Peace & War Corps – Creating A Low-Pay / High-Reward Startup

PeaceAs noted in Frugal Is As Frugal Does, it is unlikely you will be able to pay your startup employees market-rate compensation. So how can you recruit top talent while rationing your cash and equity ownership?

The answer may lie within successful, yet cash-strapped organizations that lack the ability to grant their employees stock ownership, lucrative performance bonuses or other incentives often deployed by entrepreneurs.

How are such organizations able to recruit and retain talented and motivated team members?

Make Money Not Strife

On its face, how could the Marine Corps and the Peace Corps be similar? One is primarily populated by short-haired, nationalistic conservatives while the other generally comprises long-haired, one-world liberals.

Despite the divergent personalities attracted to each respective corps, the tenets that motivate achievement and foster high morale within these institutions have broad applicability to most startups. The following chart depicts the characteristics shared by these otherwise disparate organizations, both of which foster a high level of esprit de corps and unify their respective teams toward the accomplishment of a common goal, while paying salaries which are far below market rates.

 The Marine and Peace Corps Share A Surprising Number of Organizational Characteristics

Organizational Characteristic

 

Marine Corps Peace Corps
Sense of Purpose

 

High High
Mission Clarity

 

High High
Group Identity

 

High High
Educational Opportunities

 

High High
Personal Fulfillment

 

High High
Ability To Make An Impact

 

High High
Cash Compensation

 

Low Low
Equity Participation

 

None None
Performance Bonuses

 

None None

Sense of Purpose, Mission Clarity & Group Identity

One of the most obvious similarities between the Marines and the Peace Corps is that all members of each organization understand and identify with their organization’s overarching mission. The fulfillment of the organization’s mission is the source of a powerful sense of purpose that motivates the team to persevere, even under extreme stress, fatigue and duress. The clarity of the group’s mission eliminates ambiguity and allows each member to focus on how they can contribute to the fulfillment of the organization’s mission.

The existence of a common enemy also helps bring both organizations together. The Peace Corps’ enemy might be diphtheria, cholera or the lack of adequate shelter. The Marines’ enemy is often more easily identifiable.

The focus on defeating a common enemy under arduous conditions engenders tremendous camaraderie. The feeling of “we are all in this together” is a binding force that money cannot buy. As noted in Frugal Is As Frugal Does, care should be taken to not make life too comfortable at your startup. A durable solidarity arises from overcoming adverse and stressful circumstances.

The respective groups’ slogans also offer clues as to their similarities: “The toughest job you will ever love” and “It’s not just a job, it’s an adventure.” Unless you are familiar with the ad campaigns, it may be hard to identify which slogan applies to the Peace Corps and which is used by the Army, a close cousin to the Marines. The Marines’ slogan, “The few, the proud, the Marines,” serves to further establish the group’s identity as an elite organization comprising high achievers.

Give people a reason beyond financial wealth creation to be excited about your adVenture. You may not be able to send your employees to Zimbabwe in order to satisfy their sense of philanthropy, but there certainly are things you can do within your organization to make it “more than a job.” Not every venture can claim to be world-changing, but when possible, communicate a greater good from which your team can obtain psychological rewards.

At one of my startups, we helped create the medical robotics market. The non-monetary, psychological rewards were quite clear, as we helped doctors perform minimally invasive surgical procedures that previously were conducted highly invasively. Our robots allowed patients to walk out of the hospital within hours of surgery, rather than suffer a painful recuperation that could last as long as eight to ten weeks, in the case of cardiac surgery.

At my remote access software company, we relished the fact that we allowed working parents to spend more time with their children by leaving work early to attend school plays, soccer games and other important events, while having the ability to finish their work in the evening, from home, once their children were in bed. Helping busy professionals address their work/life balance may not “save the world,” but it makes a positive difference in tens of thousands of peoples’ lives. Celebrate such positive impacts made by your startup as a means of filling your employees with a sense of purpose beyond your products’ more obvious features and benefits.

You can also inject a sense of greater purpose by encouraging your team to become involved in one or more local charities. Establish a mechanism by which employees can work together to further a charity’s mission, rather than just giving their money. For instance, at one of my startups, we sorted food in a local food bank once a month. This gave people from different departments a chance to get to know members of our team whom they would otherwise have little interaction with at the office.

Educational Opportunities

The educational opportunities afforded members of the Marines and Peace Corps are usually outside a traditional classroom setting. Both organizations require members to gain life skills that can be utilized for the remainder of their professional career.

People learn and grow when they are given the chance to solve problems on their own, rather than follow a recipe. It is impossible to teach someone how to solve all the problems they will encounter at a startup. However, you can instill within your employees the courage and confidence they will need to autonomously solve problems as they arise. Not everyone will thrive in such an environment, which is why hiring the right type of individual is especially important during your adVenture’s early stages (see Finding An Entrepreneurial Gem).

