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In all likelihood, neither you nor your team are particularly good at talking about salaries. Sophie Hossack, Director of Strategic Partnerships at Receipt Bank, talks about how to improve everyone’s ability to have these crucial conversations

Alongside sex, religion and politics, money is something that people in Britain are not good at talking about. It’s considered a taboo – so we never really get the chance to get comfortable with any conversation involving it.

This leads to a serious “language gap” around salaries. Very few of us are truly skilled at talking about salaries in an effective manner.

Say you’re running a small business, and one of your employees wants to ask you for a pay rise. They may not know how to start the conversation, what to say in it, and will probably be generally embarrassed by the whole scenario. This could lead to the conversation being awkward, unproductive – or just never happening at all.

So what?

If you’re running a small business, you might be thinking “so what?”. It sounds reasonable to think that the ability of your employees to ask for a pay rise isn’t really your responsibility.

However, there are two clear benefits: you’ll be helping them to develop and helping to level the playing field

If you’re able to teach your team to be comfortable and confident in salary discussions, you’ll create a much more level playing field, and enable salaries to be more dependent on skill and merit.

Additionally, these sort of skills are valuable for your business. If your employee is in a commercial role, developing their negotiation skills will be helpful in client facing discussions around contracts, pricing and renewals. If your employee is not in a commercial role it will help them develop the confidence to discuss value and money.

Teach your team how to ask for a pay rise

Teaching members of your team how to ask for a pay rise is a smart idea – not only does it help avoid the pay disparities we talked about above – it’s also a great way of showing that you’re genuinely invested in developing your team. This is a skill that will serve them well throughout this job and when they move on, and is one that they’re sure to value. You’re demonstrating that you trust them, that you value them, and are genuinely committed to helping them progress. Here are some ways to approach it.

Fight the taboo around salaries

By creating a widely-understood and transparent process for discussions about salaries, you can diminish the taboo around money and salaries.

To do this, have regular intervals where team leads, managers or business owners talk to their employees, where salary is an explicitly defined topic of conversation. Most likely, this will take the form of review sessions.

Exactly how often you have these sessions is largely up to your and your business – but they should be relatively regular – definitely more than once a year. The aim is to make talking about salaries a regular, habitual affair for your employees, not a once-a-year, feared event.

Smaller businesses often fail to create a structure like this (while larger businesses usually have a more formalised review process). Don’t fall into this trap: building occasions where you encourage employees to discuss salaries is a crucial part of removing the taboo which surrounds them.

How you do this: make sure everyone in your business has regular, scheduled discussions or reviews. Explain to them that in these meetings, salary is an expected topic of conversation.

Teach your team to own their salary discussions

It’s your job to create spaces where salary is discussed. But it’s the job of your team members to own that discussion.

Make it clear to your employees that the onus is on them to initiate the conversation. This should be explained as early as possible, and reiterated whenever you have a meeting where salaries will be discussed.

If you do this, you’re essentially training your team to be ready for when, eventually, they move to a different job, where their manager might not be as concerned about salary discussions as you are – they are able to take these discussions into their own hands. That may sound like it’s not really helpful to your business, but remember that showing your team that you value their development and progression is always a positive thing – and helping them develop a genuine life skill like this is a highly effective way of doing this.

How should a manager tackle salary conversations?

So you’ve learned how to teach your employees to be comfortable with and to own the conversation about salary. But what about you? These conversations aren’t easy for the person in a senior position either. Here are some key pieces of advice that will help improve every conversation about salaries.

Follow up fast

A quick follow-up to a discussion about salary is an absolute necessity. Salary is massively important to people. It can represent their personal development, their quality of life, and the quality of life they are able to offer to their family. According to a PWC survey, 40% of employees say personal financial issues are the biggest cause of stress in their lives. Being left guessing about anything is frustrating. Being left guessing about something that means so much to you is infuriating.

You should be aiming to respond to a salary related request as soon as possible – realistically, 48 hours should be the absolute limit. Having to make an important decision that quickly might seem foolish – but it makes a real difference to your employees.

One example I always remind myself of happened a few years ago: On Friday, I had an employee’s performance review, which included a discussion about her salary. After the review, I decided she would be given a raise. It was a modest increase – and it was 6pm, so I was tempted to let her know the good news on Monday rather than interrupting her evening. But as I left work, I changed my mind and sent her a quick text, telling her she’d got a pay rise and how much it would be. She and her fiancé were able to celebrate that night, and I know her weekend was improved significantly over the alternative – which would have been two days of worrying.

Don’t be intimidating

Walking into your manager’s office and starting a conversation about your salary can be  an intimidating task. If people perceive you as an intimidating person, the conversation becomes even more daunting and difficult.

Part of ensuring you’re not an intimidating person is the way you present yourself, the way you lead, and the way you speak to your team. Two things I always try to keep in mind are:

Give them your full attention. Appearing distracted or not engaged with a person can make people feel they aren’t worthy of your time. If you give them your full attention, the conversation will feel more equal, and will help them view you as a less intimidating figure in this and future meetings.

Lead with curiosity, not judgement. If someone says something you disagree with, don’t get defensive and immediately state your disagreement. Ask them to expand and explain, with the aim of understanding their point, not correcting them.

These are much easier said than done! The art of having productive conversations is a skill that takes a lot of time and effort to master. If you’d like to really dive deep into this topic, have a look at this article by CharlieHR COO Ben Gateley.

Give clear, actionable feedback

Learning to give feedback is vital for any leader – but it’s especially important in discussions about salary, and most of all when you have to turn down a request for a pay rise.

Critical feedback isn’t easy. People are frustrated, even angered by it. But this is a short-term problem. Long-term, if you give this feedback clearly and honestly, then you’ll be seriously reducing an employee’s frustration. Don’t be afraid of clearly outlining the problems which are holding them back from getting a raise.

Give this feedback with a focus on what can be done for the person in question to improve. This should feel like you’re working with the employee, to create a plan for them. Clearly explain what you feel they have trouble with, and what they can do to improve. They might seem frustrated by this. Up to a point, that’s fine. In the long run, they will value this far more than being told they can’t have a raise – without any reasoning.

Meanwhile, you shouldn’t give someone a pay rise without feedback either. Here, your feedback should outline what things they did to merit this pay rise, how you value them in the business and how this fits into their long-term progression. It may seem obvious, but explaining what behaviour caused a pay rise is the best way of making sure that behaviour sticks around.

Clearly communicate your expectations

The majority of all conflicts related to salaries happen when there has been a misunderstanding of the expectations held by the parties involved. Here are a couple of examples from my experience:

  • Six months into their tenure at the company, an employee asked me when their bonus was going to be paid… but his role didn’t come with a bonus.
  • A potential employee negotiated hard on their salary during the hiring process. We offered a higher salary, but as a result also had higher expectations.

In both of these examples, the fault may well have been on the business: we failed to communicate an expectation on our end, or failed to correct an incorrect expectation on their end. When we finally got around to properly communicating the expectations, it was all too late: both employees ended up leaving the business after a comparatively short time.

The communication of expectations must be crystal clear.

To do this, have a clear, official framework for how salaries work. This could be in the form of an official progression plan which is shared across the business, or it could simply be a set of agreed-upon rules among anyone who decides on pay rises, which they explain to employees when they arrive at the business.

