Startup businesses are some of the most exciting ventures to be involved in but they bring with them unique challenges and many, many lessons to learn along the way. Some of the toughest things to handle are staffing your company, managing personnel and handling compensation. Given the fact that a single person or even the business owner typically handles compensation, there can be some hurdles to jump over as you navigate your way through managing compensation in a startup.
From compensating yourself to compensating employees, questions abound about what the appropriate amounts are, what benefits you can offer and more. It may seem overwhelming at first, but all new things are in the beginning. Take a look at these tips for handling compensation in a startup environment and you’ll be adding it to your list of expertise in no time.
- Evaluate the competitive market
Since it can be difficult to determine what kind of compensation to offer, start by taking a look at what others in the industry are offering, as well as what other startups and others in the area give. Taking these three factors into account will assist with determining what fair compensation will be for your business. It’s a delicate balance between paying enough that talented candidates will want to work for your business and not overpaying, which would put a strain on your finances when cash flow matters most. You’ll probably need to consider matching the market, or even exceeding the market for crucial positions to compete for that talent.
- Weigh your options
Paying employees can sometimes seem impossible in the beginning but hiring more employees is an inevitable part of growth. When you just don’t have the kind of cash needed to hire more employees, consider other options aside from typical compensation and typical employees. For instance, compensating interns is a completely different story from compensating an employee as you can offer college credit and a stipend rather than a salary. Keep in mind that interns do deserve fair compensation but the ways in which you compensate them can be a bit more creative. Similarly, part time or contract employees may be a better solution when an full time employee is out of the question.
- Focus on the total compensation package
When the cash just isn’t there, fair compensation is achievable through considering your total compensation offering and not just salary. Total compensation includes all the benefits and extras you offer your employees in addition to salary. Typical aspects of a total compensation package include things like health insurance and a retirement package but it can actually include anything you would like to add, such as gym memberships, transportation assistance, equity offerings, incentive pay opportunities and more. Don’t be afraid to think outside the box because it may be the difference between being able to hire the best and not being able to compete for quality candidates.
What compensation challenges has your startup faced and how did you handle them? Let us know in the comments section below.