Startups Can Be Quick to Fire New Employees

If you are considering a job offer from a startup, think twice. Why? Because startup companies may not give a second thought when it comes to firing you. As The Wall Street Journal says, “[Startups] are reinventing the way companies work: Firing people before the ink is dry on their employment contracts.”

Fired employeeJoining a startup is filled with risk. The biggest and most obvious is the fact that most don’t survive long enough to make anyone rich. Less obvious to is the pressure-cooker atmosphere in their workplaces.

Sure, there may be free food and even massages, but “flexible hours” may require employees to be flexible to work all the time. By definition, startups are almost certainly running out of money and looking for quick results. Employees who can’t drive rapid success may find themselves on the outside before they learn their coworkers’ names.

The Journal tells the story of a senior executive who joined a startup and was fired after just three days. “It was like an organ-transplant rejection,” said a venture capitalist who watched the situation develop.

No Time for Onboarding

Unlike more established companies, startups may lack the ability to determine a new employee’s fit until after the employee arrives. Where an established company might invest time in figuring out what went wrong and give the new person a chance to get established, the startup’s attention span may be much shorter.

“It would be great if startups were all about growth, hiring and success,” said tech investor Chris Dixon. “But the reality is that founding a company is a brutal job and lots of the pain gets passed down to employees.”

That pain includes a quick boot for those who don’t work out, says Dixon, an investor with Andreessen Horowitz, a Silicon Valley VC firm. “If you think you’re going to fire someone over the next six months, you probably will. Don’t wait too long,” Dixon advises startup CEOs. “It’s better for management and employees if it happens fast.”

New hires often don’t realize just how precarious a startup job can be. Startup managers say they try to let underperformers or poor fits go within their first three months, but some hires don’t last even that long. New companies release nearly a quarter of their employees during the first year in operation, according to a Bureau of Labor Statistics survey that tracked job losses between March 2012 and March 2013. That compares to the 6.6 percent annual job losses at businesses older than 18 years.

One reason a startup may go on a firing spree is a change in business direction, which requires getting rid of skills that don’t mesh with the company’s new path.

Understand the Environment

Before accepting a startup job, be sure you understand where the company is in its evolution. “Figure it out or leave” may be the attitude of an early business, according to an anonymous company founder. Older startups may have better hiring practices in place and be able to give a new worker more time to ramp up.

Describing an employee who was almost fired, the anonymous founder admitted expectations were never made clear to the employee. “This person had never worked for a startup before, and we knew that when we hired them,” the founder wrote. “We definitely should have spent at least a little time onboarding instead of expecting them to know everything from day one.”

Not all startup CEOs will — or can — be so forgiving of a new hire’s slow start, so the importance of understanding startups — and the one making the offer, in particular — can be the difference between survival and a quick firing.

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