How Much Should I Pay My Employees? An Introduction to Compensation Philosophy

TechStars

Developing a compensation philosophy—and doing so sooner rather than later—is one key way to get compensation right. But what exactly is a compensation philosophy, and how do you go about developing one for your startup? . What is a compensation philosophy? .

When offering equity compensation, what should founders consider to make sure employees benefit fairly from a liquidity event?

SaaStr

Almost always, compensation distributions are fixed the moment you sign a term sheet to be acquired (and really, a bit before that). The post When offering equity compensation, what should founders consider to make sure employees benefit fairly from a liquidity event?

What is an equitable way to compensate someone who brings an investor to your start up company?

SaaStr

The post What is an equitable way to compensate someone who brings an investor to your start up company? If someone wants to be paid to help you fundraise, pass. VCs will smell it and it will be a negative.

At the Top SaaS Companies, Most Co-Founders Are Not Equal (And That’s OK)

SaaStr

Blog Posts Compensation Early Human ResourcesI was curious the other day how many of the recent Cloud and SaaS IPOs had founders that were equal co-founders from an equity perspective. That was how I was brought up (the first start-up job I had, the founders were equal shareholders).

How to Build Effective Sales Compensation Plans for Any Customer Facing Role

Sales Hacker

A great sales compensation plan needs to accomplish quite a lot. It needs to provide fair compensation to employees in customer-facing roles. The Process for Creating a Sales Compensation Plan. Plan Compensation for Onboarding and Training. Example Compensation Plans.

When Startup Compensation Isn't About the Money

Tom Tunguz

It’s the most provocative idea about employee compensation I’ve found. Today, it’s common for startups and companies of all sizes to refer to compensation surveys that span the 10th percentile to the 90th percentile in compensation for roles, and use these benchmarks provide offers to new hires, inform promotion salary increases and new option grants, and underpin retention packages. In his book describing Google’s People Operations called Work Rules!

Startup Best Practices 12 - Customer Success Compensation

Tom Tunguz

Compensation structures are one of the most interesting questions facing customer success organizations in software startups. How should customer success leaders structure their team’s compensation in order to align the objectives of individual customer success managers with those of the larger business? Like sales compensation plans , customer success compensation plans should evolve to serve the business’s needs.

The Surprising Compensation Trends of Startup Executives

Tom Tunguz

Since 2008, there has been a secular trend to increase cash compensation and decrease equity to startup management teams. In the past 5 years, VPEs have benefitted from a 10 to 16% increase in their cash compensation, but have seen their equity grants fall by 17-19%. Above, I’ve charted the cash compensation trends, (salary+bonus), for the different roles and different locations.

The Optimal Compensation Plan for Customer Success Teams

Tom Tunguz

In the early years, Hubspot prioritized growth and consequently compensated their sales teams exclusively on new bookings. But after observing some of the initial churn rates of particular customer segments, the company re-emphasized the importance of closing the right customers, and added a churn component to the compensation structure of the sales teams, to ensure that the sales teams were pursuing the right kinds of customers.

Benchmarks for Employee Stock Based Compensation in SaaS Startups

Tom Tunguz

Another way is to look at the cash based cost of the stock based compensation. The chart above shows the average stock-based compensation (SBC) per employee by years since founding across the basket of publicly traded SaaS companies. In summary, each year the typical public SaaS company spends about $10-20k in stock based compensation per employee. Above, I’ve plotted the median spend on stock-based compensation over the first ten years of each company’s life.

The Ins & Outs of Variable Pay Compensation Structure for Sales Teams

Sales Hacker

With increasing focus on grit and many claims of meritocracies in organizations across the country, why does variable pay compensation even exist? On top of that, why are sales people some of the few employees subject to variable compensation structures?

3 Key Ingredients of a Sales Compensation Plan

Tom Tunguz

For example, as Mark Roberge, CRO of Hubspot, wrote in The Sales Acceleration Formula , Hubspot adopted three different sales compensation plans throughout its early evolution which embody the three key ingredients of a sales compensation plan. Hubspot’s journey highlights the three key components of a sales compensation plan: commission ratio, acceleration and payment schedule. Payout timing is the third component of the sales compensation.

How Much to Compensate SaaS Sales Teams for New Sales, Renewals and Expansions

Tom Tunguz

Many times startup teams ask how to compensate a sales team for renewals and upsells. How should SaaS startups compensate their sales teams for upsells and expansions? What’s the best way to compensate sales teams? Developing the sales motions, customer success sophistication and compensation structures to enable this type of growth is an essential skill of enduring SaaS businesses

A Step by Step Guide to Revenue Growth with Mark Roberge (Video + Transcript)

SaaStr

The last part I want to do is on compensation. Blog Posts Company Culture Compensation Customer Success Featured Videos Growth Hiring Leadership Marketing Marketing Strategy Metrics SaaStr Events Sales Scale Videos saastr annual

Reviews Of The Highest Paying MLM Network Marketing Compensation Plan Opportunities

SaaS Metrics

Multi-Level Marketing (MLM) refers to one of the most popular and common forms of businesses in the industry today. It’s a big business that many Americans and even other countries all over the world are involved. Why is it so popular?

