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If the Shoe Fits: Compensation Fairness

by Miki Saxon

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

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      1. How fair is your company’s compensation plan?
      2. Do you have a compensation plan for both salary and stock?
      3. Do you pay your “stars” more, whether cash, stock or both?
      4. Do you offer it to lure them in the door?

If you answer ‘yes’ to questions 3 and 4 then you must answer ‘no’ to 1 and 2.

Winging it with no plan is a major ingredient of financial disaster.

Offering high salaries and/or giant stock options before knowing how well a person will perform at your startup is a recipe for talent disaster—history may not accurately predict the future.

One of the key determinants of satisfaction — or dissatisfaction — with compensation is how employees feel their pay package compares to others, according to Wharton management professor Matthew Bidwell. “No doubt if somebody thinks he or she is doing the same work as another who is paid a lot more, this leads to resentment and ultimately to disengagement.”

And the last thing you need in a startup is resentment and disengagement.

Image credit: HikingArtist

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