The current wave of tech layoffs presents an opportunity for smaller startups to gain top talent at below market rate prices, but here are 5 reasons why this is a bad idea:
Low pay ranges can damage the startup's reputation. Employees may see this as a sign that the startup does not value its employees or is not financially stable.
Low pay leads to high turnover. Employees who are not earning a competitive salary for the work they are doing are ripe for the picking. They will leave and go to your competitor which results in increased costs and decreased productivity.
Low pay breeds low morale. A negative culture will deter other talented professionals from joining your company.
It will cost them more in the long-run. They will either be offered a more competitive salary to which you will have to counteroffer or they will leave and the cost to backfill in terms of time, money, and energy, will be substantially more than if you just offered them a competitive salary to begin with.
High turnover is a turnoff for investors. It's a risk that they can't afford to take. Investors want to see that a startup has a solid team in place that can execute on its vision.
The best leaders know that treating your people right from the start is the only thing that will create sustainable success in the long-run.