3 Ways To Motivate Your Employees Even If You Can’t Pay Much

At the start of each startup project, the work is done by the founders. At […]

At the start of each startup project, the work is done by the founders. At this stage, motivation is rarely a big issue – even when you don’t have money to pay yourself a salary, it is quite obvious that the more you put into the project now, the higher your chances of reaping rewards in the future.

As your startup grows, however, you’ll have to start delegating some of the tasks in order to manage the ever-increasing workload.

Unfortunately, it is often the case that the increase in work that needs to be done precedes the increase in cashflows. This means that for your first employees you’d rarely be able to offer high fixed salaries.

To make matters worse, your first employees usually need to be experienced professionals who’d expect higher salaries.

Needless to say, in order to build a capable team of early employees, you need to know how to motivate them.

1. Offer A Stake In The Upside Of The Project (ESO)

The first and most straightforward way to do it is to offer them a stake in the company. After all, this is the reason the founding team is highly motivated to succeed.

If your project is interesting and has the potential to grow, experienced professionals would be happy to work for a lower fixed salary for a given time if they know they have a share in the upside of the business.

For them, this could be an opportunity to potentially earn a sum of money in a short period which wouldn’t be possible through a normal corporate career progression.

This could be a win-win situation because experienced and well-motivated professionals with high domain expertise and a relevant network could strongly influence the trajectory of your project positively.

Offering your first employees a stake in the business is usually done through an employee stock options plan (ESO) – call options give employees the right but not the obligation to buy stocks in the company at a predetermined price. This means that in case your venture raises in value, the options could be exercised and your employees would become shareholders.

It’s a good idea to put a vesting schedule on the options plan in order to guarantee that the employees are committed for a certain period before they are able to become shareholders.

2. Performance Bonuses

If you are not able to or don’t want to dilute your business further, you can still offer variable pay to your employees to compensate for the fact that you cannot offer a high-enough fixed pay right away.

A straightforward way to do it is to sign an agreement in the employment contract that your employees are owed an annual bonus in case the company revenue reaches a certain amount. In order to make it more enticing, you can make the bonuses tiered.

Of course, in order for this to work, you need to make sure that the bonus is meaningful, and together with the fixed salary, it amounts to a sum higher than the opportunity cost of working in a corporate job.

3. Professional Growth Opportunities

Last but not least, a startup project can offer a lot in the way of personal and professional growth. Climbing to a meaningfully high position on a corporate ladder is hard – the number of people who elevate themselves to a position in which their opinion and decisions are valued and meaningful to the organization is very low.

In a startup, this is not the case. As the company grows, the first employees usually end up in positions of leadership. While this could be challenging, especially for people without previous experience in such roles, it could also be an opportunity for considerable personal and professional growth.

As an entrepreneur, you need to provide these opportunities to team members, and the fact that they are personally valued, have a real impact, and that they are growing with the company could keep them around even when the times aren’t great financially.

In sum, to attract and motivate the best talent when you don’t have enough money to pay them well are:

  1. Listen to their aspirations and objectives. What may be motivating for one team member may not be interesting for another.
  2. Reward them financially by sharing the upside of the project.
  3. Facilitate their personal and professional growth.


The original article can be found at: Forbes (Entrepreneurs)