It’s easy to disparage bankers and big banks. They have corrupt relationships with their rating agencies, they routinely take positions against their own clients, and at commercial banks, their business model has transformed from giving loans to charging fees. Banks are not only destabilizing our nation, they’re nickel and diming us in the process.
But they do some things right. Banks hire right: employees are not treated as consultants indefinitely. When investment banks make money, key employees get spectacular bonuses.
When hiring, think like a banker.
Don’t rob workers of rights our forefathers fought hard to win for all of us. Unemployment insurance, some sort of health insurance, lunch, breaks, reasonable hours, vacation and overtime pay are all realities a CEOs must acknowledge and provide. Many companies impose some sort of trial period – a bizarre innovation born of a commitment-phobic culture – asking employees to act as a contractor for several months, often without any pay at all. This practice is beyond cheap – it’s often illegal. (At ClearGears we have a trial period too, but it’s paid.)
Not paying unemployment insurance is an expensive mistake.
In New York, each time an employer fails to pay unemployment insurance for an employee, the employer can be fined $12,000. NY State can ask your contractor a few questions to determine if they were truly a contractor or an employee. Contractors are actually employees if the employer can dictate the hours of work, the actual work done, and the level of pay. If the state decides your contractors are actually employees, you will owe more cash than you probably have.
When you have profits, pay like a banker.
Most online entrepreneurs never see profits. Instead, their financial windfall happens when their company is acquired or, less often, goes public. It’s at those times that paying like a banker matters. Employees should benefit significantly when their company is acquired because acquisitions are often followed by layoffs of redundant positions. By paying everyone handsomely through very high bonuses, your reputation as a CEO skyrockets, you will improve the lives of the people who you depend on, and you generate more happiness in the world.
Don’t overvalue the risk you took when starting the company.
I find that most entrepreneurs justify their huge share of the company, its profits, and the windfall after an acquisition with the risk they took in the first years of founding the company. The truth is, few people really, and truly take huge un-calculated risks to start businesses. It’s a largely a myth that online entrepreneurs are mortgaging their houses or working night shifts to start their companies.
In reality, most young entrepreneurs I know in New York have either past successes or lots of family support to get them through the boot-strapping stage. Indirect help comes by way of free housing, trust funds, or selling stocks bought long ago by parents. Starting our businesses takes some courage, but we’re not dodging bullets or going hungry to get our startups off the ground.
Don’t operate like a big business.
Part of the joy of starting a business is that you can do right by your customers and employees. While you may have ambitions to become the next big company, wouldn’t the world be a better place if you did so while treating everyone with extraordinary generosity?