Getting the most from scarce resources is the key to success for every startup. This often comes down to how to get the best people to do the right things at the right time. Unfortunately, with limited cash, a need to spread ownership thinly, and a huge list of things to get done, early stage companies are challenged with getting the right skills in the right quantities.

First of all, let’s examine the resources available to recruit and motivate people and then explore a few different ways to apply these scarce assets.

Companies compensate employees with financial, social, and internal forms of compensation. Financial is usually cash compensation via salary, bonus, and commissions. Stock options, profit sharing, retirement contribution and health care all also are in this category.
Social Compensation is the value of being associated with the company combined with the day to day work and prestige of the position at the company.

Internal Compensation is specific to each person. It’s a combination of four things:How much do I like working with the people at this company each and every day

  • How much do I like working with the people at this company each and every day
    How do I believe I am improving and expanding my skills
    How important do I feel the companies goals are to me and to the world
    How does this position at this company support my personal and community goals and self-esteem.

Obviously, some of this value is captured in the short term, like a monthly paycheck and the day to day work. Individuals gather other forms of value, such as stock option returns and helping achieve company goals over a longer time frame.

Companies have a fixed amount of financial assets to distribute at any point in time. Company positions and the associated personal prestige they provide can’t be shared equally. Titles, on the other hand, can be easily reproduced and companies should be externally flexible and internally aligned in the use of titles.

Internal Compensation is readily reproduced and shared. In fact, done correctly, the more it is shared with like-minded people, the more valuable it becomes to each member of the team. Therefore, companies looking to rapidly scale must foster an environment that creates, grows and preserves the value it’s people place on working there. It starts with the company’s “Why”, the reason for collective effort and extends well beyond Core Values and Principles, to the way people treat each other, customers, suppliers and how you collective engage with the local community and the world. And all of that’s for another day.

Please let me know what you think and the things you’ve done create and preserve a value creating culture. While I would never equate people to nodes in a network, it seems to me culture and it’s potential for exponential value creation aligns closely with Metcalf’s Law of the Network. What do you think about this?