How do you attract good talent when you have shallow pockets?

In an environment of increasing competition, high risk and skills shortages — particularly for IT roles — hiring is a significant challenge for most startups.

Add to that Australia’s latest wage growth report; figures came in as forecast, with quarterly wage growth rising by 0.6% in Q2, a steady increase by recent standards, but well below the long-term average.

In this milieu, the businesses with the deepest pockets will have an easier time attracting and retaining good talent. After all, remuneration remains one of the biggest drivers of staff retention, despite things such as culture and flexibility rising in importance.

Startups rarely have deep pockets so often can’t compete on salary. So, how do you attract the right people you need to grow your business while asking somebody to take on a riskier proposition for less money? I recently visited a well-known fitness technology company in San Francisco that has experienced this problem and shared their wisdom. Here are some strategies to apply.

Hire for potential

Traditional hiring has always been about filling current skills gaps. For large organisations, this approach is often necessary, but startups must hire with a long-term mindset.

In Australia, it is estimated the real cost of recruitment can be upwards of 50% of a person’s salary. To avoid churn and burn by trying to fill roles with recruits outside your salary cap who may inevitably be disappointed, focus on hiring for potential — even if that means headhunting somebody who doesn’t have all the skills you require on paper. When you consider that most employees will need to upskill to keep pace with technological change, it is critical to assess not just someone’s CV, but their potential suitability for a role in the future, and how equipped they are to adapt and learn in an uncertain environment.

Before you post a job ad, investigate whether your current staff can step up to meet your skill requirements. Your money is best spent on reassessing your team structures, enabling career mobility and upskilling. In fact, this approach might save you money in the long-run. If you have good talent, find ways to get the most out of them. Who knows, your executive assistant might become your future general manager.

Sell the big picture

In lieu of a lucrative salary, the onus is on startups to ‘sell’ a future to potential employees that they won’t get from more secure roles. Ask yourself: ‘What vision am I selling and why would people want to join this journey?’ Sell your business as you would to an investor by demonstrating where you are heading, why that person’s experience is essential for your growth, and what they will get out of it personally.

Startups often have their staff wearing many hats. This fast-tracked learning process can be intense, but also a great career boost which can make a person’s CV the envy of the corporate world.  

And while the immediate financial returns from a startup job are less than the salaries of an established company, things could be very different in a year. Remind candidates of this, and if you are successful, reward your people accordingly. They are your greatest assets.

Walk the talk

Thankfully, life is not all about money.

Too many companies over-promise and under-deliver when it comes to culture and workplace environments. We know millennials and younger workers place a high value on culture, meaningful work, professional development and flexibility. In the absence of high salaries and other paid employee benefits, this is what will get new staff through the door and keep them there.  

A great culture starts with strong management. Hire and train managers who can lead by example, enforce the business’ principles, reward staff for a job well done, respect everyone’s life and family situation and work hard to work with them. Be sure what an employee gains by working for you is always authentic and celebrated, so there’s less emphasis on what they are sacrificing.

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