Why startups should not hire full-time employees?

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  • Today ‘Start-up’ is synonymous with technology. This calls for automation and minimizing human intervention, which invariably means that the start up should be lean and lightweight. While founders manage with small teams during the early stage, they often tend to hire their employees on rolls. The lines below do a comparison of hiring employees on rolls as opposed to appointing them for a contract period.

     

    Reduced Hiring Effort: An early stage startup takes feedback, deploys corrective action and recalibrates its model more frequently that an established business. Accordingly, the quantum of work that is temporary in nature is significant in a start up, and hence necessitates bringing on board a ‘relatively higher’ number of temp employees. As the startup itself evolves, new tasks and/or roles can be first proposed to these employees, and in case of misalignment, they should be substituted with a different set of temp staff.

     

    Proof of Concept: The first three months of employment are very crucial both for the employer and the employee. During this period both parties access each other in detail and determine the extent of the fitment. If there is any misalignment, then engagement with a temp employee provides far more flexibility in determining the terms and duration of further engagement. This becomes more relevant in case of startups, as they cannot afford a longer transition for replacement. The signs of deviation and applying corrective action can be shared early on, which enables both parties to prepare for alternate options in case of separation.

     

    Cost of Resources: Temp employees come on board at a lower cost than their permanent counterparts. Moreover, they can be accommodated into much simpler compensation structures like stipend or consulting fees that eliminates the hassle of offering provident fund, gratuity, equity etc. Many a times, the temp employees end up being interns, fresh graduates or past employees of startups / corporates who are not engaged with any assignment currently. This invariably brings down their cost, which provides a breather to start-ups.

     

    Deploying Skills at the Right Place: It would NOT be wrong to tag adjectives like ambiguous, unstructured, ad-hoc with start-ups. In the early stage, it becomes a collective responsibility of the startup team to deliver on all parameters, which eventually means that one person delivers on multiple functions or roles. It is quite easy to explain this situation to applicants for temp roles, while full time employees often seek for a discreet job definition and boundaries of her scope of work. Once the individual demonstrates higher competency in one or two area(s) among the bucket list of tasks / functions assigned to her, she can be designated as the owner of those area(s), as the venture expands.

     

    If you are a start-up or SME and looking for people from similar background, then visit www.leanflo.co and share your requirement or visit at https://leanflo.co/my-support/startup-services/

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