The Unexpected Compensation Trends of Post-Series A Startup Founder/CEOs

Tom Tunguz

There’s an interesting phenomemon occurring in founder compensation for post-Series A companies: founding CEOs are swapping cash for larger equity stakes in their companies. Each year, Redpoint portfolio companies participate in a compensation survey along with the portfolio companies of about 50 other firms, totaling about 800 startups.

10 Tough Lessons We Learned Building a Prenicorn Outside of Silicon Valley from Pendo.io (Video + Transcript)

SaaStr

Blog Posts Company Culture Compensation Featured Videos Hiring Human Resources International Expansion Leadership Marketing Resource Type Role / Function SaaStr Events Topics Videos saastr annual

SaaStr Podcast #220: Leyla Seka, EVP @ Salesforce Mobile Discusses What Needs To Be In Place For Hyper-Scale

SaaStr

Company Culture Compensation Customer Success Diversity & Inclusion Hiring Leadership PodcastsLeyla Seka is the executive vice president of the Salesforce Mobile platform experience.

Mobile 152

SaaStr Podcast #210: Bridget Gleason, VP of Sales @ Logz.io On Why The Best Sales Reps Are Not Outgoing and Extroverted

SaaStr

If we do stick with the kind of compensation plan though, so to speak, I do get asked by, again, a lot of founders about it. Compensation Hiring Leadership Podcasts SalesWelcome to Episode 210!

SaaStr Podcast #213: Tom Tunguz, GP @ Redpoint Ventures On Why Scoring Leads May Actually Be Dangerous

SaaStr

Tom Tunguz: The second reason that we’re starting to see this kind of demarcation between CSM and AE, particularly for the upsell has to do with compensation. At the beginning, maybe two or three years ago, there were lots of different ways of compensating a CSM. Compensation Early Podcasts SaaS Product Pricing SalesWelcome to Episode 213!

SaaStr Podcast #225: Stephen Burton, VP of Smarketing at Harness Discusses How To Create True Alignment Between Marketing and Sales

SaaStr

Company Culture Compensation Marketing Podcasts SalesStephen Burton is VP of Smarketing at Harness, the industry’s first continuous delivery as a service platform. To date, Harness has raised $20m in funding from the wonderful Matt Murphy @ Menlo Ventures and BIG Labs.

8 Critical Questions to Ask Yourself as You Build a Sales Incentives Program for 2019

Sales Hacker

Still, they don’t always nail down the details when it comes to the things that might entice a prospective salesperson — like a well-rounded sales compensation plan , for example. Think about the compensation structure of various sales roles. How can our compensation plan be gamed?

Should CSMs Own Quota?

OpenView Labs

Owning quota does not mean a CSM cannot do right by the customer and owning revenue does not mean that compensation must consist of revenue quota for individuals. While it is true that compensation plans do motivate behaviors, when the behaviors are the right ones, is owning revenue wrong?

Should CSMs Own Quota?

OpenView Labs

Owning quota does not mean a CSM cannot do right by the customer and owning revenue does not mean that compensation must consist of revenue quota for individuals. While it is true that compensation plans do motivate behaviors, when the behaviors are the right ones, is owning revenue wrong?

Calculating Sales Commissions Shouldn’t Be A Pain In The SaaS

Chargify

Differentiating the two enables businesses to structure and calculate compensation models for different revenue streams and milestones. Compensating Other Revenue Generators. The title says it all…calculating sales commission shouldn’t be a pain in the SaaS.

12 Free Sales Excel Templates For Tracking Your Pipeline, Activities & Performance

Sales Hacker

Use these tried and true templates for tracking your sales pipeline, activities, forecasting, creating compensation plans, managing sales rep performance, and more. Sales Compensation Templates. Sales Compensation Plan Worksheet. Sales Compensation Plan Agreement.

Should CSMs Own Quota?

OpenView Labs

Owning quota does not mean a CSM cannot do right by the customer and owning revenue does not mean that compensation must consist of revenue quota for individuals. While it is true that compensation plans do motivate behaviors, when the behaviors are the right ones, is owning revenue wrong?

SaaS Inside Sales Benchmarks Survey | Take It!

Chaotic Flow

As many of you may know, Trish Bertuzzi and the folks over at the Bridge Group publish a lot of great stuff on Inside Sales strategy and operations, including inside sales compensation benchmarks, lead development rep best practices, outbound selling strategies, and on an on.

