When we see an iceberg, we often see the tip. Underneath the water is a much large mass of ice, typically 7 times the size.*
When it comes to startup compensation, salary is the tip of the iceberg.
For many people, the seeming lesson of the Great Rethink / Great Resignation is that wages must be higher. While that may be true for some professions, startups should think about compensation more holistically.
“𝑪𝒐𝒎𝒑𝒆𝒏𝒔𝒂𝒕𝒊𝒐𝒏 𝒊𝒔 𝒔𝒐𝒎𝒆𝒕𝒉𝒊𝒏𝒈 𝒘𝒉𝒊𝒄𝒉 𝒅𝒐𝒆𝒔 𝒏𝒐𝒕 𝒒𝒖𝒊𝒕𝒆 𝒄𝒐𝒎𝒑𝒆𝒏𝒔𝒂𝒕𝒆.” - Frances Parkinson Keyes
To make your startup somewhere desirable to work means going beyond money to recognize employees' value.
𝗠𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝗠𝗼𝗻𝗲𝘆
When talking about working at your startup, emphasize the opportunity and experience will be fulfilling. Here are some ways:
𝘈𝘸𝘦𝘴𝘰𝘮𝘦 𝘸𝘰𝘳𝘬𝘱𝘭𝘢𝘤𝘦 – Encourage innovation and collaboration. Quickly address bad behavior. Clearly recognize contributions. Effectively delegate responsibilities allowing both you and others to grow.**
𝘔𝘦𝘢𝘯𝘪𝘯𝘨𝘧𝘶𝘭𝘯𝘦𝘴𝘴 – An inspiring purpose is amazing. Clarify how each person's work is contributing to success. Transparency = respect.
𝘗𝘦𝘳𝘴𝘰𝘯𝘢𝘭 𝘊𝘰𝘯𝘯𝘦𝘤𝘵𝘪𝘰𝘯 – At a startup, a small team means that everyone needs to contribute for success. The founder needs to understand how to motivate everyone on a personal level.
𝘎𝘳𝘰𝘸𝘵𝘩 𝘖𝘱𝘱𝘰𝘳𝘵𝘶𝘯𝘪𝘵𝘪𝘦𝘴 – People join startups for the thrill of quick progress. Encourage employees to learn new skills, add more responsibilities, and attend events to level up.
𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗖𝗼𝗺𝗽𝗲𝗻𝘀𝗮𝘁𝗶𝗼𝗻
People need to pay their bills and want to save or spend a little more. Here are some ways to treat employees fairly and thoughtfully.
𝘚𝘢𝘭𝘢𝘳𝘺 – Compensation should be connected to the size and stage of the company, industry, and impact of the role.
𝘉𝘦𝘯𝘦𝘧𝘪𝘵𝘴 – Provide benefits which support employees' lives and reduce their stress outside work. Many benefits and perks are inexpensive, ask your team and other founders for ideas.
𝘐𝘯𝘤𝘦𝘯𝘵𝘪𝘷𝘦𝘴 – Commissions and bonuses should be tied to the company, team, and individual performance combined. If an employee is doing a fantastic job, acknowledge their contribution somehow. Besides a bonus, offer a nice dinner, a gift certificate, or an introduction to an exciting mentor.
𝘌𝘲𝘶𝘪𝘵𝘺 – Ownership in the company can be incredibly motivating. When introducing a stock option plan, be clear and realistic about the terms and unknowns. There are some great guides out there.*** For some employees, equity is not that compelling, so don't assume everyone is compelled by grants.
𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗦𝗲𝘁 𝘁𝗵𝗲 𝗧𝗼𝗻𝗲
Salary is the tip of the iceberg - attractive but misleading. Offer a deeper meaning to work.
It does not always take money to make an incredible working environment, but it does take effort and commitment. You must exemplify opportunity for growth and maintain the values which initially attracted talent or else you will lose the best employees.
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* #funfact Seawater is slightly denser than ice so that the iceberg floats with most of its mass below the surface.
** Blog post on Delegation here: https://www.webuildscalegrow.com/post/c14ca59e
*** Carta offers a great guide to understanding stock options: https://carta.com/blog/equity-101-stock-option-basics/