Attracting and Retaining Key Employees
The third significant challenge facing start-up and small technology companies is finding and retaining employees. We’ve all heard the cliche that “our employees are our greatest resource.” In the technology industries, this is especially true. There is a limited pool of top-flight talent, and companies are constantly competing, not just to attract that talent, but to hold onto it. Company managers live with the realization that their competition is always on the lookout to raid their stable.
According to the small business survey, companies are turning to new types of incentives to lure and retain employees. For instance, 62 percent of companies recognize the importance of rewarding performance through bonuses, commissions, and other incentives. In addition to rewards, companies need to offer progressive salary and benefit packages, including health, dental, and vacation benefits, as well as defined contribution plans such as a 401 (k) plan.
In early stage technology companies, the most common and valued employee benefit is participation in an equity-based compensation plan sponsored by the company. This benefit generally takes the form of options or grants to purchase common stock. Many companies will set aside between 10 to 20 percent of the equity ownership for non-founding employees and then allocate the option grants based on each employees position and contribution to future success.
Measuring Success for Technology Companies
For technology companies, the measure of success is not necessarily size. Rather, the key is the company’s ability to adapt to market trends and ways of doing business. Only by addressing the three keys to success–strategy, planning, and employees–can companies make the necessary market adjustment. The technology marketplace is littered with failed companies that had fine products and competent management, but still failed because they didn’t adequately address these issues in a timely manner.
This region boasts many of the country’s most successful technology businesses, companies like Thermo Electron, Raytheon, and Arch Communications Group. Without exception, these businesses serve as examples of companies that have worked with their advisors to develop effective corporate strategies and business plans, as well as programs for attracting, motivating, and retaining their employees. – ###
Provided by Arthur Andersen