The goal is to have every person in your business fully aware of what they need to do and how they need to develop in order to receive a pay rise. You’ll also be equipping them to discuss it within a consistent and understood framework that works for your business. Do this, and conversations about salaries will become much easier.

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If you can’t afford to give a good employee a raise, you’re in a dangerous situation – and dealing with it in the wrong way can make things even worse. Matt Buckland, VP of Customer Advocacy at Workable, and formerly of Facebook, Bloomberg and Lyst, explains how to get through it.

If you’re running a small business, soon enough, someone in your team will ask you for a raise.

Dealing with raise requests is generally about answering the question of “does this employee deserve a raise”. But at small businesses, there’s often an additional question to be asked, which complicates things a lot:

Can the business afford to give out this raise?

If the answer to this question is a resounding “no”, but the answer to “does this employee deserve a raise” is “yes”, you’re in trouble.

This is a nasty situation. While they’re probably not going to walk out on the spot if you don’t give them a raise, it will steadily erode their morale, most likely ending with them leaving your business. And unfortunately, since they’ve directly identified money as a problem, alternative ways of rewarding them (such as more learning opportunities, different perks, and so on) are unlikely to act as anything other than a temporary solution.

You need to fix this problem. Here’s how.

The bad way, the really bad way, and the good way

There are a few ways to deal with this problem.

The bad way: give them a meaningless title

This is an enticing trap which small businesses have a nasty habit of falling into. You add a completely irrelevant layer to the structure of your organisation (like a “senior lead” in a team of four people), talk about some meaningless changes in responsibility, and sheepishly tell them that they’ll get a raise… at some point.

This might stop the employee from leaving. It will cause much bigger problems down the line. It will make it harder to hire people (where does your new Head of Sales fit in if you already have a Senior Lead Sales Director?). It will make your salary and benefits system a nightmare. And when, eventually, everyone realises that these inflated titles don’t really carry any higher salaries or real responsibilities – and that “progression” in your business is basically a myth – people will start to look for other businesses which can offer them real progression.

If you're interested in learning more about this progression in small businesses, check out this post on how to promote someone in a startup.

The really bad way: pretend they don’t deserve a raise.

I’m not going to spend much time explaining why this is a terrible idea. Remember two things:

  1. Most people have a pretty decent sense of whether they’re being under or over-valued
  2. You’re probably not as good a liar as you think you are

Your employee is, most likely, going to know that you’re not being honest with them. Worse still, you’re lying to deny them a raise, and misrepresenting the amount of work they’re doing.

You’re going to lose any goodwill this employee feels towards you, and they’re going to immediately feel that the extra work they were putting in was utterly pointless. You’re at risk of angering, demotivating and (most probably) losing a high-performing, valuable employee. Don’t do this.

The good way: make a plan

Talk to the employee, and be as open as possible about your financial situation. Acknowledge that they deserve a raise, and that you want to give them one, and work with them to create a plan, detailing what the business needs to do to be able to give them a raise.

Don’t let this plan be vague. It should have specific numbers and specific timescales in it - e.g. “If we hit X revenue target by Y date, we will be able to offer you a Z% raise”.

If the targets are within the employee’s area of responsibility, it might be worthwhile talking about how their contribution could help push the business towards reaching them – but remember that this is fundamentally a commitment the business is making. They’ve excelled at their job, and deserve better: it’s time for the business to start measuring up to that.

This plan should also contain a solid description of what happens if the business doesn’t hit the targets lined out – most likely an acceptance that they will be looking to move on from the company and, if possible, flexible notice period terms.

Ideally, this plan should be written down, with both you and the employee keeping a copy for their records. In many ways, this is a way of keeping the business honest: it’s all too easy to make vague promises and find limp excuses for not following through on them. A clear, written document with specific numbers is better for everyone involved: the employee will appreciate the commitment, and, if you do hit your targets, will be able to have a frank, above-board conversation with you about the promised raise.

Here’s an example of what this plan might look like:

We recognise that you deserve a raise. Unfortunately, the financial situation that the business is currently in means that is not possible to do this.

This plan aims to clarify what conditions the business must meet to be able to offer you an increase in salary, and what period of time we feel is a realistic expectation for meeting these conditions.

If we hit [target], we will be able to offer you a raise of [percentage]

Some examples of possible targets:

  • An increase in sales
  • An increase in revenue
  • An increase in profitability
  • A reduction in costs
  • Completion of a project which is currently causing costs
  • Securing a funding round at or above a certain value
  • A growth in user numbers

Once we reach this target, we are committed to increasing your salary by the aforementioned amount.

Reasonably, we are expecting to hit this target within [specific period of time].

If we are not able to hit the target(s) that we have outlined, or only partially hit them, then we will discuss other options – such as providing you with a smaller raise which the business can afford, or extending the timelines for the targets. At this point, we would understand if you chose to leave the company, and we will be happy to write you a reference and provide a flexible notice period arrangement.

If you don’t hit the targets, then you should be prepared to lose the employee. There’s actually a good chance they’ll stay on: this whole exercise should be an effective way of building trust between you and them.

But if they don’t want to stay on – that’s ok! It’s normal for people to join and leave businesses. Small companies often look to foster a “family” atmosphere – and while this can be nice, it’s not particularly helpful when someone wants to leave. Remember that this isn’t really a personal judgement: they’re making a decision about their career. Treat it respectfully – and try to avoid feeling hurt or offended.

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We’re British. We’re awkward. Conversations about salaries are difficult and emotional – even when that conversation is one you’re having with yourself. But it's a conversation you need to have.

All too often, when people start businesses, they don’t really think about their own salaries – or don’t know how to think about them. But deciding what you’re going to pay yourself is a vital part of a business, and failing to do this can lead you to some serious problems.

How should I decide how much to pay myself?

Obviously, every company is different – so we can’t give you any exact numbers here. But there are some basic rules you can stick to.

If your business is a startup, aiming at rapid, continuous growth, probably funded with venture capital investment, then the rule is:

Your salary is there to eliminate financial worries – not to fund a lifestyle.

On the other hand, if your business is built around being consistently sustainable at a small size, things are a bit different:

As far as the business can afford it, your salary is there to provide you with a comfortable lifestyle. But that lifestyle shouldn’t be different enough from the rest of your employees that it sparks resentment.

I stand by these rules for the vast majority of businesses – but I also realise they’re a touch vague and philosophical – so here’s some more specific things that you should be thinking about if you’re setting your own salary.

What you should think about when setting your salary:

Profitability. When businesses start generating a significant amount of revenue, it’s usually time for the person running the business to have a think about giving themselves a raise. You can approach this by literally running a performance review on yourself. Consider the following questions:

  • How responsible for the uptick in profits was your input?
  • Have you lived up to the expectations of your team?
  • Were the expectations of your team set high enough?
  • How are you measuring up to the rest of the team?

Don’t just produce brief answers to these: take the time to write out your response, and an explanation arguing why your response is legitimate. Once you’re done, read over the document and, attempting to take as detached a view as possible, consider how much of a raise you deserve. It might be worth doing this exercise with someone else in the business so you can get some honest feedback – choose someone who won’t suck up to you, and who you can trust to be brutally honest about how well you’re doing your job. This could be anyone in the business, but if you’ve got a board of directors or investors, they’re often a good starting point.

Family & responsibilities. This is another dodgy area. In principle, a your life outside work shouldn’t really impact your salary… but in practice, this is slightly different. Being unable to provide for people who depend on you is a fast-track to ruinous financial stress – which will seriously impact your ability to run the business.

