Very nice article. A question that came up while reading, was.
We agree that bonuses suck. And equity is better because all internal-yearly bonus targets are translated to the "ultimate KPI of success", company value. Missionary over Mercenary.
But, trying to move the discussion forward, what about the common problems of these two? How you decide who gets equity and how much of it? How you decide that Lukas takes 1, Mary 100 and Tom nothing. And how do you communicate that before the fact, as something that a team member can achieve?
Great question Christos. As with all compensation, it's not a perfect science. But it does roughly track to how your company thinks about base pay, which is that there are standard equity grants 1. for new hires, by level, and 2. additional grants at promotion points. On 'who gets equity', I think most great companies would say 'everyone' gets at least something. And then 'how much' is a mix of art and science around what you think that equity is worth today, what it will be worth over the course of its vesting, and then what you want each employee's 'total comp' to be.
One point perhaps to clarify: I'm not an HR expert, so I don't necessarily have A+ insights on how to set pay generally (tl;dr, it's complicated). What I am saying in this article is that from a leadership/ operating point of view, cash bonuses - outside of sales - aren't a great *component* of any great growth company's compensation strategy.
Very nice article. A question that came up while reading, was.
We agree that bonuses suck. And equity is better because all internal-yearly bonus targets are translated to the "ultimate KPI of success", company value. Missionary over Mercenary.
But, trying to move the discussion forward, what about the common problems of these two? How you decide who gets equity and how much of it? How you decide that Lukas takes 1, Mary 100 and Tom nothing. And how do you communicate that before the fact, as something that a team member can achieve?
Great question Christos. As with all compensation, it's not a perfect science. But it does roughly track to how your company thinks about base pay, which is that there are standard equity grants 1. for new hires, by level, and 2. additional grants at promotion points. On 'who gets equity', I think most great companies would say 'everyone' gets at least something. And then 'how much' is a mix of art and science around what you think that equity is worth today, what it will be worth over the course of its vesting, and then what you want each employee's 'total comp' to be.
One point perhaps to clarify: I'm not an HR expert, so I don't necessarily have A+ insights on how to set pay generally (tl;dr, it's complicated). What I am saying in this article is that from a leadership/ operating point of view, cash bonuses - outside of sales - aren't a great *component* of any great growth company's compensation strategy.