Our own in-house author and COO, Vincent Martino (he also wrote The Marine Corps Way), has been writing a series of articles for our local newspaper regarding running a start-up business.  Below is the second in the series:

Starting up: Got vision? You need it to attract talented employees 

Stock options have lost some of their luster since the Internet bubble, when companies could attract talent through the hope of a quick payday. A combination of wages and stock options was a great hiring incentive for eager and talented workers who believed those options could turn them into millionaires overnight.

That irrationality is gone, but it is still very realistic to expect people to be motivated by options if they believe in the vision of a company and its ability to achieve it. Of course, with options comes risk, so getting others to deliberately assume risk starts with the leader’s ability to create and sell a vision.

Quite honestly, early in my career I didn’t rank vision as a top leadership attribute. I remember sitting in my first MBA leadership class when the professor asked us to list the top three qualities of “great leadership.” Having just exchanged my Marine Corps captain’s bars for the “business casual” uniform of a full-time MBA student, I listed the standby leadership attributes of integrity, leadership by example, and unselfishness.

Once we students finished and the professor put “vision” atop the list, however, I was nonplussed. Based on my experience, I surely knew more about leadership than this tweedy academic - vision was important, but not a requisite attribute.

Now, with experience in the business world, I’ve realized the importance of vision. For entrepreneurs, vision is an absolute necessity in any venture. A new venture, after all, is little more than an idea, and successful entrepreneurs are able to transform their vision into reality by getting others - preferably incredibly talented, self-driven people - to commit their time and sweat to it.

Stock options serve to support the visionary by providing a low-risk, low-cost way of giving employees ownership.

Further, options help attract and retain people who see value well beyond a regular paycheck - people willing to work for less salary in exchange for a potential big payday later. This is important because in many startups, especially ones based on intellectual capital, salary can exceed 90 percent of costs, so having people motivated by options can be critical to growth.

At Balihoo, a Boise startup that last year launched an online search platform for media buying, I have learned firsthand how to build a business based on vision and collective ownership. Our CEO, Pete Gombert, set the initial vision for Balihoo and has been a great example in this regard. We give all our full-time employees options and have attracted incredibly talented people with a shared goal of building a great company. Here are some key lessons I’ve learned along the way:

Start by painting a picture of the future. Color it with your passion and fill it with market data. The smart people you want to recruit will believe you only if your vision is well-researched and plausible.

Next, give employees ownership through stock options. Show them the part they can play in creating the future and be transparent with your fellow owners about the company’s results, opportunities and challenges. They will appreciate it and work hard to lift the company during the downs and extend gains during the ups.

Next, educate them on the mechanics and potential value of options. Options can be complex to understand and value, so a little education goes a long way.

Over time, reward strong performers with more ownership by implementing a performance management system that measures not only past results, but employees’ potential to contribute to long-term growth. Part of this system should be an options bonus plan, which gives employees confidence they can earn more options based on performance.

Finally, communicate, communicate, communicate. Periodically repaint the picture - the fog of everyday tactics will sometimes obscure the grand vision, so make clear the mile markers that define your company’s journey.

If you are able to do the above, your chances of attaining your vision are greatly increased. Your company will be buttressed by incredibly motivated employees who act like owners, because they are.