Startup Management & Talent Compensation: A framework for - - PowerPoint PPT Presentation

Startup Management & Talent Compensation:

A framework for startups and small companies interested in talent planning and compensation.

This ebook was produced to help startups and small companies understand talent planning and compensation at every stage of growth and use the information to establish a framework for implementation.

“Reflecting on the 650+ searches completed by our human resource

• utsourcing and recruiting firm over the past five years – One common

truth persists: compensation is always a key factor for attracting and retaining talent.”

• Amy Cell -

This ebook will guide you through several important stages of insights and steps for talent and compensation planning:

• 1. Organizational Framework by Stage
• Stage Profile
• Compensation Expectations
• Situations and Positions
• 2. Market Compensation by Position
• 3. Looking Beyond Compensation to Bolster Retention

Organizational Framework

Over the years we have encountered different stages of start-up growth. Each of these stages encompasses different skill and experience needs and therefore requires different tools for determining talent compensation. Get to Know The Stages ▪ Coffee Shop: Your team consists of you, your co-founder, and maybe a one or two people who get your vision and are ready to hang on for the ride. ▪ Incubator: Your likely have a small team of 2 to 10 (mostly contractors) at this point, with some formalized agreements. ▪ Foosball Table: You’ve made some significant traction. Your team has grown to 10 to 20 folks and many of your contractors are now full time. ▪ Bureaucracy: You’ve gotten the funding and sales growth to support your team that now ranges anywhere from 20 to 100. ▪ Stable: Your business has matured and now benefits from solid funding and sales growth.

Organizational Framework | What to Expect at the Coffee Shop Stage

Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level Exploring the viability of something new Does this solution address a market need? Is the business model viable? Getting to the MVP Finding potential customers Leadership Product Dev. Sales/

• Bus. Dev/

Cust. Service Marketing Finance Manufacturing/ Production Human Resources Operations (IT/Purchasing/ Office/Bldg.) Founder Co-founders Founder Co-founders Founder Co-founders Founder Co-founders N/A N/A N/A N/A

▪ Your team consists of you, your co-founder, and maybe a one or two people who get your vision and are ready to hang on for the ride. ▪ Founders are working for equity.

Organizational Framework | What to Expect at the Incubator Stage

Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level The team is beginning to formalize equity/ownership interest Finding customers for growth Funding the business/plan Make an MVP Selling the product Raising money

▪ You likely have a small team of 2 to 10 (mostly contractors) at this point, with some formalized agreements. ▪ Founders are working for equity. Contractors, advisors, consultants, and employees are also working for equity or deferred compensation.

Leadership Product Dev. Sales/

• Bus. Dev/

Cust. Service Marketing Finance Manufacturing /Production Human Resources Operations (IT/Purchasing / Office/Bldg.) CEO CTO CTO CEO Contractors Consultants Contractors Consultants Contractors Consultants Usually Ignored Usually Ignored

Organizational Framework | What to Expect at the Foosball Table Stage

Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level The team has grown and is now generating revenue Commercializing the product Selling more & increasing market share Scaling manufacturing Implementing product enhancements Sales growth and customer retention Product development Product refinement

▪ You’ve made some significant traction. Your team has grown to 10 to 20 folks and many of your contractors are now full time. ▪ Founders are now earning a low salary. Employees have equity or are earning below market salaries. Some contractors are converted to employees

Leadership Product Dev. Sales/

• Bus. Dev/
• Cust. Service

Marketing Finance Manufacturing /Production Human Resources Operations (IT/Purchasing / Office/Bldg.) CEO CTO VP Sales CTO Engineer(s) VP Sales Marketing Leader Finance leader Bookkeeper Plant Manager Production Operators Outsourced Office manager Office manager

Organizational Framework | What to Expect at the Bureaucracy Stage

Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level

You’re starting to add resources to support roles, such as project management, HR, finance, purchasing Understanding and managing supply chain Increasing market share, retaining customers, and reducing customer acquisition cost Getting HR/people processes and systems in place Process documentation and development Project management Building the business out beyond the founder Growing and influencing culture

▪ You’ve gotten the funding and sales growth to support your team that now ranges anywhere from 20 to 100. ▪ Employees have market level salaries and equity. Bonus plans are beneficial.

Leadership Product Dev. Sales/

• Bus. Dev/
• Cust. Service

Marketing Finance Manufacturing /Production Human Resources Operations (IT/Purchasing/ Office/Bldg.

CEO, COO, CTO, CFO, VP Sales VP Marketing VP Human Resources VP Manufacturing CTO VP Engineering

• Dir. Engineering

Manger Engineering Engineers VP Sales Sales manager Sales Reps Customer Service managers & Representatives VP Marketing

• Dir. Marketing

Marketing Managers & Specialists CFO Finance Director Coordinator Accountant COO VP Manufacturing Plant Manager Production Supervisor Production Operators VP HR HR Manager COO Director of Operations Office Manger Administrative Assistant

Organizational Framework | What to Expect at the Stability Stage

Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level

Your product or service is a dominate player in its industry and geographic market Reducing operating cost/building efficiencies Staying ahead of the market/disrupting the landscape Planning for leadership transitions, building talent pipeline, develop career pathways and succession planning Growth through product or service expansions and acquisitions Increasing market share, retaining customers, and reducing customer acquisition cost. Getting HR/people processes and systems in place You’re at the top. Time to hold on and defend your position.

