A healthy reminder: Startups need employees more than employees need startups

YepMe shut down most of its shops and fired almost all of its employees two years ago. These employees even complained about getting delayed salaries for months. The fact of the matter is that there are more than 10 people at the firm who are yet to be paid back their due salaries. 

And the amount due is not in thousands or even 10s of thousands, it’s in multiple lakhs. The delays started with a 15 day duration in October ‘16 and stretched up to 2-4 months by the next couple paydays, revealed Entrackr sources.

A girl is owed Rs 5 lakhs. Two cheques were given to her, with an instruction to only cash them when company tells her to, otherwise the cheque would bounce. She has not received that approval still. A sole earner of the family with a sick wife had to take a medical loan to pay the bills, and was relying on the 7-8 lakhs that YepMe owed them to repay those bills. Yes 7-8 lakhs, that is 1.5 years worth of salary.

The accountants of the company wouldn’t pick their calls or give them proper answers, the HR of the company kept deferring payments with a promise of giving them their hard earned and well deserved money on a future date.

Employees in ShopClues are also facing problems of delayed salaries, and if the problems there keep on aggravating, since the startup is on the verge of shutting down due to failed merger and acquisition talks, the employees might end up facing a similar fate.

In another startup office, Cars24, employees were fired for no mistake of theirs. The HR itself agrees that there was no particular reason to fire people, no performance or integrity issue, but they still are doing that because of the monetary issues. While they were given one month notice with pay, how are 300-400 people supposed to find new jobs in 1 month? 

Why not make it a structured lay off, rather than calling people to give their laptops and phone in a single go?

As per an Entrackr source, the company is looking at C2C vertical as a cash cow now and the layoffs have been in the C2B operations. About 200 plus people were fired in the Delhi C2B team, 80 in Mumbai. However, in Mumbai the MNS Sena protested outside the Cars24 offices and intimidated them into giving the laid off employees a 3 month compensation after a legal process. 

No such relief was given to people in Delhi. Chennai branch of the company was also a part of this mass lay off.

Another firm that takes the cake in this exploitation race is Rubique. The company has fired 45-50 employees in tech team, bringing down the number to 2-3 in February this year. These employees still haven’t received their FnF and TDS related Form 16, which is required to be filed by July 31 this year.

“The style of management here is absolutely unprofessional. The funds were almost over around December 2018. The senior employees had been working on delayed salaries for months. After January, employees at all levels faced the issue of delayed salaries. The company cut the TDS from our salaries but hadn’t paid it to the government, which is why it is not giving us our Form 16 now. We just want them to either give us the document or declare bankruptcy so our taxes can be sorted out,” said the sources from Rubique.

Some of them have to pay taxes worth Rs 3-4 lakhs to the government if not for any action by the company. More importantly, deducting taxes and not submitting them to the government is illegal and unethical at the same time. As per the rules set by the Income Tax Department, the assessees who fail to deposit the TDS deducted on time are liable to pay a 1.5% interest on the amount of TDS from the date of deduction to the date of submission. In addition to said  interest,they are also liable to pay Rs 200 per day as penalty.

 A legal notice filed by some of the employees was circumvented by the company with petty excuses like blaming them for sending the notice at the wrong address or making menial spelling mistakes. In other cases, they ask people to wait as they are still scouting for acquisition deals and some talks are going on around the same.

Employers have been exploiting the workforce with delayed payments, use of emotional appeasing by gaining sympathy and making false promises, or firing people without any premise when the funds are drying up. It has been the entrepreneurs’ job description since the rise of capitalism, and for all their disrupt, startups actually use this oppressive culture as a cushion. 

When all this happens, the employees go back to wondering why they even joined a startup?

Reality check on “Why startups?”

“Startups are place to learn, be able to push your boundaries to realize your potential, to grow yourselves and be a part of taking the fledgling company to heights.”

Why? Startups are a place that could offer returns and growth opportunities without the general constraints that are present at corporate. Those promises of ESOPs and hefty raises becomes lucrative, don’t they? Don’t people take risks for better rewards? 

And employees do get these rewards. ESOP holders in companies like Paytm, Rivigo, Flipkart, Ola did turn crorepatis in the respective ESOP encashment and secondary deals. An opportunity that people in corporate are devoid of. But how often does that happen? And the number of people who gain from these benefits are a few - the top layer.

Not all employees who took that risk get those rewards. Why? Because capitalism is real and exploitative, and the difference between the number of entrepreneurs who promise to break the cycle and the number of entrepreneurs who are actually doing it is vast. 

