Compensate Fairly to Enhance Your Prospects for Success

I love talking to founders about their plan to assemble a team, especially the compensation part. It can be a leading indicator of what’s to come. I regularly speak with early founders who have a big vision for their companies but haven’t thought through team compensation.

Building something great takes a great team. Great team members want to be compensated for the value they bring, and rightfully so. Great people have options—if one company won’t pay them what they’re worth, someone else will. There are two ways to compensate people: cash and equity. If cash is readily available, then paying market salaries will make it possible for a founder to assemble a great team. If cash isn’t abundant, then a combination of cash and equity is typical. It allows the founder to hire more people with limited cash and lets employees have an ownership stake in the company. They get some cash now and benefit from the upside potential of the company if it does well.

If you’re looking to do great things, you need great people. If you don’t compensate people fairly, your chances of attracting a great talent plummet along with your likelihood of achieving your big vision.