What you shouldn’t be thinking about when setting your salary:

The amount of investment you’ve got. Startup founders can easily fall into this trap. If your business has received a huge amount of investment, that is not a license to pay yourself sky-high salaries. That money is probably there because you’re tackling a huge project which has some hefty costs attached.

Your “market rate” – ie what other business owners are paid. Employees will often look at the salaries of people in similar roles at other organisations to work out whether they’re being paid fairly. It can be tempting to do this as a business owner – but you shouldn’t. The people who own a business are not employed by the company. They are the company. Your salary is not there to attract you away from another job. It’s there to keep you going while you work towards success.

Experience. In regular jobs, pay differs massively based on your experience with the role – so it’s understandable that people who have started or run multiple businesses might expect a higher salary. But this is backwards logic: more experienced employees are paid more because they’re expected to bring more value to the business. If a more experienced founder brings more value to the business, that value will manifest itself as the business succeeding – which will (most likely) result in a large financial reward for the business owner.

Employees who are paid more than you. At early stage businesses, it’s quite possible that you’ll take on employees who are paid considerably more than you. I had this exact experience with one of our early hires at CharlieHR. It’s a daunting, uncomfortable thing to do – but fundamentally, this shouldn’t change how you see your own salary.

At this point, you might be asking yourself “why don’t I just pay myself as little as possible?” This can seem like a smart idea. Maybe you’re trying to squeeze out an extra month of runway, or minimise costs so you can point your revenue elsewhere.

However, this is a dangerous line to walk.

Why it’s a problem when business owners underpay themselves

If your salary is so low that you’re struggling to meet basic expenses, you’re going to experience a heavy dose of personal financial stress. This can seriously impact your productivity and demeanour, compromising your ability to lead your team and get your work done.

Stress isn’t your only worry

If your team is aware that your salary is very low, get ready for some more problems.

There’s a risk of inhibiting the ambition of people on your team. The promise of higher salaries incentivises people to push themselves towards progression and promotions – and hearing that the top dog in a business is paid a pittance could undermine that.

Some business owners (often unintentionally) use their own low salary as a weapon to drive down the wages of their team. They might talk about how little they’re paid, or the sacrifices they’re making, as a way of demonstrating their commitment to the business. This sends a message that other members of the team should feel guilty for having a high salary, or asking for a raise.

This is a problem. Business owners have a habit of forgetting how much skin they have in the game. If their business ends up being seriously successful, they’re going to be reaping massive rewards: money, prestige and personal satisfaction. Given that potential upside, a low salary is a small sacrifice. Employees, meanwhile, may have some skin in the game – but their main motivation for coming to work each day is receiving a fair salary. In this context, presenting your choice to take a low salary as comparable to someone in your team taking a low salary is, at best, naive, and at worst – insulting.

Don’t take any of this to mean you should pay yourself a ludicrously large amount. Additionally, it’s fine to make short-term financial sacrifices if the business needs it. But you shouldn’t be keeping your salary at a consistently low level.

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Dominic Jackman founded Escape The City to help people find fulfilling work outside traditional corporations. Here, he explains how small businesses can hire top-tier people, even when they're unable to pay a top-tier salary.

Realistically, most small businesses can’t offer the top-level salaries that big corporations can. That’s an uncomfortable reality to accept, and it leads to a worrying question:

“Is my business be missing out on the best hires because we can’t offer top-tier salaries?”

Luckily, salaries aren’t everything. There are multiple reasons people choose to work somewhere  – and in some of them, smaller businesses actually have a huge advantage.

Don’t waste time fretting about salaries. Instead, focus on putting effort into optimising the areas where you have an advantage over larger corporations, and you’ll see the best returns.

There are three key areas where small businesses have the edge over large corporations: impact, learning and autonomy. Committing to these within your business will help build your culture and improve employee retention – but crucially, they will give you something that helps you stand out to candidates during the hiring process.

Impact

In a massive, faceless corporation, the work you do can feel like it’s just being fed into a gigantic machine.

This is not the most enjoyable way to work. Regardless of what your bank balance looks like at the end of the month, most of us like to feel that the work we do is having some sort of effect on something.

This is where you have an advantage. In a small team, the effect of every person’s input is impossible to miss. Exceptional work – even from junior employees – will have a measurable effect on the health of the business.

Some of this happens naturally – just by dint of how small teams work. But you can help it along, and make sure no employee feels like they’re ever doing meaningless work, by:

  • Regularly celebrating individual wins
  • Making sure everyone knows when someone’s hard work had a significant impact on the business
  • Focusing on cross-company communication – to avoid teams getting siloed off and not finding out about the work being done in other functions

How do I communicate this to potential employees? During the hiring process, don’t just tell candidates what their role will be: tell them what impact their role will have on the company and its goals.

Learning

Small businesses can offer a very steep learning curve. Small teams don’t have the manpower to have people specialised and experienced with every problem they’re going to encounter – so you’ll end up tackling problems you know very little about, and learning on-the-go.

This is a hugely compelling prospect, especially for people who are early on in their careers. It’s also a smart move on their part: sacrificing a salary for the chance to accelerate the development of various skills has a good chance of paying off down the road.

Once again, this happens naturally in small companies, but there are ways you can help it along:

  • Consider implementing a personal learning allowance. Even if money is tight, a small allowance to be spent on learning materials (such as courses, books or seminars) is a great way of showing your team that you’re invested in their development. Most people feel a huge difference if their salary went up by a couple of hundred pounds a year... but being told you have access to a £200 learning budget seems both generous and tangibly valuable.
  • Make personal development a key, structured part of your business. A quick, easy way to do this is to use PDPs – you can read about these here.
  • Actively make time for learning in everyone’s calendar. Some business owners can be reluctant to do anything which eats into their employees’ “work time”. This is generally short-sighted: scheduling learning days, lunches, knowledge-sharing sessions teaches your team that you’re invested in their progress – and leads to team members who feel like their job is pushing them forwards.
  • Be flexible. If someone wants to learn something which isn’t directly related to their job, be supportive. Does someone in your sales team want to learn to code? Sure, it probably shouldn’t be their top priority, but there’s no reason you can’t support them along the way.

How do I communicate this to potential employees? This one is comparatively simple. You should be talking about your commitment to developing your team everywhere: on the job advert, in interviews, and on the offer letter. Be both specific (make sure every concrete thing you do – like learning budgets –  is described) and general (stress that the business has a strong culture of personal development).

Autonomy

Big businesses have a lot of managers. Some people thrive in an environment where they are heavily supervised… but a lot of people don’t. Especially when it tips over into micromanagement.

This really isn’t a risk in small businesses – often because there just aren’t enough people to produce the endless levels of management that larger companies have. Employees at smaller companies are much more likely to be handed a set of goals, and then left to their own devices to work out how to get there.

Bear in mind, however, that this sense of autonomy is fragile. Build the wrong culture, hire the wrong people, or just let yourself slip into being excessively controlling - and it will slip away.

This subject is huge, and there's much more to be said here – so if you're interested in finding out more, check out this post about how to transform your workplace with a culture of autonomy.

How do I communicate this to potential employees? Clearly outline the areas that potential employees will “own” during the hiring process. Stress that you’re looking for people who can work independently. Finally – if your team is still relatively small and works under one roof, bring candidates into the office. It’s one thing to talk about how you’re a small, motivated team – but if you’re able to show candidates that, you’ll make a far stronger impression.