One of the most fulfilling days at one of my startups was when it became apparent in an Executive Staff meeting that a major problem had been resolved without the involvement of any of the senior executives. Previously, this had not occurred, as the organization was still relatively early in the maturation process. It was very gratifying to know that we had created a culture in which our employees were comfortable confronting and resolving major issues without relying on a member of senior management to give them tactical directions.

Personal Fulfillment and Ability To Make An Impact

Both the Marines and the Peace Corps allow their members to gain professional and personal fulfillment. Such fulfillment is often derived by the ability of a member to witness the direct impact of his or her efforts. In the case of a soldier, it might be saving the life of comrade. For a member of the Peace Corps, it could be saving the life of a villager by administering antibiotics, cleaning a flesh wound or generating potable water.

Another way to make a low-paying, difficult job more rewarding is to foster an environment that allows employees to reach their personal potential. For instance, allow employees to take on as much responsibility as they can effectively manage. If someone in the Peace Corps says, “I think I can fix that dilapidated water pump,” no one will say, “Step aside, that’s not your department’s responsibility.”

Bill Hewlett and David Packard understood this principle at a time when most organizations relied on a highly centralized management structure. They realized that HP’s employees and customers would both benefit from an organization in which responsibility was delegated as close to the customer as possible. According to Mr. Packard, “…our success depends in large part on giving the responsibility to the level where it can be exercised effectively, usually on the lowest possible level of the organization, the level nearest the customer.”

The Marine Corps is a rank-driven, hierarchical organization. At first blush, it may seem antithetical to the typical startup. However, when confronting their enemy, soldiers are empowered to define the specific tactics necessary to carry out the overarching strategic goals defined by the generals. This is especially true during times of crisis. For instance, a squad may be given the strategic order to “take that hill;” however, the manner in which the hill is taken is left up to the squadron commander and his or her troops. As your adVenture grows, there will eventually be too many hills to take for you to dictate the tactics in each case. As noted in Founderitis, entrepreneurs must exercise judgment regarding which hills to conquer directly and which ones to delegate to others, in order for their startup to grow and prosper.

Lousy Cash Compensation, No Equity, No Bonuses

Numerous studies have shown that cash compensation is a temporal motivational tool. In the near-term, it can positively impact morale and enhance productivity. However, in the long run, most employees are more motivated by non-cash factors, such as personal growth, the “meaning” inherent in the organization’s mission and non-cash “trophies” which publicly validate their efforts.

In addition to the strong sense of unity and pride associated with exclusivity and the sense of accomplishment from helping to achieve the group’s mission, the Marines and Peace Corps offer their employees other forms of non-cash compensation. For instance, the Peace Corps afford their volunteers the chance to travel to remote destinations they would likely not have access to via commercial travel agencies. Such wild places are quickly becoming yet another domesticated corner of our largely homogenized world. As such, the chance to experience pristine locales is highly valued by Peace Corps volunteers.

Marines have access to discounted food at the commissary and often are provided with free base housing. I am not suggesting that you create a “company town,” in which employees shop and live in your stores and housing. However, elements of such non-cash compensation can be highly valued. This can include free meals, on-site dry cleaning services, etc. Billions of dollars worth of software code has been fueled by free pizza and gallons of Red Bull. However, do not fool yourself. Great cultures are not solely built upon free Cheetos and diet sodas.

Marines also have the opportunity to engage in activities that are unattainable in the private sector, such as flying planes, operating sophisticated weaponry and driving exotic vehicles, many of which cost hundreds of millions of dollars. Although you cannot afford your employees the chance to land a jet on an aircraft carrier, you should be able to motivate your personnel by allowing them to do things that would be unattainable at a BDC. For instance, at one of my startups, I was able to lead an initial public offering while I was in my mid-30s. I had no prior experience and frankly I did a heck of a lot of on-the-job learning (and I had a lot of help along the way). At a BDC, I would have never had the chance to lead such an effort. Look for similar opportunities you can make available to your employees as further incentive for them to accept the risks inherent in your startup.

Can’t Buy Me Love

Piggy You cannot buy your way to success when recruiting employees for your startup. However, you can establish a culture in which employees are motivated by the shared sense of purpose and the organization’s overall mission.

If the Peace Corps can motivate volunteers to travel across the world and endure extreme personal discomfort and the Marine Corps can inspire people to place their lives in harm’s way, you certainly can devise a culture, mission and compensation structure that motivates your team without breaking the bank.

Copyright © 2008 by J. Meredith Publishing. All rights reserved.

 

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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