Startup Success: 3 Compensation Strategies for Cash-strapped Companies


You’ll see plenty of articles online giving advice on how startups can find the right people for their company. But after you’ve hired these exceptional employees, how are you going to pay them? An experienced employee might be making five to six figures, which is an amount most startups can’t sustain even if you raise outside capital.



Startups constantly struggle to entice new talent and convince them to stay while sticking to their budget. So if you can’t match the employee’s previous salary or the market rate, how do you structure a compensation package that won’t drive talents away?

  1. Boost your non-cash incentives

You can adopt more generous non-cash compensation since you won’t equal high-performing employees’ dollar value. Apart from the basics – leaves, health insurance, and federal benefits – look into incentives not all companies offer.
Take Netflix, for example. The leading streaming services provider offers unlimited paid vacation days. Netflix’s philosophy is that they don’t have to keep track of their employee’s vacation leaves since they aren’t strict with the number of hours their people spend in the office.
You don’t have to offer unlimited paid vacation days like Netflix. The key is promoting flexibility and work-life balance for your employees. Consider offering the option to work remotely on certain days, flextime, or sabbaticals for veteran employees. These attract employees who carry plenty of personal obligations, especially those who have families.
Apart from non-cash incentives, consider startup equity.

  1. Consider equity-based compensation

Equity compensation is becoming a popular bootstrapping strategy for startups. Stocks can be attractive to high-performing employees. Remember, these are people who could be making a lot more money elsewhere since you can’t afford their market rate. Offering them part ownership of the company in the form of stock bridges that deficiency.

Stock compensation also help retain your employees. Most stocks have a vesting period. This means the employee can’t enjoy the full equity until they’ve worked for your company for a certain number of years. If, for example, an employee decides to leave before the four-year vesting period, he won’t receive the full amount of his stock options.
Also, stocks motivate your employees. Being a partial owner makes them feel that they are part of the company, so they’d want to perform better.
Then, don’t neglect the value of a cohesive onboarding process to welcome your new employees.

  1. Create a decent onboarding process

Many companies don’t properly onboard their new recruits. The new workers get thrown into unfamiliar tasks they’re forced to navigate on their own. The onboarding process is supposed to help the new hires adjust to the functional and social aspects of their job. It also helps retain job hoppers.

One idea is to give new hires welcome packages on their first day. Include practical items that help them in their day-to-day work, like a coffee mug, a pen, sticky notes, and others. But apart from the usual, look into other unique gifts you can give to new employees.
Dynamic Gift, for instance, offers an extensive range of corporate branded gifts, such as power banks, flash drives, and more.

Another option to consider is a mentorship program. This setup is ideal for startups that don’t have the time to follow through a week-long formal training program. Pair your new hire with a senior employee who can guide the former throughout his first few months. This way, your new employee can become productive as soon as he or she starts working.
A strong mentorship program also helps the new talent assimilate seamlessly into the company, which can boost retention.

Ultimately, what’s important is giving your employees meaningful work and appropriately compensating them for it. Even if you can’t meet their market salary, a thoughtful compensation plan is bound to make your team feel valued. Build one with the welfare of your employees in mind – and not simply for the sake of cost-cutting – and top talents will be eager to join your team.


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For The First Timer - Business, Startups, Health, Parenting, Lifestyle, Travel and more: Startup Success: 3 Compensation Strategies for Cash-strapped Companies
Startup Success: 3 Compensation Strategies for Cash-strapped Companies
Startups find it hard to meet the market salary of experienced employees. A thoughtful compensation plan can make up for this deficiency and entice talents.
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