If you really throw yourself into all three areas you’ll build a great working environment, find it much easier to keep employees from leaving for higher-paying corporate jobs, and be able to stand out from the crowd to potential hires.

However, the sad reality is that during a job search, prospective employees will take claims about culture with a hefty pinch of salt. They’ll be looking at dozens of businesses, all of which will wax lyrical about their “incredible culture”, and all the learning opportunities and independence they’ll give you – regardless of whether this is actually true. Salaries, meanwhile, are a concrete, easily-comparable number which businesses can’t really misrepresent. So while this stuff helps, to a skeptical candidate, it won’t truly win them over.

If you really want to compete with big corporates at this stage, you have to commit to one of the biggest advantages small companies have over big ones, and one of the most effective ways you can make a business stand out from the crowd:

Learn to communicate your journey

When it comes down to it, people work for money. But people work at a specific place because of the journey that business is on.

A person joining a small business is becoming part of a group of people on a journey. Small businesses usually have a singular goal, or a small group of goals, to be completed in a relatively compact time frame. That makes for an extremely compelling story, and one which people want to be a part of.

This is much, much harder in larger corporations - which usually have diverse, long-term goals. Perhaps they span several industries, or have numerous ongoing projects, all loosely aimed towards an “expand and generate profit” goal.

The journey they are on is vague, and – more often than not – unexciting.

If you successfully communicate this mission, you’ll be offering potential employees something unique and compelling, which it is almost impossible to offer at a larger business. You need to:

  • Have a clear mission statement that is brief, easy to understand and compelling
  • Ensure everyone in your business understands the mission
  • Embed that mission statement into as much of the business’ public-facing person as you can. Your marketing, website, logo, storefront – you name it – should all be built with this mission central in your mind.
  • Over time, the mission you are on might change. That’s fine. Just make sure you’re clear on what the new mission is – and that you’re doing all the previous things with this new mission.

If you do this, communicating the journey will become second-nature. You’ll have baked it into your language and the way the business operates – and prospective employees will recognise this.

Finally, if  you’re still not convinced, I’ll leave you with one last point: doing this costs basically nothing.

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Giving your team a stake in your company can be a brilliant source of motivation – but only if people actually understand them. To make sure you're getting the best out of them, you need to learn how to talk to your team about options. Here's how you do that.

Options - the most commonly used mechanism to award your employees shares in your company - can seem like a dark art. A black box that nobody fully understands and few members of your team really appreciate. That can be extremely frustrating when every point of equity represents something deeply tangible for you, as the owner of a business. Something that not only represents the financial upside of building a company, but the continued control and ownership of the business you cherish.

It's an extremely common complaint that, in spite of designating large chunks of equity to the team (often worth multiple millions of pounds) very few people really value them. The aim of this piece isn't to discuss the variables involved in creating an options strategy and distributing them: there are plenty of good resources for that – such as these guides from Balderton and Index.

Instead, I’m going to talk about how you can embed options into the DNA of your business so that your team value them. After all, if they're meant to be a tool to retain and motivate your best people, then they need to become more than a couple of signed sheets of paper that gather dust in a drawer.

I started off writing this article drawing from my own experience – but I wanted to push the scope broader. We got in touch with Amanda Parsons, Head of Equity Administration at Carta, to find out about the biggest challenges in this area – and how the best small businesses overcame them.

Options are complicated to understand

I have always taken the view that you can't expect anyone to appreciate something unless they understand it.

Nobody finds options straightforward – even those who consider themselves financially literate. Furthermore, lots of online information around employee options is US-centric (this is true for a lot of startup content). While there are some parallels, there are also specific nuances of the UK scene and tax laws that can make much of what you find online misleading.

“Founders are creative. They want to do things differently. That’s fine – but equity is complex enough as it is. Don’t issue anything so complex you can’t explain it in a minute – because, if your business takes off, you’re going to be explaining it pretty much constantly for the next few years.” - Amanda Parsons

Each time a new team member is issued options, I spend 30 minutes talking through all the key areas of the agreement:

  • How an option works and why we issue options as opposed to straight equity
  • The EMI scheme and its tax advantages
  • The current paper value of the awarded options grant, based on the company's valuation at the last round
  • How dilution works over funding rounds, explaining how their "percentage ownership" may go down over time but the value of their potential holding should increase
  • How vesting works, and when they can (or are required to) exercise their options
  • What happens if they leave the company
  • And finally - the most important one - the preference stack, which is the leading cause of the second big issue...
Big money exits where share options become worthless

This is a major problem. There are too many examples of big (often £100m+) exits where employees who have worked through multiple years of vesting, cash them in to receive a big fat nothing (or a long stretch short of what they were expecting). We've seen this happen numerous times over the last few years, often covered extensively by the press. Fanduel was a very high profile recent example in the UK.

This is a massive communication error that arises because founders don't communicate the impact of their preference stack to employees.  It's extremely standard for venture capitalists to protect their downside through preference shares, and this can have a tangible impact on the value of options even in a big exit. If you’re unsure about preferences, learn all about them here.

I believe it's absolutely vital to ensure options holders understand the terms of each financing round. Not just the new share price, but also the hurdle to clear before those options become worth anything. Set expectations well, and it will ensure that everyone understands what their payday looks like under different circumstances.

Option grants become forgotten

You often award options when a team member joins (or very soon after) and, save for perhaps a grant refresh further down the line, they never need to rear their heads until an exit. That means there are very few reminders of their value – or that they even exist – through the long hard years of grinding away to make them worth anything.

A lot of startups just don’t really talk about equity. They mention it to new candidates during the interview process but never clarify anything or follow up later down the line. - Amanda

A few years back, we started doing something that acts as a little reminder. Every month when we send people's payslips, we also send them an email letting them know the number of options they vested that month and their worth. It's a small reminder that your month of hard graft hasn’t just deposited some cash in your bank account, but you’ve also earned the right to a further share in the upside of the company.

Facebook made 1,000 millionaires

Our perennial issue in the UK is the lack of big success stories. It's reported that Facebook's IPO made more than 1,000 people millionaires as their options grants became valued on the public markets. That's a lot of employees who suddenly have deep pockets to flaunt about town and demonstrate that options really can come good.

Other than continue to work hard to build more great companies on this side of the pond, there is, perhaps, little we can do. It’s helpful to remind the team of stories in the US, but very soon I hope we will start to create our own. Maybe you’ll be one of them?

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Head of People, Operations Manager, COO… whatever their job title, they’re often wrestling with the very same problems and challenges.

In The Secret HR Manager, we sit down with an anonymous industry insider to lift the lid on how HR really works.

To allow them to speak freely, we have protected their identity.

Small businesses come in all shapes and sizes. That deceptively compact term ‘SME’ can sometimes make them seem almost uniform in nature... In reality, a ‘Small or Medium Sized Business’ could mean anything from a family-run accountancy to a 200-strong tech innovator.

But if they have any one thing in common, it’s this: at the very top table of the business, the HR function is consistently underrepresented and misunderstood.

As a professional in the People space, how successful you are in confronting this will go a long way in deciding how successful you are in your career. In order to progress, you have to get your seat at the top table.

But first… how did we get here?

Managers who can’t manage – the specialist nature of senior leaders

A lot of the time, people who make it to top leadership positions arrive there off the back of a very specialised skill set.

