Opposite of Conventional Wisdom: Startups Shouldn’t Offer Benefits?

Early-stage startups should think twice before offering benefits, that’s the counter-to-popular-wisdom advice from researchers who tracked about 5,000 companies for seven years.

Inc’s Kris Frieswick reports:

Turns out that timing really is everything, especially when it comes to some common employee benefit programs. Researchers led by David S. DeGeest of the University of Groningen recently parsed data from the Kauffman Firm Survey, which for seven years tracked about 5,000 companies launched in 2004, and discovered that benefits can either dramatically increase your startup’s chances of survival or sharply reduce them, depending on when they are provided in your business’s growth cycle. For viability-stage companies, which the new study defined as less than three years old, even a single benefit can decrease the likelihood of succeeding.

The benefits they studied were health insurance, bonuses, flextime, and stock options.

That may well be the research, but good luck finding top talent willing to work for low pay and long hours, without benefits or (more importantly) the real upside that startups offer in stock options?

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