivate people; you can only discover how not to de-motivate your best people, such that they'll continue ticking producing great work.

  • http://www.OwnYourBrand.com Mike Wagner

    Great post….got my mind racing.

    And very timely, I’m doing two training sessions for a client this week where my goals revolve around the subjects of motivation, ownership and empowerment.

    I agree with Benn, you can’t really motivate people as much as you can create a context and culture where self-motivation is possible.

    Thanks again for stirring the conversation up with this post.

    Keep creating…your wildest dreams,
    Mike

  • http://www.copper.net C. Bolender

    I worked for a company once that was somewhere between a small and a medium business. They offered many of the perks you mentioned and the social aspect of the workplace was amazing. Many talented workers stuck around for less money so they could be a part of the company.

  • http://www.OwnYourBrand.com Mike Wagner

    Great post….got my mind racing.

    And very timely, I'm doing two training sessions for a client this week where my goals revolve around the subjects of motivation, ownership and empowerment.

    I agree with Benn, you can't really motivate people as much as you can create a context and culture where self-motivation is possible.

    Thanks again for stirring the conversation up with this post.

    Keep creating…your wildest dreams,
    Mike

  • http://www.copper.net C. Bolender

    I worked for a company once that was somewhere between a small and a medium business. They offered many of the perks you mentioned and the social aspect of the workplace was amazing. Many talented workers stuck around for less money so they could be a part of the company.

  • http://www.bizunite.com Sonciary Honnoll

    Jeff’s right on and I was happy to honestly admit that I’m motivated in the order he mentioned (working on something intellectually stimulating, working with smart people, and making money…)

    I work for a web startup (BizUnite) and most of the perks on your list are offered to employees. Now I can really say ‘Hey! My company is cool!’ :)

  • http://www.bizunite.com Sonciary Honnoll

    Jeff's right on and I was happy to honestly admit that I'm motivated in the order he mentioned (working on something intellectually stimulating, working with smart people, and making money…)

    I work for a web startup (BizUnite) and most of the perks on your list are offered to employees. Now I can really say 'Hey! My company is cool!' :)

  • http://manizesto.com Manizesto

    Enabling is obviously of utmost importance to success, but finding someone who is passionate about what they do is far and away the best motivation anyone can have. I like having a nice computer, but that will always take a back seat to doing something I truly love.

  • http://manizesto.com Manizesto

    Enabling is obviously of utmost importance to success, but finding someone who is passionate about what they do is far and away the best motivation anyone can have. I like having a nice computer, but that will always take a back seat to doing something I truly love.

  • http://www.instigatorblog.com Ben Yoskovitz

    Thanks for all the comments.

    @Audiomecca Webmaster: Seems we’re saying fairly similar things. You pointed out that hiring self-starters is key. I agree. You want people who are intrinsically motivated — it’s in their blood. And I like how some of the others have put it, then your job is to remove barriers and ensure you don’t de-motivate those already motivated people.

    What do you think a CEO/business owner can do to motivate his/her employees?

  • http://www.instigatorblog.com Ben Yoskovitz

    Thanks for all the comments.

    @Audiomecca Webmaster: Seems we're saying fairly similar things. You pointed out that hiring self-starters is key. I agree. You want people who are intrinsically motivated — it's in their blood. And I like how some of the others have put it, then your job is to remove barriers and ensure you don't de-motivate those already motivated people.

    What do you think a CEO/business owner can do to motivate his/her employees?

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  • http://www.audiomecca.com/download-music/ Audiomecca Webmaster

    Ben, thanks for the response.

    What the CEO can do, is to consult/discuss with, the employee on his field of expertise, give him the resources to implement what he needs to achieve, monitor his progress regularly, intervene at need to review his requirements of resources, remove obstacles if any, get him to participate in collective decision making, implementation and above all, give him dignity.

    I have learned from bitter experience, one major defect of the employer that is likely to happen with a high flier – abdication. That is why I have put in the need to monitor his progress. This is vital. Some of these self motivated employees can and do get carried away with their own sense of indispensability and can cause a great deal of harm, and till their reliability is proven, you need to monitor them. This also establishes connectedness which is a great motivator.

    Connectedness, constancy of that connectedness without interference, plenty of encouragement and accepting mistakes as part of the learning and growing process,but clearly communicating that repetition will not be acceptable; and above all, treating the employee with his or her dignity intact, will be the way to go about it.

