by Brett Fox*
Generosity is your secret weapon as a startup CEO if you want to build a great team. Generosity directly impacts your team’s motivation.
The more motivated your team is, the more likely your company is to succeed. In this post, I’ll share with you five ways you can use generosity to build a great team that will propel your startup to success.
Let’s start with…
One of the first challenges to your leadership skills as a CEO is how much equity you will give to your co-founders and then to your employees. My recommendation is to be generous with the number of stock options you offer to each member of your team.
I’m not saying you should go crazy and give out amounts way above the norm to your team. What I am saying is do your research and don’t be stingy with the amount of equity and shares you offer them.
For example, let’s say you have a co-founder. The company was your idea, and the strategy was also your idea. You sit down with your co-founder to discuss splitting equity between the two of you, and you think an 80%/20% split is fair.
Your co-founder is visibly upset and says that a 50%/50% split seems fair. Now you have a problem on your hands.
However, you are smart and quickly apologize and adjust your position. You and your co-founder agree that a 55%/45% split is a fair split.
Here’s what you need to remember about equity as a startup CEO: You’re either going to make a lot of money, or you’re just going to get a salary. And giving more equity to your cofounder will improve your cofounder’s motivation and therefore improve your odds of success.
Now do this across the entire team and your chances of success will continue to increase.
Now, let’s move on to…
If I had to give advice to a new CEO, I would say: “Give your team all the credit for every success your company has, and you should take all the blame for every failure.
The reason this is a smart way to go is that as a CEO, you’ll get credit for success anyway, so why not make it public to give success to your team? They’ll appreciate it because it feels good to be recognized for doing a good job.
Conversely, it builds loyalty when you publicly take the blame for your team when a mistake is made. They know you won’t betray them.
Now, I’m not saying you should ignore poor performance. On the contrary, I’m saying you should address poor performance behind closed doors, not publicly. No one likes being reprimanded in public, so just don’t do it.
Next…
I don’t know where I learned it, but I was taught to delegate as much as possible to whatever team I was managing as quickly as I could. This is a great skill to learn as a CEO.
I’ll give you two big reasons why delegation is so powerful. First, the more you delegate to your team, the more free you are to do the things that only you can do. Because as your company grows, you’ll want to work on the things that only you can do.
Second, delegating to your team by shifting responsibility for as many tasks as you can down the organization prepares them to take on more responsibility as your company grows. In this way, you are training the future leaders of your company by being generous and delegating down the organization. By the way, delegating down the organization should be practiced by every manager in the company, not just you.
Next, let’s move on to…
Compensation doesn’t end with equity and salary; healthcare and other benefits like vacation are key tools for retention. So how generous you are with the healthcare and benefits you offer your team is important.
Remember, it’s not just the employee who looks at benefits, their spouse does too. One of the smartest things we did at my company was compare our health plan to that of the public companies we competed with.
We wanted to be at least on par with the top companies in our industry as we were recruiting engineers from these companies. In many cases, our benefits package helped convince a potential employee to join us.
Finally, let’s move on to the last point on our list…
From your co-founder who wants to be CEO of his own company someday, to the new college graduate you just hired, be generous with your advice. An important part of your role as a startup CEO is coaching and teaching your team.
I had weekly one-on-one meetings with each of my direct reports. I divided the meeting into two parts. In the first part of our one-on-one meeting, the direct report could ask me anything that was on his or her mind.
In the second part of our one-on-one meeting, I gave them advice and guidance on how they could improve and achieve their long-term goals. You never want there to be any doubt about where an employee is at, and giving ongoing feedback is a great way to do that.
Next, I suggest you use the old Hewlett Packard concept of “Management by Walking Around.” In other words, don’t just sit in your office. Walk around your facility and get to know your team. Build a good relationship with your team. Get to know their challenges and goals.
Your team will appreciate your desire to get to know them and will feel more connected to the company.
One final thought: Be generous in sharing information. Your team wants to know how the company is doing, so be generous and share as much information as you can with them. Not just the positive information. Share the negative information, too.
I know you’re worried that information might leak out and your team might quit. I used to feel the same way, especially when I was younger.
However, I have learned that the downside risks are minimal. The benefit of being generous with the information you give to your team is that you build loyalty for the many times you will need your team to step up when there is a major problem. That is the great benefit of being generous.
