Incentives and small, fast moving companies

Lately I have been giving a lot of thought to how theories of incentives apply to small groups and teams in startup companies. The employee base is relatively small (less than 50), the team size is less than 5, and the level of stress is mind-blowingly high. Our economy has experienced large gains from the always-on interconnected lifestyle of the last ten years, but employees are also increasingly mobile and volatile. I have yet to see good research studies covering this new work environment so I will offer some quick observations. It’s mostly a brain dump because I am exhausted.

Performance incentives

Shorten the expected reward cycle. If your employees or team is overworking itself look for some way to reward that effort with a near-term payoff. It doesn’t have to be big but it does have to pull them away from the keyboard for a little bit and give them something to look forward to while they feel like they are going to collapse from exhaustion. It can be relatively cheap too. Think tickets to a sporting event, a fancy lunch, or something geared towards each individual on a team. You’ve probably already lost two days of labor after overworking your team, so why not spend $250 to soften the recuperation?

Google and Yahoo! offer founders awards with possible rewards worth millions of dollars but I consider those awards an attempt to make entrepreneurship outside the company less attractive. The awards may motivate employees with pie-in-the-sky aspirations but I have yet to talk to an employee at either company with their eye on that prize.

Work environment setup

I think managers often overlook evaluating an employee’s work environment. Do they have the development programs they need? Would a second LCD or a new mouse increase productivity? Does Milton want a red Swingline stapler? Assuming an employee costs $120,000 a year in salary, benefits, office space, and other overhead configuring a proper work environment for an already costing the company $480 a day seems trivial. I think Fog Creek Software does this well. I’m still torn about how to best create a productive work from home environment one or two days a week for employees with commutes, families, or quiet time preferences.

Formal training

Most geeks like to be constantly learning new things. A cheap way to create learning environments is to swap expertise with other small companies. Have the database guys at two companies get together to talk shop or have a company advisor speak to your team for an hour.

Conferences provide peer recognition and the ability to learn new things. You should encourage your employees to speak at various conferences in their areas of expertise or sponsor their attendance at one local conference a year.

So that is just some of what’s been on my mind over the last week. It’s difficult to sort out but I am learning a lot every day by observing local startup companies and talking to entrepreneurs.