This week, compensation leaders from Clay, Google and Instacart share the rules early-stage founders can break — and the few they should actually follow — when building their first comp packages and strategy.
What Early Stage Founders Should Know About Comp: The Rules To Break (And A Few You Should Actually Follow)
When your headcount is still in the single digits, outlining a compensation strategy or philosophy might seem like overkill. But take it from those who’ve been there: a little planning now will save you from headaches later.
“People want to get promoted and move up way quicker than you're usually ready for,” says Kaitlyn Knopp, who has built compensation programs at companies including Instacart, Cruise and Google, and is now the co-founder of HR automation platform Pequity. “Having a framework enables you to be consistent and defensible.”
There’s no shortage of advice on how to structure compensation at a startup, but how do you know what’s useful and proven, versus outdated or irrelevant? At The Review, we believe the best lessons come from those who have done it themselves and lived to share the learnings. So we’ve compiled insights from industry leaders who’ve built and scaled compensation strategies, breaking it down into rules that make sense to follow — as well as some you might want to break.
Highlights include:
- The risks of over-giving on equity, and how to get the balance of total comp right. “You have more leverage than you think you do,” Knopp says (plus her 10% equity rule, and her suggested salary tier structure).
- A sensible, sustainable and scalable approach to salary, from Applied Intuition founder and CEO Qasar Younis. “The vast majority of our employees are now at the 99th percentile of compensation, but they didn’t start there.”
- Clay co-founder Varun Anand on the power of off-cyle comp increases to drive performance and loyalty, rather than adjustments tied to an annual review. “Compensation is fluid because as things change, as you perform, we should reward you and you should get more.”
- Building a culture of transparency and education around comp with Colleen McCreary, Chief People Officer at Confluent, who reformed comp strategy at Credit Karma. “If you don't consistently provide clarity and context, all you're going to end up doing is talking about compensation all of the time.”
- Why contract-to-hire can be a long-term solution, not a stopgap, according to Knopp. “Explaining your philosophy, mission, vision, and values is not the same as being in the day-to-day with the team, seeing the interactions, seeing how customers are reacting, seeing the problems that you face.”
- Advice from Molly Graham, who helped structure comp at Facebook and Quip, on how to calibrate comp according to function — because what motivates someone in sales to excel won’t necessarily move a product manager.
Thanks, as always, for reading and sharing!
-The Review Editors