How to Reduce Employee Turnover

If you're starting a company, you probably have some ideas about what qualities you want in your first 50 hires. Intelligence is a no-brainer. Initiative, flexibility, and, provided you can find it, experience all probably reside at the top of your list.
Any list of desired qualities can quickly spiral out of control. Confidence, results orientation, ability to work in teams? Employees should have them. What about decision-making, resourcefulness, and the ability to deal with ambiguity? Startups need people with those qualities, too.

What You're Looking For

In staffing a startup, begin with a series of assumptions. You're going to grow—and you'll need people with the ambition and talent to grow with you. You'll be nonhierarchical by necessity—people throughout the company will make decisions daily that will affect your business, and they should be good at making those decisions. You'll have a lot to do—and you'll need people with enough enthusiasm and initiative to do a lot more.

"Employees need to be able to see a project through from inception to completion," says Virginia MacLean, the vice president of corporate marketing at Kaseya, a software development company in Silicon Valley. "You rarely have time to teach people the ropes, but neither do you have the bandwidth for the person who is used to making high-level decisions and passing all the tangible tasks off to their staff. There is no room to hide in a startup."

MacLean views every position at a startup as a "generalist" position, but she says don't confuse that term to mean "junior." "People are hired for their specific skill set, but are called upon at any given moment to complete a variety of tasks—some far below their skill level and some that stretch them beyond their skill level. That's the fun of a startup and that's the challenge," MacLean says.

Essential Qualities Redux

When hiring, even though your list of desired qualities may spin out of control, there's a set of essential qualities you'll need in your team. More to the point, you need people willing to take the startup risk with you. And you need them to care about what you're trying to do.

Most startups lure people with the promise of stock options and the opportunity to influence that value. Otherwise, "Why would they risk 10 percent of their salary today?" says Judd Hoffman, the president of Hoffman Recruiters, a technical recruiting firm based in Boston. "You don't want to convince them they're a risk taker if they're not."

"People who come to your employ because of a personal quest, a mission or calling or whatever terms you want to use, are the kind of people who will be able to ride out the ebbs and flows of a startup," says Jeanne Allert, a principal at Ellipsis Partners, an Internet strategy consulting group. "They keep their eye on the larger goal and can pick the others up when things are a little tough."

Finding individuals who are passionate about their work is not an easy task.

"We've always been pretty picky. A lot of companies, when they build, it's numbers, numbers, numbers," says Lisa Olson, a recruiter at Flyswat, a Web search and navigation service. "We want people to be here because they want to be here."

Identifying Great Hires

Of course, passion for the business is all well and good. But without results, it won't help you get very far. When hiring, consider your startup's assumptions. You'll be working with limited resources in terms of money, staff, and material. Startups need resourceful, flexible, problem-solving types of people.

"I want to hear stories of ingenuity and clever problem-solving that involved little-to-no resources," says Allert. "Sometimes I even pose far-fetched situations just to see if the candidate has the wherewithal to come up with a solution."

"People who require lots of resources and precision to execute their plans normally don't thrive in guerrilla marketing-driven environments, where death or glory will be celebrated in six months," says Andrea Butler, the vice president of marketing and communications at bTask.com, an online marketplace for buying and selling tasks.

The position you're staffing for will also determine the qualities you look for.

"Depending on the area of the business, like technology, I would never hire somebody who had not done it before," says Matt Coffin, the CEO of LowerMyBills.com. But in affiliate marketing, says Coffin, "There's not that many people you can find who have done it." Coffin put an inexperienced hire on affiliate marketing, and that person has excelled.

Strategies for Hiring

Another strategy for hiring in bunches is to recruit teams from other organizations.

"I'm a big believer in hiring in teams," says Coffin. Among others, he hired his tech team from USWeb (now marchFirst) and his PR team from Goldmine Software. "I find the leader in the group," he says. "They go back and spread the gospel."

Kelly Phillipps, CEO of Center 7, an application service provider, built his team through his and his employees' networks. "It's good to hire the best and allow that to snowball. High-caliber people have a gravitational force of their own," he says.

Phillipps says he's willing to bring on candidates who may not have the exact skills he's looking for, but who show potential. "We hope to find some of the explicit skills, but we're willing to build them."





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