Startup Communication with Employees

By Stephen Day

In my first article in this series, we discussed how to reach and communicate with customers and potential customers.  This 2nd article will focus on communicating with employees.  Now if you are wondering just how many employees will be working for a startup, perhaps not too many.  But I will also include outsourced contractors, 1099 part timers, and other service providers. Anyone who works for you, employee or not.  We will leave investors and vendors for a later edition.

You are either a startup founder or your company is already up and running, maybe for quite a while.  Really, if you have 5 employees or 5,000, good communication is a must. The tips I offer here are just a few of the methods that you can begin to effectively communicate with your employees.

Remember, communication is, by definition, a two-way street. 

If there is no give or take, then you are not communicating. You are merely issuing an edict from your own ivory tower.  While this may be necessary at times, such as issuing a policy statement or a new federal guideline for compliance. But if this is your normal manner of informing your employees of any changes, you will soon create an atmosphere of hostility. 

I know about the effect of such hostility!

Back in the 1990s, I will a full-time consultant to a large federal defense contractor. My responsibilities included management of the mergers/acquisitions.  To a smaller company of under $50ml in revenues, it sounded like a merger.  But make no mistake, to the larger firm, it was an acquisition.  Once the deal was signed, the various departments of the big company laid siege to the new “acquisition”.  There was an arrogant attitude that the big company’s HR department knew best and the “acquisition” had to accept the accounting and payroll systems and policies, including the compensation plans.

 One such smaller company was owned by two men, but had over 140 employees, many who had been involved since DAY ONE.  They had been promised that if the company was sold or merged, the employees would participate in the profits of the sale. But you already see where this is going, don’t you? No one saw a dime of a bonus while the owners pocketed millions.  To say they were upset was a severe understatement. They were blindsided by the owners and by our acquisition.

While the executives were issuing new rules and policies to the newly acquired employees, they had no idea that many of those employees were leaving.  Actually, it was about 20%, but that 20% represented the very best performers and the brain trust.  My challenge was to keep the key employees from leaving.  I became the acquired company’s employees’ gladiator to keep the big company officers away.  At the same time, I had to convince the CEO that the entrepreneurial nature of the smaller company was what made it successful.  I was met with resistance, including one executive who told me that the employees should be grateful that they could be part of such a great and big company.

I kept a constant communication with virtually all the employees.  I wanted them to understand that I was not making separate deals for a select few. They soon saw that I was trying to work out a solution for everyone.  Finally, I set up a meeting with 5 key managers and the Board of Directors.   What we did was leave the old structure of the company alone. It would become a partly-owned subsidiary rather than just another business unit, with 22% of the small company’s shares reserved in a profit sharing program. That way, the employees could keep their entrepreneurial culture and were rescued from the parent company.

Imagine if the employees of the acquired company employees had been given the opportunity to voice their concern, instead of having new policies and procedures pushed down their throat.   Good communications from the start would have saved hundreds of thousands of dollars, possibly kept the really great project managers and other key employees that left, and created an atmosphere that would have attracted other acquisitions. 

Here are some basic rules for general communications to employees:

1.  Know what your employees are thinking about you and the management of the company. Use Survey Monkey or other independent surveys to poll the employees over policies and management.

2.  Create a newsletter just for the employees and independent contractors. 

3.  When you announce good news, make sure you give credit to those that participated in the success.

4.  Do not announce that you are in negotiations with anyone for anything. No talk of mergers and acquisitions, no talk about a big customer you are wooing. 

5.  NEVER criticize anyone for anything in public. If your salesman got drunk at a convention, or your accounting department incorrectly billed your biggest customer, deal with them privately. Never make it public. NEVER!

6.  Praise your employees and mention when they have a significant life event…marriage, birth of a child, death of a family member, etc.  Make everyone feel that you consider them to be part of your business family.

7.   Once per month or so, ask for ideas on how the company could be better. There are never any wrong ideas.

8.  NEVER criticize your competition.  Find ways to take their customers and perhaps their best employees, but do not criticize them.

9.  If you do not know the names of all your employees, then ask each manager to develop a short bio of each one, including their interests outside the company. Include this in the newsletter.

This is really just basic good sense.  Remember, your employees may be wonderful friends. But you are still the BOSS, and they absolutely need to view you as a fair, even-tempered leader.

Contact and follow Stephen Day at:

Email: sday@daycap.com

Twitter: @stephenaday

 

 

Posted on September 12, 2016 .