David de Geest in Wallstreet Journal: Don’t offer big benefits until your company turns three

Dr. David de Geest of the department of HRM&OB of our Faculty featured in the Wall Street Journal this week:

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Don’t Offer Big Benefits Until Your Company Turns Three
Startups that offer generous perks earlier than that have a higher chance of going under
By Rachel Emma Silverman

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There's a high incidence of failure of start ups. DeGeest and his colleagues tracked 1100 technology start-ups over a period of seven years and found that implementing 'motivation-enhancing human resource practices' in the first three years, such as bonuses, stock options and group healthcare programs, decreased the chances of the company surviving dramatically.
The researchers found that startups offering motivation enhancing research practices in the first three years have a survival rate of roughly 20%, while startups that do not offer these practices have a survival rate of roughly 55%.

Journal of Management
The article in the Wall Street Journal is based on the publication of Degeest and Ernest O'Boyle of the University of Iowa in the Journal of Management: The Benefits of Benefits. A Dynamic Approach to Motivation-Enhancing Human Resource Practices and Entrepreneurial Survival.

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