For early-stage, high-growth startups, preserving your cash runway is essential to achieving your long-term goals. This often means paying your first employees less than they could make at a larger organization. There is always someone who could pay more, and to founders, this can feel discouraging when trying to recruit world-class talent.
However, it’s important to remember that cash compensation is only a short-term incentive. High performers evaluate roles based on more than just their salary alone.
While it’s crucial to offer your employees fair and equitable pay, salary is not the only thing you should include in your compensation strategy. Compensation also includes the role, responsibilities, company culture, growth opportunities, benefits, bonuses, PTO, and stock options.
The good news: startups have many innate talent rewards.
Focus on the Strengths of a Startup
Although startups may not be able to compete with the base salaries at large organizations, they can be more attractive to potential candidates because of other factors you do have control over.
Startups possess opportunities for big impact, new experiences, career growth, and direct access to leadership. These intangibles are a major part of your compensation package.
Some examples include projects that require starting something from scratch. To potential hires, the idea of building something new or tackling unfamiliar assignments is rewarding. Additionally, unlike big corporations, as one of the first hires to a new team, employees will develop personal relationships with leadership.
We encourage all our companies and Co-Founders to articulate and align on their company’s beliefs on compensation. Once you set your compensation strategy in stone, the next steps are to be transparent about it and be sure each hire and promotion follow your established guidelines.
When I’m working with High Alpha CEOs and Co-Founders, I recommend they base their compensation strategy on their culture and values. For example, one of our companies chose to provide a completely remote team environment, flexible work schedules, stipends for home office and tech, and the ability to work across different time zones as a part of their compensation strategy. This was a direct reflection of their culture that values people integrating their life with work.
Applying Your Philosophy to Recruiting
When you’re actively recruiting, make sure to share your entire philosophy and the full story behind your open opportunity. Go in-depth regarding the unique advantages behind the role.
It is also essential to ask about salary expectations early on. This ensures neither party is wasting the other’s time. If they are expecting a salary outside of your budget, don’t be afraid to ask if there are other aspects of compensation that they’re open to negotiating further.
At the end of the day, having and presenting a full-picture compensation plan will help you find great talent that is passionate about your mission, understands your company’s stage, and is motivated by the work they’ll be doing and the opportunity at hand.