For CEOs, that might be their business acumen. For CFOs, it is their knowledge of financial planning and how to guard against risk. These skills are the Unique Selling Point that push them higher up the career ladder until they are in leadership positions.

But very often, management or an empathetic understanding of people is not one of those skills. I’ve spent a long time working in many small businesses and startups, and I have been consistently struck by how often those ‘soft’ people skills are missing from the top leadership team, and how widely they are undervalued.

That’s how the imbalance arrives in the first place. This is how it becomes entrenched for good:

The trap of ‘retroactive HR’

Let's say a company grows from a team of 5 to a team of 40.

While the team was just a handful of people, there was probably enough familiarity and trust going round to allow that company to skate over most HR issues.

When they get to 20, that arrangement starts to break down. At 40, it becomes unworkable.

Eventually, they hire someone to fix it – to provide the transformational change needed to create a truly great working environment.

But the fact this hire has been neglected so long puts them at a huge disadvantage, right from the off. Inevitably, there’s a backlog of organisational and structural problems to put right – years of bad habits to ‘unpick’ all across the company. They end up just putting out fires.

It's a vicious cycle. Putting out those fires means they can never get to work on the big picture – to really ‘move the needle’ and change the way the company works.

In turn, that means the senior leadership team never sees the tangible, transformative change they want, and the HR function never wins any credibility. Without that credibility, the person in that role never gets to influence strategic decision-making at the top level – instead, they stay put fighting fires.

The solution? Stop firefighting, and start changing behaviours

If you want to get that seat at the top table, then you have to stop putting out fires and start changing behaviours – starting from the top down.

You need to make the case for a people-centric model of running your business, and convince the leadership of its value – and the way to do that is by speaking in the language that they understand.

Here’s an example from my own experiences:

Not too long ago, an employee at my company resigned after a very long period of tenure. While I wouldn’t describe them as a superstar, they were real stalwart – this person had remained committed to the business for years and put in long, hard hours to make it successful.

But when they handed in their notice, a senior leader pulled them into their office and – offhand – mentioned that they'd “never been amazing” at their job.

I can’t say exactly what was going through their mind here… Maybe they were upset about being left in the lurch, who knows. It’s not really my business what was going through their brain.

But what I am worried about is the effect their words and actions have on the rest of the team. When that employee came to me, they were angry and upset – inevitably, that upset spread to the rest of the team. That’s why I had to intervene.

I asked for a meeting with the leader in question, and presented them with two scenarios:

  1. If the person leaving really wasn’t a great performer and them leaving represented positive turnover for the business, then you shouldn’t be unhappy to see them resign. Which means there's no need to engineer animosity.
  2. If it is actually negative turnover, then perhaps it's retrievable? Maybe we can talk to the employee, find out why they are leaving, then take action to change their mind.

Even if it turns out to be beyond retrieving, then at least behaving positively and supportively will ensure the working relationship remains amicable during the notice period – and they will remain an ally after they’ve left.

Whatever the case – the people who aren't leaving the company are judging the company by our response. Who wants to work for a company that gives loyal employees such a dismissive send-off?

Fundamentally, this whole conversation is about making leaders understand that for all their other business skills, they might not be very good managers. That’s the crux of what is going on here.

But you can’t go in with a line that aggressive – you need to be smart with your messaging.

Speaking the language of the business

If you want to change a CEOs course of action or the way they behave, then do it in the language they can understand. Present the business case for the way you want to handle things, and make your case as concrete as possible.

In the example of the unexpected leaver, that means talking the language of retention, our staff’s engagement with their work and the employer branding that we present outwards to prospective candidates. I had to make it clear that treating our employees without respect would hurt the business, not just my own sense of right and wrong.

Often, I think CEOs see me as a blocker to their own agility. What is more accurate is the fact that I am bringing a different skill set and perspective to the same problem – I understand the damage a bad firing can have on a team dynamic.

HR is coming of age

Everyone who works in the People sphere is going to rub up against this problem. Your struggle to get that seat at the top table is part of a much wider movement – after a long, long period on the sidelines, companies are beginning to understand just how important the ‘people’ side of running a business really is.

My advice is to fight your corner, and hold your ground – you are on the right side of history on this one.

Please note: The Secret HR Manager is not an employee of CharlieHR or in any way affiliated with The Workspace blog. The views expressed in this post are those of The Secret HR Manager alone.

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A good job advert is the cornerstone of your hiring process. It doesn’t matter how many jobs boards you post on, or how attractive your benefits are – if you can’t tell candidates why your role is worth applying to, then your company isn't getting the applications it needs.

In this post, we’re going to show you how to write a great job advert – one that attracts great candidates, whilst also making sure you receive only high-quality and highly relevant applications.

What is a job advert?

A job advert works as an announcement that a certain role is open to applications. It’s what you post on jobs boards or upload to your own company hiring page when looking to grow your team.

A well-written job advert is your chance to ‘sell the role’ to potential applicants. It's an opportunity to show off the vacancy to candidates and make sure you’re attracting only the right people to the role.

Remember – a job advertisement is not the same as a job description or a job spec. A job advert is outward facing, designed to attract and excite the right kind of candidate.

A job description is more for internal use, where the full responsibilities and expectations of the role are laid out more comprehensively.

Getting started on your job advert

One really important part of the hiring process is a step that I call identification and alignment. Long before you start writing your job advert, you need to spend some time identifying exactly the role you’re hiring for and what their specific responsibilities will be.

To do that properly, you’ll need to bring in the other stakeholders involved in the hire (that’s the alignment part) to make sure everyone is on the same page. You’d be surprised how easy it is for people working in the same office to end up with very different ideas of what a new role will encompass!

I’m not going to cover that stage here – it's a whole blog post in it's own right. I’m going to assume you’ve already identified the company’s needs and got everyone aligned on the role, so we can focus on the process of writing the job advert itself.

How to write a job advert

Before we get started… let’s think about your dream candidate.

You might have heard marketers talk about focussing their efforts towards an 'ideal buyer persona' – the same principle applies here. What does your ideal hire look like?

If you’ve completed that process of identification and alignment, then you should already have a really clear picture of the tasks and responsibilities to be carried out by this new role.

That's a great place to start.

You’ve already got a comprehensive list of what that person is going to be doing day-to-day – now you just have to find the person that fits. You do this by working backwards.

Get that list up in front of you. What would somebody need to do those tasks well?

  • What hard skills would they require?
  • What personal characteristics would be useful?
  • Would a certain professional background be a good fit?
  • How many years of experience would they need? Is it an entry-level role or is more seniority required?

Once you’ve got those characteristics down, you need to rank them in order of importance. Visualising the ‘dream candidate’ is a useful focussing exercise, but in reality, that person doesn’t always exist.

You usually won’t get every single thing on your list, but ranking them allows you to determine which characteristics are the most valuable and which might be just ‘nice-to-haves’.

How do I structure a job advert?

The traditional job advert format looks a bit like this:

  • Job title
  • Salary
  • Location
  • Introduction to your business
  • Role and responsibilities
  • Key requirements (qualifications and skills)

There’s nothing to say you have to use this format (we actually do our job adverts slightly differently) but it is a useful way of breaking down the different components candidates will expect to see.

We’re going to work our way through this format step by step, breaking down exactly how to write a job advert that’s going to bring in your dream hire.

