03 Dec Employee Equity as Bait for Startup Recruiting

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Startups are cropping up and taking many of us by surprise. A great idea is a terrible thing to waste, especially if it could be the next big thing. Now that you have taken the plunge and are dedicating yourself to your startup, raising funding and hiring a highly talented team must be the next steps to get this company to the top. As it happens on most early stage startups, founders require the top talent before being able to secure financial help. But how can they do so without breaking into the last resort piggy bank? An equity compensation plan might be the right enticement for your startup recruiting.

As great as it might look on paper, an early employee equity offer is not for everyone. Many top talent candidates have seen or experienced startup failures or heard of bad negotiations in equity shares. If equity compensation is part of your startup recruiting strategy, do not wait until the last minute of the recruiting process to let the candidate know since it could be a deal breaker. Save yourself and the candidate time by putting the cards on the table as soon as possible. Be sure to be persuasive as skeptical minds could change.

Depending on the urgency, the candidate’s future role and the stage of your startup, you might want to offer a generous amount of equity compensation. This not only demonstrates the candidate the significance of their contribution to the company but also motivates hard work quality and ownership once employed.

Need to see results quickly to get things going? You will probably want to consider working out some sort of task based payment plan. The lack of initial funding will probably have you offering extra percentage of equity at first for a lower salary. As the startup grows and its value gets higher, you can then consider the increase of the monthly payment.

Nothing says “passion and purpose” more than a great pitch by a startup’s founder. Share this to the potential new hire by speaking from the heart as to what excites you from this new project and how their expertise will be of even greater value as the startup completes milestones. Plus the career growth opportunity the candidate will be benefiting from as you expand the team and products.

Maria Jose Chaves

Maria is an English teacher graduated from the Universidad Hispanoamericana in Costa Rica. She is now a full time technical writer for recruitment startups. An avid reader on all matters technology, marketing and a beauty blogger on the side.