  • http://www.audiomecca.com/download-music/ Audiomecca Webmaster

    Ben, thanks for the response.

    What the CEO can do, is to consult/discuss with, the employee on his field of expertise, give him the resources to implement what he needs to achieve, monitor his progress regularly, intervene at need to review his requirements of resources, remove obstacles if any, get him to participate in collective decision making, implementation and above all, give him dignity.

    I have learned from bitter experience, one major defect of the employer that is likely to happen with a high flier – abdication. That is why I have put in the need to monitor his progress. This is vital. Some of these self motivated employees can and do get carried away with their own sense of indispensability and can cause a great deal of harm, and till their reliability is proven, you need to monitor them. This also establishes connectedness which is a great motivator.

    Connectedness, constancy of that connectedness without interference, plenty of encouragement and accepting mistakes as part of the learning and growing process,but clearly communicating that repetition will not be acceptable; and above all, treating the employee with his or her dignity intact, will be the way to go about it.

  • http://www.instigatorblog.com Ben Yoskovitz

    @Audiomecca Webmaster: I certainly agree with monitoring employees and evaluating their performance – whether they’re self-motivated or not. Those are two separate issues. You should review employees, and you should do so in as standardized a fashion as possible. But if an employee is faltering and it’s because of motivation (or a lack thereof), it’s unlikely you’ll be able to fix it.

  • http://www.instigatorblog.com Ben Yoskovitz

    @Audiomecca Webmaster: I certainly agree with monitoring employees and evaluating their performance – whether they're self-motivated or not. Those are two separate issues. You should review employees, and you should do so in as standardized a fashion as possible. But if an employee is faltering and it's because of motivation (or a lack thereof), it's unlikely you'll be able to fix it.

  • http://nationaltransportllc.com/blog Jenna

    I agree that it is often very difficult to motivate others! For those that don’t have that inner “get up and go” motivation, I believe extra perks, a good work environment, and other rewards (like what you listed) — could be very beneficial.

    I also believe that perks and a good work environment often make up for less pay. I would much rather be happy where I work and make less, rather than hate my job and be rich.

    Good points and very interesting post! : D

  • http://nationaltransportllc.com/blog Jenna

    I agree that it is often very difficult to motivate others! For those that don't have that inner “get up and go” motivation, I believe extra perks, a good work environment, and other rewards (like what you listed) — could be very beneficial.

    I also believe that perks and a good work environment often make up for less pay. I would much rather be happy where I work and make less, rather than hate my job and be rich.

    Good points and very interesting post! : D

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  • http://www.gussmanczakoestates.com/brentwoodrealestate.html Dave

    I have to say that it isn’t how much you work but how intelligently you work that matters on a start up.
    using people who are smart enough to budget their time, and stick with the program counts for a lot more than someone who bangs their head against the wall for extended periods of time.
    Dave

  • http://www.gussmanczakoestates.com/brentwoodrealestate.html Dave

    I have to say that it isn't how much you work but how intelligently you work that matters on a start up.
    using people who are smart enough to budget their time, and stick with the program counts for a lot more than someone who bangs their head against the wall for extended periods of time.
    Dave

  • http://stanleybronstein.com MrPositioning.com (Stanley Bronstein)

    Rewards are EXTREMELY important in the beginning. Highly rewarded people will usually be very loyal people. HOWEVER, at some point, the venture either needs to take off, or no amount of rewards will be sufficient to keep such employees personally satisfied. They will get burnt out and they will leave.

    I’ve seen it happen before.

    Mr. Positioning
    Stanley F. Bronstein
    Attorney, CPA, Author & Professional Speaker

  • http://stanleybronstein.com MrPositioning.com (Stanley Bro

    Rewards are EXTREMELY important in the beginning. Highly rewarded people will usually be very loyal people. HOWEVER, at some point, the venture either needs to take off, or no amount of rewards will be sufficient to keep such employees personally satisfied. They will get burnt out and they will leave.

    I've seen it happen before.

    Mr. Positioning
    Stanley F. Bronstein
    Attorney, CPA, Author & Professional Speaker

  • http://www.oneyearmillionaire.net KG Lew

    Implementing an incentive for referrals and things of this nature can be a great way to get the word spread about your small business.

  • http://www.oneyearmillionaire.net KG Lew

    Implementing an incentive for referrals and things of this nature can be a great way to get the word spread about your small business.

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Ben Yoskovitz
I'm VP Product at Codified (makers of VarageSale).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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