  1. The job title

In today’s hiring landscape, job titles are strange things.

Think about how applicants look for jobs today... mainly, it’s by searching for them online.

Job titles aren’t just job titles anymore – they’re an important part of SEO-optimising your advert so that it shows up in the right search results.

Think back to that dream hire, and imagine what they would be searching for online. What are they typing into search bars? What keywords are they using?

Don’t be afraid to test a couple of variations, either. Keep an eye on your pipeline – if you see the pipeline filling up then you know you haven’t got it quite nailed.

Just remember...you’ve got to temper this SEO-optimised approach with some common sense! Whatever job title you use, make sure it’s also a faithful representation of the role.

2. Salary

In an ideal world, every job advert should include a salary bracket. There’s a couple of reasons for this:

  1. It helps to save you a lot of time on any needless back and forth with candidates, trying to figure out salary expectations and whether it fits in with your budget.
  2. From a candidate’s viewpoint, including a salary bracket is just the right thing to do. It gives them some welcome clarity over what can often feel like a frustratingly opaque process.

3. Introduction to your business

There’s an old saying in marketing that says people buy with their emotions first, and then use logic to rationalise their purchase afterwards. I don’t think it’s much different in the world of hiring.

Applying for a new job is an innately aspirational act – so take this opportunity to communicate what is aspirational about a move to your company.

What is exciting about working for you? What makes it a good opportunity? Why should your dream candidate apply to work with your company, when there are so many good openings elsewhere?

Every company is unique, so I’m not going to try and tell you exactly how you should go about this. But if you’re looking for inspiration, I’ve often been impressed by how Verve talk about what sets their company apart.

4. Role and responsibilities

This is probably the most important section of any job advert. If you’re going to spend extra time anywhere, then make it here.

A ‘Head of Marketing’ job title really gives no indication of what that person is going to be doing 9-to-5, Monday to Friday. It could mean something totally different from one company to the next.

Before applying to any job, candidates will want to see that it is the right fit for their professional and personal development. Will they be spending time developing the skills they want to perfect? Will they find the work they do engaging and challenging?

I don’t know personally what gets a Product Designer excited about a new role – but I can talk to people at Charlie who do, and use their understanding to inform the advert. This is a great way of making your job advert genuinely exciting for candidates.

The job ad below is a great example. Look at how much detail the advert goes into on the specific responsibilities – you can tell that it was written with a high level of input from the wider team.

Another nice example from Verve

I also think framing the role responsibilities through the lens of ‘What will you achieve in the next 12 months?’ is a really great touch. It really helps give the advert a tangible sense of realness, while also keeping that aspirational aspect.

5. Key requirements (qualifications and skills)

Remember that list you drew up, detailing your dream candidate’s background and skill set? This is where it comes into play.

If there’s anything on your checklist that’s an absolute dealbreaker, then don’t be afraid to communicate that on the job advert. You want to make sure you’re getting applications from candidates who are right for the role – if you're convinced your new hire will need a certain qualification, then communicate that desire.

What we’ve outlined above are the building blocks of a good job advert – hopefully, it gives you a solid starting point from which to start writing your own. If there’s any aspect of this process we’ve missed out, or you want us to write about next, then just leave a note in the comments!

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When Tom, Rob and Ben started CharlieHR, they wanted their parental leave policy to be better than the standard statutory requirements. The only problem? None of them had children.

Before Tom, Rob, and I started CharlieHR in 2015, everyone who had worked in our businesses had been a similar age. With Charlie, we hired much more intentionally for specific skill sets, experience, and seniority.

This, of course, included hiring parents. And as we did, we – three childless men – soon found ourselves confronted by a question we hadn't considered before. Did we have a strong policy for when a member of our team decides to become a parent?

After asking a lot of questions and doing a lot of research, we've built a policy that works for us, and we believe could work for other companies too. While we know that small companies don't have huge budgets, company size shouldn’t be a barrier to looking after your team.

Becoming a parent is a pivotal moment in anyone’s life. It's also often one of their most vulnerable moments – one where all of the emotions and pressures of having a child can coincide with worries about finances and work.

Taking care of your people when they’re in a situation is an excellent way to set yourself apart and build the foundation for a great company. Your business relies on their continued dedication and support – and in turn, they should be able to rely on the business when they need support.

The problem with parental leave in the UK

While working on early versions of our parental leave policy, we spent a lot of time talking with parents we knew and trusted. We wanted to know about their experiences with parental leave in the past, where the system succeeded, where it failed, and how they felt it could be improved.

A common theme of those conversations was flexibility: being able to take time off when you need it rather than all at once, being able to switch time off with your partner, being able to choose who stays home and who goes to work.
It's an idea that most would seem to share. A 2015 study found that a majority of parents believed that the responsibility for looking after children in a household should be shared equally. This fits into an ongoing change in views on gender roles – a 2017 study found that 72% of people disagreed with the statement "a man's job is to earn money, a woman's job is to look after the home and family" – a number which has been on an upwards trajectory for the last three decades.

In line with these changing views, the UK introduced Shared Parental Leave (SPL) in 2015. SPL allows parents to split up their total leave time into blocks and share those blocks of time with one another – such as by enabling one parent to go back to work for a time.

But participation in SPL hasn't reflected this change in views on gender roles. A government estimate suggested the take-up of shared parental leave could be as low as 2%.

The most common reason that families have reported not sharing their parental leave is financial. That's not too surprising. A pregnant woman who goes on leave in the UK is entitled to Statutory Maternity Pay, equivalent to 90% of their typical weekly earnings but only for the first six weeks. After that, they receive a reduced rate of just £145.18 a week (or 90% of their average weekly earnings, if that's lower). With Shared Parental Leave, their partners only ever receive that reduced rate: hardly a livable wage for most.

Meanwhile, despite changing public opinion on traditional gender roles, there are still many men who don’t feel comfortable using shared parental leave. There is a fear of jeopardising their position in the workplace or being on the receiving end of misogynistic stigma. Aside from those concerns, there are practical, administrative barriers that parents must negotiate before being able to participate in shared parental leave. The mother must sign off on the transference of leave days to their partner, (a requirement which enforces the outdated idea that the mother is and should always be the primary decision maker in the child-caring process) and parents are required to give at least eight weeks written notice of their leave dates.

This – alongside negotiating for flexible work or part time arrangements – can end up being such a challenge that some parents instead choose to simply quit their jobs.

Some businesses might see that as a good outcome, preferring to bring in a new employee rather than deal with the hassle of supporting one. For us, the idea that people would join our company, become a vital part of the team, and then quit because we couldn't support them in this pivotal and crucial time in their life – was totally absurd. It completely contradicted the ideals that we were building our company upon. And so we built our parental leave policy accordingly.

The CharlieHR parental leave policy

The main focus of our parental leave policy at CharlieHR is providing equal maternity and/or paternity leave, and giving both sets of parents choice and flexibility.

1. Flexible working hours for antenatal appointments

Throughout the pregnancy, we have flexible working hours for both mothers and fathers for antenatal appointments or classes.

Under UK law, if you're pregnant, you're entitled to take a “reasonable” amount of time off to attend antenatal appointments. Your partner can take time off for two appointments (lasting a maximum of 6.5 hours per appointment), but that time is unpaid.

The average pregnancy involves around 8-10 appointments – sometimes more, sometimes less – to check on the health of the baby, on the health of the mother, and on the progression of the pregnancy in general.

