Need to know
Why do organisations get started? A lightbulb moment. A frustration with faceless corporate bureaucracy. A desire for a sense of true ownership; and the accompanying rewards.
At first, the start-up feels like liberation. Late nights brainstorming over pizza. Everyone’s opinion matters, because there are only a handful of people. The start-up grows, thrives.
Out of necessity, more staff are hired. What was five people around a desk turns into ten, thirty, a hundred. Before its founders know it, they’ve gone full circle. They have become the corporate culture that they originally innovated in order to better.
Chris Charman, principal in consultancy Mercer’s talent business, says: “The thing that drives everyone nuts is faceless corporate bureaucracy. If I know anything after 20 years advising businesses, it is that all the large [organisations] want to create the entrepreneurial, shared ownership culture.”
To keep their staff engaged, fast-growing orgnaisations need to work out how to avoid becoming victims of their own success. How can they preserve the unique culture and purpose that set them apart in the first place, and how they can take both existing staff and new on the journey?
Think about hierarchy early
“Many organisations wait too long to think about structure and formalising norms. They let them erode before they’re prepared to turn around and say, ‘This is how we are: we have stormed and we have formed, now we need to norm’,” says Charman.
Instead, take the initiative on structure at the beginning, advises Charman. “People instinctively don’t like hierarchy being explicit, whereas I think the sensible ones do it earlier. Do it before it becomes corrupted. It almost always happens too late.
“We forget as well that hierarchy is a natural function for human beings. Having no structure at all can be as disruptive as having too much structure. What humans care about is fairness.”
Employment lawyer John Hayes’ suggestion is to try to keep it personal. “Create a devolved structure where people still feel ownership of what they’re doing. That means breaking up teams into smaller units and having engaged bosses,” says Hayes, who is principal and founder of Constantine Law.
There are two ways to structure a company, says Charman. “You either control it more because you need to have conformity or you keep very focused on setting standards and let control go a bit and give people more frameworks – devolve down that freedom.”
When devolving power, it’s important to equip team managers with the right skillset, advises Aliya Vigor-Robertson, founding partner of HR consultancy JourneyHR, which works with a range of predominantly founder-owned agencies and start-ups within creative industries, including media agency the7stars, which often gains plaudits for its innovative approach to benefits.
The classic example is promoting people based on their technical skill level, says Vigor-Robertson. All of a sudden, they are expected to manage a team. “One of the most common reasons people leave a company is because of their relationship with their manager. Most of the time, poor managers aren’t supported. If managing people is someone’s strength, then you should play to that. If people have technical brilliance but aren’t natural managers, they shouldn’t be forced into it.”
Ask your staff what matters to them
“I tend to deal with exit consequences when companies don’t get this right,” says John Hayes. “It’s not all about pay. Increasingly, you need to give people a sense of ownership in what they’re doing that goes above and beyond pay. That’s about interesting work and a sense of career progression.”
If people don’t feel they developing, whatever benefits the company offers won’t persuade them to stay, says Hayes.
Consider offering early hires skin in the game
Offering equity to founding members of staff is the ultimate compliment, and it will keep them motivated, believes Hayes. “The best [benefits] I’ve seen are share equity ownership. That’s the most motivating tool because you’re seeking to define an equity upside in the future, contingent on staff engagement today. If you work hard now and the company is sold later, you will see significant upside, and it’s also advantageous to employees from a tax point of view.”
Review your benefits and make sure to communicate clearly
Take the time to review your benefits every year and make sure your staff appreciate what’s on offer, advises Vigor-Robertson. “We ran an assessment with a client who has lots of lovely things – private medical, death in service – hardly anyone had sent in their death in service next of kin, the response rate was around 28%, private medical was under 50%.
“The reason why was first of all the admin involved and also the lack of clear communication. Some people thought they had to pay for those benefits out of their salary. It really does show that communications are critical.”
Another of Vigor-Robertson’s tips is to use information from exit interviews. “Find out what other benefits packages are – that’s an opportunity for competitor analysis – and see where you are benchmarked against them.”
Accept you won’t be able to preserve everything
“It’s best to recognise this early,” says Charman. “At some point people are going to stop joining you because it’s going to be a fantastic ride and an awesome experience and they are going to be asking about market competitive packages. It’s a very much less groovy conversation.”
Charman’s advice? Be realistic – and don’t be afraid of bringing on different talent as you need it. “Companies grow up and you want to make the adolescence as short as possible.
“The people who are in charge of evolving are often there because they want to build and create. They may not be the ones who take the company global. The skillsets aren’t necessarily the same.”
