Startups, as every entrepreneur knows, face a multitude of challenges on the road to success. But, of those hurdles, perhaps few are as critical as talent management. Given their limited size and resources, a startup’s investment in employees—both financially and in terms of time—can significantly impact the company's viability. That's why it's crucial for them to attract, retain, and consistently engage the right talent. So, how can startups stay competitive in today’s talent market?

Daniel Clark, Assistant Professor of Entrepreneurship at the Ivey Business School, recently explored this topic in a special edition of Business Horizons, entitled “Celebrating Tim Baldwin.” This edition pays tribute to the late Timothy T. Baldwin, a pioneering faculty member and former Chair in Leadership at Indiana University's Kelley School of Business. As Baldwin’s friend and former colleague, Clark leverages Baldwin’s best practices and other theories to present three budget-friendly strategies for startups to appeal to today’s talent market. And the secret lies in maintaining a sense of class.

Only #1 Draft Picks

In sports with a “draft” model, the #1 draft pick is universally recognized as the most valuable new player, carrying the highest performance expectations. As such, these players receive the best compensation, perks, enthusiasm, and inclusion – and this is just in the recruitment process. So, what if entrepreneurial firms adopted a similar approach?

In a term Clark coined as “Only #1 Draft Picks” he encourages firms to treat all candidates who exceed the minimum experience and talent threshold as if they were the #1 draft pick. Unlike traditional hiring practices that put the onus on judging the candidate, this approach aims to early showcase and “sell” the firm to the candidate. This could involve facility tours, meetings with team members, as well as honest and regular communications. Allowing the employee to be openly exposed to the firm during the recruitment process helps them determine fit, while also receiving a clear message of their value to the organization.

Clark argues that many firms overlook this step due to the time investment or only reserve it for high-level roles. However, applying this approach to less senior positions can make a significant difference, ensuring new hires feel valued and truly wanted at the firm.

He said: “Can you pick and choose who to treat as the #1 draft pick? Sure, but if you make your managers feel important and your administrators or custodians unimportant then you are sure to create isolation, and that ultimately lessens the value of making others feel important.”

Hire smart, onboard smarter

Once the right hire is in-place, Clark insists the real work begins with onboarding. New hires often feel overwhelmed by unfamiliar people, processes, requirements, environments, and social conditions – a situation made even more daunting by remote work.

In entrepreneurial firms, these challenges are amplified as the role either must immediately fill the firm’s needs or is newly created and poorly defined. With no formal training and busy colleagues, new hires are often left to absorb information on their own and at a rapid pace, leading to feelings of isolation, frustration, being overwhelmed, and ultimately underappreciation.

For all firms, but especially any entrepreneurial enterprise, a successful onboarding process is crucial. And the key to successful onboarding? Immediately involve your new hires in a smorgasbord of social activities. From staff lunches, meetings, coffee breaks, and informal check-ins, Clark advises organizations to utilize several tactics to engage new employees socially. But, for this to be successful, it must be a shared responsibility by the entire team – not just the director.  Though seemingly simple, this strategy immerses new employees in the company’s culture, making them feel included and supported.

While it may be tempting for entrepreneurial firms to rush the onboarding process to quickly boost productivity, Clark advises against this approach.

He said: “Most people are unproductive in a new job for their first ~6 months. That doesn’t mean they are bad at it, just that they need help, take longer, and consume resources along the way (training, mentoring, etc.). If you screw up the process and the person leaves (or is fired) in 12 months, then those resources are wasted AND you have gotten LESS output than needed AND you must hire again. Taken together that degree of waste multiplied over several positions can cripple a young firm. Doing it right, making the investments, and getting 5 or more years of genuine productivity is how firms succeed.”

Gratitude is the best attitude

Talent can leave a firm for various reasons: personal, professional, or emotional. While many of these factors are beyond a company's control, they certainly have an influence over professional considerations. Although it's impossible to prevent all departures, firms can mitigate this risk by taking one crucial step from day one: consistently demonstrating genuine and heartfelt gratitude.

But what exactly is gratitude? Is a simple “thanks” enough? Clark reasons that it's not about the gratitude expressed, but the gratitude perceived. He explained:

“If I throw in a “thanks” at the bottom of an email, that is gratitude, right? But gratitude received is not gratitude perceived. Indeed, we often confuse gratitude with courtesy. For it to be true gratitude it needs to stand alone. You can express gratitude in an email, but it’s the PURPOSE of the email, and that is when people notice it. Doing gratitude well is hard because it makes both people feel a little vulnerable, but that’s why it is so valuable. If you aren’t feeling just a little vulnerable, you probably aren’t doing it right.”

Perfecting the art of gratitude can be challenging, but when companies get it right—practicing consistent, timely, and genuine appreciation—they can create a powerful ripple effect. Gradually, gratitude permeates every level of the organization, fostering a true culture of appreciation. Although some may dismiss this as a "soft" benefit, a culture of gratitude offers significant advantages for both employees and employers. It helps employees feel appreciated, valued, respected, and needed—especially when companies ask for more and are paying less—which in turn reduces burnout, enhances well-being, and boosts job satisfaction. Ultimately, this leads to higher productivity and engagement, while also reducing the likelihood of turnover.

Stay classy

In the startup world, the product reigns supreme, but it's nothing without the people behind it. Organizations ultimately succeed because of their people. And the companies that appreciate, support, guide, and motivate their employees – and future employees – are what Clark calls “classy."

He explained: “Think about any organization that prioritizes the value it creates (for others) over the value it receives (profits). They are still very profitable organizations, but they recognize that financial results are not the only outcomes that matter.”

Startups, due to their size and unique position, have significant potential to become classy organizations by implementing Clark’s three recommendations and prioritizing employee welfare. The good news? Achieving a classy status doesn't require a hefty financial investment. Yet, the value of showcasing your unique entrepreneurial firm to attract top talent, even against wealthier and more prestigious competitors, is absolutely priceless.

“Tim Baldwin knew these lessons, instinctually,” said Clark, “and he instilled these lessons both by example and explanation. He treated everyone with class, and created an environment infused with class. It was an honour to know him, and call him friend and mentor.”

To learn more about “Entrepreneurial leadership: Putting the “U” in team,” and the life and legacy of Tim Baldwin, please view the March/April 2024 Issue of Business Horizons.

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