How to make compensation your competitive advantage

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Compensation isn’t just a number on an offer letter. Any hiring manager can tell you that it’s a wildly complex process that takes up time, money, and energy. But we all know it’s time, money, and energy that’s well-spent. Because compensation is a competitive advantage—it’s how we attract and retain people to keep culture, achieve goals, and drive results. 

I’ve been a hiring manager for over 20 years, and worked in HR for nearly a decade. These are three areas that hiring managers should seriously consider as they think about setting themselves apart when it comes to compensation. 

Your philosophy

Every company needs a compensation philosophy—the principles and values that define the way you invest your budget. It’s not always your benefits that set you apart. It’s the story and the principles behind why you chose them.  

At Carta, we’re committed to democratizing equity ownership. So we recently changed our approach to equity refreshes because we wanted to reward employees who stay with Carta for the long haul with increased ownership. We also began to offer our employees regular liquidity through our private exchange, CartaX, to make sure they actually tangibly benefit from the shares they own. These compensation decisions were guided entirely by our values. They are Carta.

There are countless ways to align benefits with values. Decide your philosophy up front. That’s your North Star. Then use it to drive your decisions around compensation.

Your systems

There’s a lot involved with compensation, including standardizing a philosophy, benchmarking, forecasting, scenario modeling, levelling, rewards planning, internal communications, and more.  

And so in the early and mid-stage startup space, one company might end up using as many as seven different systems to handle all of those different aspects. But few of them can support a company with live data that’s applicable in real-time scenarios—like adjusting comp for remote work during a pandemic. And few can support a company throughout its life, from pre-seed to seed and beyond. Too often, people in HR leadership positions end up making their own spreadsheets and calling peers to supplement data from external providers. Find systems and reliable data sources that work for you, and for your employees, as early as you can. 

We support nearly 20,000 companies on Carta. We know the kinds of compensation challenges these companies face because we hear it firsthand. That’s why we created Carta Total Comp—a platform that allows companies to look at live data to benchmark equity and salary bands, and to scenario-model and apply various compensation philosophies. Our goal was to take the guesswork and spreadsheets out of compensation for leaders—ensuring consistency, equality, and transparency across the organization. 

Your challenges

Your approach to compensation should be really closely connected to the challenges that are specific to your company. Where are you in your growth? What are your hiring goals? Being thoughtful about those problems will help you allocate the right resources to solve them. 

One of the challenges we were focused on solving this past year was: how do we remain private, but compete with public companies for talent? For us, that meant transitioning our new hire offers from options to restricted stock units (RSUs). A lift like this took significant internal resources, but we knew it was worth it. Today, RSUs combined with our regular liquidity events on CartaX allow us to create compelling offers that compete with public market companies. 

Compensation isn’t just a program you set once and never revisit. It’s an ongoing conversation. It shifts with the market. With demands from a new generation of talent. With the needs of existing employees. 

It also changes as your organization changes. Today, you might be hiring your first engineers. Tomorrow, you might be retrofitting or adjusting your comp practices. In a few years, you might be doubling the size of your team and sorting out how equity plans impact your cap table. 

Think through your philosophy, your systems, and the way you approach your challenges up front. If you do, you won’t just save yourself time and energy and money. You’ll also have a 360-degree approach that keeps you flexible, efficient, transparent, and competitive, no matter what part of the compensation process you’re in. 

DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”).  This communication is for informational purposes only, and contains general information only.  Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.  This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests.  Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor.  This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. 
©2021 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved. Reproduction prohibited.

 

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