Yes running a company is difficult, but when companies don’t bat an eye while exploiting these employees’ circumstances and dreams, they forget that without these employees, there wouldn’t be a company to run. The founders can buy infrastructure, tech, and other assets, but who would run it if employees can’t afford to overwork on a lesser pay, or a delayed pay, or in a work environment where they aren’t valued? 

Maybe YepMe could have saved its business if they had valued their employees in the first place. And if not themselves, they could have extended that opportunity to their employees by being transparent and cautious when the first signs of problems started to show up instead of the founder saving their own future with new jobs and leaving employees high and dry. 

If they would have shown the employees that respect, they could have gotten the required help and cooperation in return. But all they opened a can of worms, for everyone to clean up.

“The CEO at Rubique carries a big guy attitude and doesn’t pay attention to details of what is going on at the firm, only has an overviewed idea of the same. He isn’t professional at all and even gets angry at employees for expressing their plights on their social media handles. He threatens that any employee who does that will not get a single penny from the firm,” said a Rubique source talking about the work environment at Rubique and why the company is facing the current circumstances.

When Rubique received a bridge round in between, instead of paying off its current employees and submitting taxes, the firm hired several senior employees, but when their roles weren’t defined and there was a lot of confusion at the place around what exactly they have to do, all these people left the firm within months.

“The management style at Cars24 is awful. Employees who are working 12-13 hours a day, are being subjected to a pay cut because they are not able to achieve the unrealistic numbers set in front of them. If a manager disagrees with this pay cut scheme looking at how hard the employees have been working, he or she is intimidated and pressurized into authorizing the same,” revealed the Cars24 source when asked about the work culture at the firm. 

These employees are not even properly reimbursed for the fuel and other expenses they make during these 14-15 hour work shifts. The payment for these is delayed, and less than their fair dues. If the reimbursement is delayed for more than 2 months, the employees are being asked to let it go.

"Further, they are being badgered with messages from seniors on WhatsApp at all hours. During and outside work. This sort of constant pressure proves to be detrimental at work, and adds on to physical and mental stress of employees at all levels (and this is a problem pervasive in most of the startups)," went on the source at Cars24.

Similar to Rubique, the autoportal also hired senior employees with 10-15 years worth of experience, and within 1 month these professionals were asked to deliver unrealistic numbers. If they couldn’t do that, a performance improvement policy was thrown at them that allowed the company to fire an employee if the numbers aren’t achieved. Now a person who is accustomed to one company for 10-15 years will take a little time to catch on with a new startup, but this wasn’t a part of Cars24’s understanding.

Of course, if the employees are not given reasonable work targets, the roles at the firm aren’t defined, unfair pay cuts are being imposed, constant badgering on WhatsApp is taking place, and even unfair reimbursements aren’t being given timely, why would anyone want to work there?

Which is why, forget vanity metrics and focus on keeping these employees happy first. An entrepreneurs first responsibility is employees. If they’re taken care of properly, given salaries, raises, and rewards timely as due, as well as facilitated with a conducive work environment, they will automatically become more enthusiastic and productive, leading to the achievement of the firm's goals. But don’t just dangle the bait, because only the entrepreneur will lose the game that way. While we’re at it, let’s talk about that too.

That mighty promise

There are n number of startups that hire employees at a lesser pay with a promise of higher pay that they will get later, a day that keeps getting delayed with a chain of promises dated in the foreseeable future. You see, it works well for the entrepreneur, they don’t have to pay more, they get even more work done with that dangling temptation of a higher pay and better “rewards”, and when the due date arrives, they always have the option to defer it to a future date that is close enough to seem real, but gives them enough time to build more excuses to delay that further.

What goes wrong with this “smart” strategy, is that these employees are real people, with real dreams and real circumstances. They have lives that push them to arrive at work each morning - rent to pay, parents or kids to support, dreams to achieve - lives that motivate them to push their boundaries to get those rewards. Not all employees come from rich families, or a cushion of savings, or the scope of earning profits to afford that grind where the promised reward doesn’t seem to be turning into reality. 

At the end of the day, they are not the entrepreneurs with equity, just a promise. And a series of unkept promises don’t feed stomachs, only ugliness, lost morale, and reduced productivity. With that, goes down not only theirs, but the firm’s future too. Entrepreneurs working on chain of promises cannot inspire loyalty and ownership in employees, and hence neither can they build long standing relations.

Ownership will develop in employees when employers own up to their promises.

Also, guess what, while employees were kept hanging on a promise, they have gained the experience to go somewhere else and get a higher paying and better rewarding job, or maybe the mismanagement only gave them their own ideas that would come back to hurt the entrepreneur as more innovative competition.

Queries have been sent to all the particularly mentioned startups. The post will be updated as soon as responses are received.