What we've found from doing research and talking to people is that any incentive against taking this time can lead to mothers (and fathers) skipping what could be critical appointments. Both for the health of the mother and to ensure that fathers can get equally involved in the pre-birth process, we chose to allow all of our employees who are pregnant or have pregnant partners to work flexible hours when those appointments come up.

2. Equal Benefits for Both Parents

We offer 6 weeks of fully paid leave, and another 6 weeks paid at 50%. All of this can be taken in blocks, apart from the first two weeks after the birth, where the mother must take time off in accordance with UK law. After this, our policy provides 14 weeks of maternity leave paid at 25% of their salary, or the statutory pay rate – whichever the higher amount is.

That is very different from the legal minimum requirement for both parents, but it's especially different for fathers.

Under the government’s default system, fathers using shared parental leave will only ever receive £145.18 per week (or 90% of their average weekly earnings, if that’s lower). If they don’t use shared parental leave, fathers get just two weeks of leave – at that same low rate of pay. Either way, they never get access to the higher rate of statutory pay that mothers receive for the first six weeks.

We built this part of the policy aiming to provide equal opportunities between parents to balance responsibilities as they see fit, rather than how circumstances permitted. We didn't want to force people into the choice so many parents in the UK have to make: having the other parent around, while taking unpaid leave, or having them absent, but earning enough to take care of the child.

3. Real control over parental leave

We created our policy to address the core concern that we heard time and time again from the parents we spoke to: they wanted flexibility and choice.

Offering choice is not just about making sure both parents can have the same type of leave and can choose to care for their child together. It’s also about providing the option to take this leave when most needed. Both the maternity and paternity leave that we offer can be taken in chunks with prior agreement.

This is one point where we felt we could really change the way parental leave worked: not one long, continuous leave but bits and pieces when needed most. This type of flexibility for mothers and fathers gives them options in the way they choose to take their leave.

The CharlieHR parental policy is our take on the level of support parents should have when starting or expanding a family. Yes, it was created by childless founders. But it was created by reaching out to a wide variety of parents, gaining their input, and then thoroughly considering the level of support that we would one day need if we decided to start a family.

The return on trust

Trust is a core tenet of our culture at CharlieHR. The best results are always found when there’s a high level of mutual trust between the business and the team. That also extends to how we think about parental leave.

Each family is different, and every set of parents is going to have different priorities for how they want to take care of their child in the weeks and months after birth. We trust our team members to make their own decisions about childcare, so we’ve made our policy as flexible as possible to allow them to do that.

That said, we realise this policy can't do everything. A truly parent-friendly culture is built by actions and attitudes as much as policy. Charlie's team and leadership need to reinforce our policy, each and every day – and we work hard at it. So far, our policy and approach to parental leave has worked well for us. We think it could work well for you too.

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Head of People, Operations Manager, COO… whatever their job title, they’re often wrestling with the very same problems and challenges.

In The Secret HR Manager, we sit down with an anonymous industry insider to lift the lid on how HR really works.

To allow them to speak freely, we have withheld their identity.

Here’s something no one tells you when you’re just starting out in HR:

What the letter of the law says you can do and what you actually have to do in the day-to-day reality of your role are two very different things.

Now, I’m not saying HR managers are free to simply flout employment law as and when they please. But there is certainly a significant disconnect between what is written in the actual legislation and what is now accepted as normal practice.

This is the sort of thing that your company lawyer will never want to tell you… and if they do, it’s the kind of conversation that happens at the pub on a Friday, not in the office.

It’s their job to cover you from every conceivable angle, and they are always much more comfortable when your company is sitting on the right side of black-and-white, set-in-stone legislation.

Where they feel less safe is in the murky grey area of 'case law', which is constantly shifting and evolving. That’s why company lawyers will always default to the comfort and safety of the legislation – you know where you stand with that.

It’s your job as an HR professional to strike a balance between what your lawyer feels comfortable with and what you need to happen for the good of the company.

As is the case with so many of the HR world’s many nuances, this situation is at its clearest when it comes to firing someone.

The UK’s written legislation around firing people is incredibly cumbersome. It is really quite old law and hasn’t yet been updated to bring it into line with how society actually operates.

A lot of that law has roots in a history of trade unions and collective action and is very adversarial in nature. It was written with the goal of protecting employees from overbearing or uncaring employers – and while I’m not saying that’s irrelevant now, it is certainly not as necessary as it used to be.

As an example, the UK’s ‘letter of the law’ process for firing an employee who has passed their probation period goes something like this:

  1. First off, you’ll need to put them onto a Performance Improvement Plan (PIP). If they aren’t able to meet the expectations set out in that plan, they get a verbal warning, and then the time to address it (usually a month).
  2. After that, it’s time for a written warning, and time to address that (so another month).
  3. Lastly, you’re looking at a written final warning, and – yep, you guessed it – another month afterwards.
  4. Bear in mind that this person will probably have a contractual notice period as well, so in a best-case scenario, you’re really looking at a four-month waiting time under that process.

That’s four months of them being angry, you feeling frustrated, and your team becoming resentful because ‘you aren’t doing anything’ about the underperformance that is making all of their lives more difficult.

Most small businesses simply can’t afford for that process to take so long. I’ve worked in a lot of small tech startups in the last few years and for those companies, the margins between making it or going bust can be so, so small. You can’t risk dragging a bad situation on for so long… the stakes are just too high.

And let’s not forget the employee’s point of view here. If they are struggling to make a success of the role they’re in, it’s a horrible experience to have that drag on over a period of four months.

It goes without saying that PIPs should remain strictly confidential, but I think it’s misguided to pretend people aren’t going to notice the under-performers in their office. It directly affects them and their work, and it’s impossible not to become frustrated by that. Eventually, that frustration will spread.

So instead of heading down that road, the question becomes this:

How can you manage this situation in a way that is best for everyone?

A good HR advisor will help the company and the employee find their way to a settlement agreement. That might look like two or three months pay in return for leaving the business amicably, and in the short term. But that’s not always a great option for small businesses… there’s a cost implication involved that can mean that a settlement isn’t a viable option.

A great HR professional will go further.

The best people in these roles are the ones able to have a one on one conversation with a struggling employee and help them understand that their current role is no longer the best place for them.

I don't want to sugarcoat this unnecessarily – at the end of the day, you are trying to manage this person out of the business in the most painless way possible. But that doesn't mean it needs to be a callous or uncaring conversation.

In fact, the more sensitively you handle it, the less chance there is of any kind of backlash. If you want to excel in this industry then you need to be able take someone aside and walk them through the reasons why their current role didn’t work out – not as their critic, but as an ally.

Then you can help them move towards a career they're better suited to.

That is the win-win outcome for everyone.

The employee can leave with their head held high, being able to tell prospective employers that they quit, rather than got fired.

Their manager doesn’t need to spend three months moving through a laborious and emotionally draining firing process.

And what's more, the rest of the team sees you acting decisively and effectively on their behalf during a challenging situation.

For anyone in a leadership role at a small business, it can be awful to feel like you're letting down your team. Hearing rumblings of discontent from colleagues makes you feel like you’ve failed in your role… taking decisive action is the best thing for everyone involved.

Working in HR is like walking a delicate tightrope – a tightrope between staying within the letter of the law and making sure you do what is right for your company, your culture and your team. Not only that, but you have to make a lot of those judgement calls on your own… the HR, ‘people’ function can be a very lonely and isolated place.