However, be sure to assess critical hires for cultural fit. “It’s commonly acknowledged that a strong cultural fit between a candidate and his or her colleagues and organisation will increase the likelihood they will perform well and stick around,” says Tom Marsden, CEO of Saberr, a consultancy.
Case study: Farzana Baduel, managing director, Curzon PR
Farzana Baduel has always been entrepreneurial. She founded her PR firm, Curzon, in 2009, in part because with a one-year-old, she wanted the flexibility to balance work with the school run.
Baduel’s business grew slowly for the first two to three years. She had previously worked in politics for the Conservative party, and building contacts in the PR world took time. Today, she works with a host of governments worldwide. Curzon has offices in London, New York, Dubai and is opening in Delhi.
At first, hiring staff was tough. With fairly small clients, she struggled to afford to hire experienced people. But hiring inexperienced staff meant the quality of work suffered, leaving her struggling to attract bigger clients. “Whatever money came in, I would invest in more experienced team members,” she recalls.
The turning point was in her fourth year, when her interests in politics and PR led her to land the Ukrainian government as a client. Others swiftly followed.
She realised in the early days that finding – and keeping – good staff was a key challenge. “My biggest weakness is HR and that shows in my staff turnover. It’s very disruptive and in the early years I really suffered because I couldn’t afford experienced staff.
“I became like a training machine. All I did was train people and after a year they would go and find another job in a bigger agency. I wasn’t able to meet their salary expectations ether – they would move to big agencies with bigger salaries and training academies.”
How did she solve the problem? Without a huge budget, Baduel had to think creatively. “I brought in staff handbooks with value systems, checklists, standardised operating procedures, templates. I made a huge effort last year working on that.”
Next, she asked staff what benefits they would value. The answers were training opportunities, and more money. To address the first point, Baduel tapped into her network. “I looked at the cost of all the courses and they cost a lot of money. I thought, actually, all the top PRs and journalists are my friends and you wouldn’t even get their calibre on a training talk.” So she invites a guest speaker to address the agency every few weeks over dinner.
To address the second point, Baduel brought in an annual bonus, structured to encourage staff to stay loyal over the course of the year. She is also considering introducing monthly targets, tailored to each member of staff. If they meet their targets, they are awarded bonuses.
“It’s a question of finding out what the team want, as opposed to assuming what they want,” she says.
[Case study: B&CE / The People’s Pension]
B&CE was founded in 1942 as a simple way to help construction workers build up holiday pay. It branched out into offering other financial products, like pensions. However, it’s in the last few years that the business has seen its workforce grow, fast.
When the government decided to introduce auto-enrolment, as an established pensions provider to the construction industry, B&CE saw an opportunity. In 2011, it created mastertrust The People’s Pension, with the plan to use its existing expertise to help companies who were seeking to outsource their pension scheme arrangements.
When it launched, the People’s Pension was hoping to capture something like 5% of the auto-enrolment market. It landed 15%. “It is fair to say that our level of growth exceeded our expectations,” says Patrick Heath-Lay, the company’s chief executive officer.
In 2011, B&CE had around 130 staff. Today, it has 360. “That growth has been three or four times our expected level,” says Heath-Lay. “We will probably have to recruit another 50-60 people this year.”
Such radical growth has challenged the business. “You go through that rapid growth and change and I wanted everyone to have a life belt. I want [staff] to stay true to some valued principles,” says Heath-Lay.
When Heath-Lay joined in 2012, he re-wrote B&CE’s then-nine corporate values. “Nobody knew what they meant. We went through a process of evaluating what are we all about as an organisation. We came up with three very simple values which remain integral to what we do.”
Another challenge for the Crawley-based company was hiring the right staff. “One of our challenges was exhausting the local market of local recruits. We have recruited heavily in Crawley – we essentially ran out of people with financial services experience, so we had to rethink our strategy for recruitment,” says Heath-Lay.
Instead B&CE looked for people with strong backgrounds delivering customer service and re-engineered its training scheme to focus more on pensions.
A third challenge was benchmarking its benefits. A financial services companies which is a not-for-profit, B&CE is an unusual hybrid. Heath-Lay describes the feel as “family-oriented”.
“Our benefits tend to be more value-driven,” he says. “Financial services normally has bonus schemes running through it; that isn’t something we have operated traditionally. That is a challenge for me – how we can evolve our benefits? Will we have to challenge our historic view of whether bonus schemes work in value driven, not-for-profit organisations, where it’s about the member not so much about sharing reward with shareholders and staff? We haven’t had to resort to that just yet.
“We have to stay competitive in the local market and take feedback from staff. We run regular survey and have focus groups that will help us to understand what we could do differently going forward,” says Heath-Lay.
