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 outsourcing 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 ▪ 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. 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 Getting to the MVP need? Finding potential customers Is the business model viable? Leadership Product Sales/ Marketing Finance Manufacturing/ Human Operations Dev. Bus. Dev/ Production Resources (IT/Purchasing/ Cust. Office/Bldg.) Service Founder Founder Founder Founder N/A N/A N/A N/A Co-founders Co-founders Co-founders Co-founders
Organizational Framework | What to Expect at the Incubator Stage ▪ 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. Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level The team is beginning to formalize Finding customers for growth Selling the product equity/ownership interest Funding the business/plan Raising money Make an MVP Leadership Product Sales/ Marketing Finance Manufacturing Human Operations Dev. Bus. Dev/ /Production Resources (IT/Purchasing Cust. / Office/Bldg.) Service CEO CTO CEO Contractors Contractors Contractors Usually Usually CTO Consultants Consultants Consultants Ignored Ignored
Organizational Framework | What to Expect at the Foosball Table Stage ▪ 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 Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level The team has grown and is now Commercializing the product Sales growth and customer retention generating revenue Selling more & increasing market share Product development Scaling manufacturing Product refinement Implementing product enhancements Leadership Product Sales/ Marketing Finance Manufacturing Human Operations Dev. Bus. Dev/ /Production Resources (IT/Purchasing Cust. Service / Office/Bldg.) CEO CTO VP Sales Marketing Finance leader Plant Manager Outsourced Office manager CTO Engineer(s) Leader Bookkeeper Production Office manager VP Sales Operators
Organizational Framework | What to Expect at the Bureaucracy Stage ▪ 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. Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level You’re starting to add resources to Understanding and managing supply chain Process documentation and development support roles, such as project Increasing market share, retaining customers, and Project management management, HR, finance, purchasing reducing customer acquisition cost Building the business out beyond the founder Getting HR/people processes and systems in place Growing and influencing culture Leadership Product Dev. Sales/ Marketing Finance Manufacturing Human Operations Bus. Dev/ /Production Resources (IT/Purchasing/ Cust. Service Office/Bldg. CEO, COO, CTO VP Sales VP Marketing CFO COO VP HR COO CTO, CFO, VP Engineering Sales manager Dir. Marketing Finance VP Manufacturing HR Manager Director of VP Sales Dir. Engineering Sales Reps Marketing Director Plant Manager Operations VP Marketing Manger Engineering Customer Service Managers & Coordinator Production Office Manger VP Human Resources Engineers managers & Specialists Accountant Supervisor Administrative VP Manufacturing Representatives Production Assistant Operators
Organizational Framework | What to Expect at the Stability Stage ▪ Your business has matured and now benefits from solid funding and sales growth. ▪ Employees have market salaries and equity. Bonus plans are typical. Actions You Are Taking Issues You Are Facing Skills Needed to Reach Next Level Your product or service is a Reducing operating cost/building efficiencies You’re at the top. Time to dominate player in its industry Staying ahead of the market/disrupting the landscape hold on and defend your and geographic market Planning for leadership transitions, building talent pipeline, develop career pathways and position. 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 Leadership Product Dev. Sales/ Marketing Finance Manufacturing Human Operations Bus. Dev/ /Production Resources (IT/Purchasing/ Cust. Service Office/Bldg. CEO, COO, CTO VP Sales VP Marketing CFO COO VP HR COO CTO, CFO, VP Engineering Sales Manager Dir. Marketing Finance VP Manufacturing HR Manager Director of VP Sales Dir. Engineering Sales Reps Marketing Director Plant Manager Operations VP Marketing Manger Engineering Customer Service Managers & Coordinator Production Office Manger VP Human Resources Engineers Managers & Specialists Accountant Supervisor Administrative VP Manufacturing Representatives Production Assistant Operators
Market Compensation by Position 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. CEO CFO Positions by Compensation Range CTO COO Operations Director Accountant Engineering Manager VP Marketing Plant Manager Production Supervisor VP Manufacturing Marketing Director Office Manager HR Manager VP Human Resources Marketing Specialist Controller Administrative Assistant VP Sales Customer Service Manager Bookkeeper Finance Director Customer Service Representative Marketing Manager Engineering Director Sales Manager Production Operators 30 ------------------------------ – 70 71---- – --------------------- 100 101----------- – ----------- 300 Compensation Ranges in Thousands
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.
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