The pandemic has pushed a big percentage of the global workforce to engage in a remote-work experiment on a never-before-seen scale, and a lot changed in the last year.
Early-stage ventures, that are often strapped for funds and seeking to provide flexibility to their first set of employees, have reaped the biggest benefits from the remote working trend. They have witnessed the advantages of lower rent and reduced energy and utility expenditures.
Also, with more women joining the workforce owing to the flexibility that remote work offers, startups are gaining social advantages. As a result, there is a possibility that in the future, remote-only will become the norm for startups.
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The current talent scenario for startups
Today, hiring has become more challenging than ever. It is an extremely competitive market, and candidates have the upper hand.
Everyone is seeking a similar kind of talent, looking in the same locations and vying for the same people. For example, a Bangalore-based startup is competing for talent with one in the Bay Area; a Morocco-based startup is competing with one in Mahabalipuram.
Another challenge encountered by startups is the influx of employees who are not culturally compatible, resulting in employee misfit.
Many businesses are facing high attrition rates due to various factors such as low employee engagement levels and personal interactions being replaced by virtual, transactional ones.
While talent acquisition is tough, retaining top talent is tougher. Talent hunting has become more challenging and unpredictable, and less exciting for startups. If they're able to hire and retain talent successfully, then it becomes an adventure sport that gives an adrenaline rush.
The bigger picture
The pandemic enabled startups to save infrastructure costs and gave them access to a global talent pool.
The initial phase of the pandemic was marked by a short-term gain of productivity. But the bigger picture is something else. The consequential impact on talent acquisition and retention are as follows:
Talent has become expensive: Recruitment has become expensive as well for startups. This is also because the competition for talent has become global.
Besides high demand for acquiring new talent, retaining existing employees is getting increasingly difficult.
With the high cost of training new employees, coupled with the average salary hike rising up to 40 to 50 per cent, businesses are likely to see a dent in their bottom lines. Apart from the burden of running the firm, these factors add to the stress for top management.
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Cultural erosion: In the remote work scenario, the engagement levels between employees and employers have gone down, resulting in a transactional relationship between them.
Another challenge encountered by startups is the influx of employees who are not culturally compatible, resulting in varied teams.
The broader startup mentality has shifted from putting employees first to putting money first. The focus on culture, policies, benefits, growth and learnings in startups has shifted to providing pay perks, resulting in cultural erosion.
Startups thrive on disruption
Disruption arises when people work together in groups. Remote work offers few such opportunities. Innovations that occur outside of the workplace or during corridor discussions are halted.
The exciting nature of a disruptive work environment, one of the key motivators for talent to join startups, may be lost in a money-centred culture, thereby making talent acquisition all the more challenging.
Large established companies vs. startups
Startups may lose talent to larger, more established companies that can offer higher salaries. Because startups are unlikely to be able to provide competitive compensation to the high-quality people they're attempting to attract. This leads to a net negative for the startup ecosystem.
Early-stage startups must regard retention and attrition differently and contextually. and make ongoing efforts to upskill and re-train employees. This not only ensures that current talent remains relevant to changing demands, but also helps businesses better handle unexpected exits.
The future of startups will be determined by how they organise themselves in this new world. They should strive for an equilibrium where the quality of work, culture, and growth are given precedence over compensation advantages.
(The author is CEO & Co-founder, Careernet.)
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