What makes it worthwhile for me is the chance to take care of my team and the person leaving the business. Firing someone is always a tough experience, but I have to remind myself that what I’m doing is almost always in the best interests of the person leaving as well the team that stays behind.

Please note: The Secret HR Manager is not an employee of CharlieHR or in any way affiliated with The Workspace blog. The views expressed in this post are those of The Secret HR Manager alone.

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Remote working offers an unparalleled set of benefits – but comes with a bunch of serious drawbacks. If you really want to make the best of remote working, you’ve got to tackle these problems head-on and commit to a business-wide strategy.

It’s 2019. Communication via video, text and voice across continents is instantaneous, easy, and essentially free. We’re living in the future – and businesses are starting to realise the immense opportunity this offers. One of the most oft-cited examples of these opportunities is remote working – where employees work outside a centralised office, not as part of irregular, working-from-home sessions, but as the primary way they do their jobs.

It’s easy to see the potential benefits to embracing remote working: you get to pick from a massive – potentially global – talent pool. You make your business more attractive to people whose lives don’t easily fit into traditional, 9-5 office jobs. You can save huge amounts of money on office space, and your employees can avoid the steady pile-up of expenses on coffees, lunches and commutes. Various studies suggest that that remote workers can be highly productive. Last, but definitely not least – you get to hand your employees a hefty chunk of flexibility and independence.

With a list of benefits like that, it’s easy to charge into remote working head-first, anticipating massive rewards… but do that, and your business will likely end up in some serious trouble.

The reality is that remote working requires a significant commitment. It comes with its own unique set of problems – and your business will need to have spent a good chunk of time thinking about these, and their solutions, if you want to make this move successfully.

To help you prepare, we spoke to a variety of companies which have embraced remote working – and really knocked it out of the park.

We spoke to two people who have stellar experience managing the realities of highly-remote working: Andreas Klinger, the Head of Remote at AngelList, and Sara Bent, a People Ops specialist at HotJar.

Problem 1: Loneliness.

We put this one first because it’s one of the most overlooked issues with remote work – and one of the most damaging problems.

Humans are social creatures, and many of us rely on our workplaces to provide us with a large portion of our social interaction each week. Remote workers could end up barely seeing their colleagues – with their human contact limited to Slack messages, emails and calendar invites.

The result can be a very real threat to your employees’ mental health. In an office, a good manager might quickly pick up on someone 'who’s not feeling themselves' – and offer them some early support. That’s much, much harder when your communication is messages, emails and the odd video call. Doist has a fantastic article by their CEO about how living the no-strings-attached “digital nomad” lifestyle ended up turned into a nightmare of loneliness, insomnia, anxiety and depression.

The solution: build sociable spaces

You need to spend some serious time constructing ways for remote workers to interact socially with other people in the business. You can’t just hope these interactions will happen naturally (as they often do in an office) – you have to build spaces where people can have them.

Hotjar – which is a fully remote company – really threw themselves into this, implementing:

  • “Coffee Break” calls – any team member can message another for a 10 minute chat about anything – mimicking the chat that happens around the office coffee machine.
  • “Bonfire Calls” – each Wednesday, everyone has the chance to jump on a group call and spend time chatting, playing games (charades is apparently a particularly popular choice) and getting to know each other.
  • Work Together Allowance – team members are allocated a set amount each year which they can spend on travel and accommodation – so that they can spend time working with another team member.
  • Regular full-company retreats – because getting everyone in a room is still an invaluable way of bonding your team
Hotjar has actually been a more communicative, open and sociable company than any other I've worked at. I had been concerned that remote working could get lonely at times, not working in the same location as others. Hotjar has actually been the opposite of that.  -Sara
Problem 2: communication gets tricky

When compared to face-to-face conversations, every form of remote communication has some sort of drawbacks. Slack messages are easy to ignore or miss. People take ages to reply to emails. Video or voice calls are fiddly, and get ruined by dodgy internet.

And that’s just the “official” communication channels. Remote workers can lose out on all sorts of subtle, “unnoticeable-until-they’re-gone” types of communication. A chat around the coffee machine where you find out about a project that you’d love to be involved with. A running joke that boosts the bonding between your team members. Someone’s body language, or their intonation, which completely changes the tone of a conversation.

The solution: build a culture of effective communication

Effective communication needs to become a core aspect of your company’s culture.

This starts at the top – so set an example by being highly responsive to all messages, and focusing on communicating clearly in everything you do.

Be clear about what sort of responsiveness you need from your team members – and always hold yourself to that same standard.

Finally – don’t get frustrated. Sometimes, things are going to be trickier to communicate than they would be in person – accept this, and remember that there are benefits that come with this type of communication too: you can think over your messages in more detail, edit and improve messages later on, and recall conversation archives at the touch of a button.

“I’m not sure there actually is a product which really works for remote communication. To understand a conversation on Slack, you either have to be around as it happens, or you have to retread loads of ground. Perhaps some day we’ll have a product focusing on discussion summaries – which would be extremely useful for remote teams.”  - Andreas
Problem 3: productivity challenges

Offices are – and always have been – designed to help people be productive. There’s plenty of very legitimate criticism of them, but it’s also undeniable that, for some people, they really do fulfil their intended purpose.

Bedrooms, kitchens, coffee shops – or wherever your remote workers choose – are not designed with productivity in mind. They’re casual, distraction-filled places, far removed from the supervisor peering over your shoulder, or the colleague who needs your work done to hit their deadline. There are plenty of people who thrive in these spaces – but, being entirely honest, many people don’t, and will struggle to produce work at the same level and speed as they would in an office.

The solution: hire the right people

You can sidestep this problem entirely with effective hiring. According to Sara, there’s a few things that are absolutely crucial for someone to fit in at Hotjar: they’ve got to be self-motivated, independent, and committed to growing and improving.

Sara also talked about the importance of hiring people who were committed to openness and transparency – so they’ll be comfortable bringing up any problems they’re having with work, allowing the team to help them out.

“There’s already a location barrier between team members. If you’re not operating transparently, you’ve just built up another barrier – which might just end up being insurmountable” - Andreas
The real, overarching solution

All of the above solutions are fine, but there’s one larger action which makes all of the above actions much easier.

You need to go all in. Both Andreas and Sara stressed that this was the real message they wanted to get across: if you really want to feel the benefits of remote working, partial commitment is not an option.

The more a business is split between remote working and centralised, office-based working, the harder it is to build in policies which make remote working succeed. The businesses that have truly successful remote working cultures are the ones that have embraced it as the primary way of working.

"For us, a lot of the challenges of remote work have been managed easily – because Hotjar has been set up to deal with them from the very beginning" -Sara

A 50-50 split of remote and centralised, office-based workers is a nightmare. When you’re hiring, you’ll have to constantly switch between looking for someone who will fit into an office, or someone who will thrive remotely - and never develop an instinct for either one. All your effort in building up a culture of effective communication and building sociable spaces will be wasted on the half of your team that works in an office.

“Whenever you’ve got a company which is divided between remote and office-based workers, problems will crop up. Eventually, employees will start asking themselves whether one of the groups are being treated as second-class citizens.” - Andreas

But if your company is 90% remote workers, you can really commit to building the perfect culture, the right behaviours and the necessary structures to make this work. Don’t waste your time dithering: go big or go home.

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