Risk Tolerance of your Employees

Of course, some of the most important partners you will be working with are your employees. As you start to organize your company and bring in human resources, it will be important to understand the risk tolerance of your employees. In short, do they have the type of personality that is conducive to a high-risk start-up?

There are ways to test the risk tolerance of your employees. One simple method is to understand how they act in high-risk situations, such as gambling. Taking an afternoon offsite, or a practical interview, at a casino is an interesting way to see how employees react in high-pressure situations. Does the potential employee go for broke, risking a seemingly large wager? Do they try to make their money last as long as possible? Are they afraid of gambling and not willing to “step up to the table”? Amongst these possibilities, its really only the individual that is trying to stay at the table as long as possible that will be right for a start-up environment.

Another (less fun) way of understanding the risk tolerance of a potential employee is by looking at their work history. Is this their first foray into the world of start-ups? If so, why have they chosen such a high-risk venture? How many start-ups have they attempted to launch in the past or worked with in the past? In these situations, what has been their role? Were they leading the effort or simply participating in a venture because it was a team of friends and it sounded fun?

Taking a deep look at the risk tolerance of your employees will help to understand their overall mindset and attitude and allow you to best understand if they will help or hurt your venture. Ideally, a start-up is looking for employees that reflect a balance of someone willing to take a risk, yet someone who is cognizant of the risks and can make the right calculations so as to not put the future of the venture in jeopardy.

In short, employees should be scared. After all, a start-up is a risky endeavor. Fear, however, is a great motivator. The trick is to properly motivate employees so that their fears are balanced by their hopes for success.

Thumbs UpTry This: Try to scare potential employees during an interview by overemphasizing the risks inherent in your business. If they see this as a challenge and an opportunity, great, if not, they might not be right for the start-up environment.



Thumbs DownAvoid This: Don’t assume that a potential employee is risk averse simply because they have no worked with start-ups in the past. Use other personality tests and interview questions to see if this is indeed true.

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