▪ Your business has matured and now benefits from solid funding and sales growth. ▪ Employees have market salaries and equity. Bonus plans are typical.

Leadership Product Dev. Sales/

• Bus. Dev/
• Cust. Service

Marketing Finance Manufacturing /Production Human Resources Operations (IT/Purchasing/ Office/Bldg.

CEO, COO, CTO, CFO, VP Sales VP Marketing VP Human Resources VP Manufacturing CTO VP Engineering

• Dir. Engineering

Manger Engineering Engineers VP Sales Sales Manager Sales Reps Customer Service Managers & Representatives VP Marketing

• Dir. Marketing

Marketing Managers & Specialists CFO Finance Director Coordinator Accountant COO VP Manufacturing Plant Manager Production Supervisor Production Operators VP HR HR Manager COO Director of Operations Office Manger Administrative Assistant

Market Compensation by Position

30 ------------------------------– 70 71----–--------------------- 100 101-----------–----------- 300

CEO CTO VP Marketing VP Manufacturing Engineering Director Finance Director VP Sales VP Human Resources COO CFO Marketing Manager Sales Manager Customer Service Manager Plant Manager Marketing Director HR Manager Controller Engineering Manager Operations Director Customer Service Representative Production Operators Bookkeeper Production Supervisor Office Manager Marketing Specialist Administrative Assistant Accountant Compensation Ranges in Thousands Positions by Compensation Range As your business grows, compensation for various positions will become part of your consideration. The graph below provides a topline view of key positions by compensation ranges.

Looking Beyond Compensation | What Else Do Employees Want?

Culture Challenge: Startups don’t pay enough attention to this, as they are often technical people, especially technical founders, that might be light on people management and development. In an organization, a culture will occur regardless of whether you pay attention to it or not. Recommendations: ▪ Be intentional about culture; Know the values or characteristics that are important to you, or will be important to the success of the startup. ▪ Document these, and use them to hire, reward and promote team members.

Looking Beyond Compensation | What Else Do Employees Want?

Structure Challenge: Structure needs to evolve as the company grows. During times of growth, it can be easy for an organization to approach structure as one-off issues when a hire is needed. Sometimes a founder might think, okay, here are five things that aren’t getting done, let’s create a job description and bolt it onto the organization somewhere. Recommendations: ▪ Periodically thinking through the organization and how things are supposed to fit together, using the following approach: 1. Principles - What are the key strategic differentiators or areas of focus? 2. Processes - What are the processes that drive those goals? 3. Roles & Responsibilities - What are the tasks and activities associated with these processes? Use lots of sticky notes to capture what people are doing. Then, group the activities if they are related. These “buckets” of similar activities can then become job descriptions, or departments, depending on the size of the organization.

Looking Beyond Compensation | What Else Do Employees Want?

Development Opportunity: There are great growth opportunities in startups! Millennials, in particular, care about variety and challenge. The level of visibility into business strategy is unprecedented for recent college graduates looking for growth. Also, the ability to take on more responsibility as the organization grows can be highly appealing. Recommendation: While this can be challenging for busy startup founders, it is important to pay attention to the training needs of team members and provide opportunities to take on more responsibilities that contributes to growth in experience and knowledge. Internal Equity Challenge: Most people will find out what others are making. Having a fair and strategic plan for determining compensation and equity grants is important. Recommendation: ▪ Ranking or weighting the value of each position across the organization is important so that there is consistency. ▪ It is also good to periodically compare salaries to the market, and to make necessary adjustments. Usually salary bands are used to provide a range that takes into account the internal value of the position, external market compensation, and the performance and experience level of the incumbent.

Looking Beyond Compensation | What Else Do Employees Want?

Good Managers Challenge: People leave managers, not companies. As a startup grows, individual contributors sometimes become managers out of necessity, but lack the skills or training to be successful in the new role. Recommendation: Ensure managers have good project management and interpersonal skills so that they can delegate, monitor, reward and recognize and effectively develop team members. Conflict Management Challenge: All teams have conflict, but creative conflict, when appropriately managed, leads to innovation and overcoming obstacles. However, doing this effectively is challenging. When people feel threatened, they can disengage or result in negative behaviors. Recommendation: Create a safe environment where people can openly discuss and resolve issues is critical. Flexibility Work life balance matters to people. An ounce of flexibility can provide a pound of productivity. Some founders believe that everyone needs to have the same level of dedication as they do. However, this can burn people out, or drive them away. Many people value flexibility over the highest salary.

Want to know more! We invite you to connect and follow Amy Cell Talent: Web: www.amycelltalent.com Email: Amy@amycelltalent.com Also, look for Amy Cell Talent on Facebook and LinkedIn