New Partner Program

Trujay

Trujay partners will increase overall customer satisfaction and revenues, as the program offers solutions that carry Trujay’s impressive NPS rating (82), and compensates for sales of these needed services. Trujay Group is happy to announce the launch of our new Partner Program.

1 Key SaaS Sales Metric to Fine-Tune Sales Productivity

InsightSquared

You can argue about the best sales process, the most effective sales compensation plans, and territory management, but you can’t argue with concrete data on sales cycles, the benchmarks for sales cycles from peer companies, or the fact that shorter sales cycles are consistent with faster growth.

How To Create A Customer Journey Map That Works

Nimble - Sales

They can seldom boast objectiveness; moreover, current competitive market environment dictates that the time spent analyzing each such polling also seldom compensates. Traditional polls that just recently accompanied most every marketing research have become obsolete nowadays. One of the principally new approaches to analyzing the behavior and motivational points of potential buyers is mapping […].

Hacking the Performance Evaluation

Tom Tunguz

Self-improvement elicits better performance than compensation, but both motivators work. In a review, it’s easy to focus on the compensation elements to the detriment of the personal growth feedback. So, most reviews end up being about compensation, rather than self-development. Performance reviews tax organizations, managers and employees to such an extent that some companies have abolished them outright. Reviews are emotionally complex conversations.

Surprising Trends in Startup Founder Equity Stakes

Tom Tunguz

Earlier this week, I wrote about the increase in cash compensation and decline in equity grants to VPs of Engineering and Product in startups. The graphs are broken out by last Series of investment (A, B, C and D) and show the equity compensation trends of CEOs, VP of Engineering and VP of Product. Non-founder equity grants have remained relatively constant over time, with a recent spike in post-Series A CEO compensation apparent in the last year.

Trends 100

Heidi Roizen on meaningful work & relationships

TechStars

You know, it should not be hard to design compensation schemes. “The true path to happiness is to have meaningful work and meaningful relationships,” Heidi Rozen says. She brings these two elements together as a VC working with entrepreneurs who are changing the world for the better.

How to Motivate a Sales Team to Improve Each Rep’s Performance (3 “Types” and 12 Tips)

Sales Hacker

This sales rep talks about money, commissions, bonuses, comp plans, incentives, and their numbers start to drop when they feel like something may affect their compensation negatively. and always shares her opinion on how the money would be better spent in direct compensation to the reps.

Diverse Startups Do Better: How To Make Yours More Inclusive At Any Stage

TechStars

Here are some samples that you can use: Example of a non-discrimination policy: (Your company) is dedicated to the principles of equal employment opportunity in any and all terms, conditions or privileges of employment including hiring, promotions, termination, training and compensation.

The Customer That Needs a Champion: Your Free Customers

SaaStr

And you know how many were compensated by the number of free users? I am a big believe in Free editions — when they work. At EchoSign, we launched not only with a Free edition, but we launched 100% Free. We thought it was a great marketing strategy, back in the day.

How to Build Your Sales Operations Team from Scratch

InsightSquared

Quota and compensation planning. Sales operations has been around for quite some time, but lately the function has been gaining momentum. Instead of behind-the-scenes sales support, sales ops now acts as a strategic partner for sales VPs and leadership.

Sales 308

5 Best Practices for Effective Customer Escalation Management

Totango

If the escalation is so problematic that the customer is seeking compensation, review their purchasing history before extending a compensation offer. High-value customers are more valuable to retain, so you may want to give them more generous compensation offers. Still, make sure all compensation offers are in your company’s best interest. Many companies are afraid to give escalation response teams leeway to compensate or close escalations.

SaaS Metrics for Enterprise-Driven B2B Networks (Bookings)

Software Platform Consulting

I spend very little time on issues of compensation on this blog. If you are going to get in one, be prepared to spend plenty of time on issues of compensation!! Source: [link]. This is the third in my series on SaaS Metrics for Enterprise-Driven B2B Networks.

Are We Investing Enough in Our Managers?

Tom Tunguz

80%+ of startup operating expense flows to compensation. Seven people’s compensation might total an annual budget of $1.5M I met a seasoned executive recently. He made a bold claim. “Management is an art, and one that is overwhelmingly undervalued in Silicon Valley.” ” I wondered, are we investing enough in our managers? Talent is the largest investment of an early stage company. Retaining these employees is good business.

Startup Best Practices 16 - Option Pool Planning

Tom Tunguz

At some point after the Series B, the startup should create a compensation committee that includes the head of HR and two board members who are not employees of the company. Among other responsibilities, the compensation committee establishes standard offer ranges, which include salary and equity, for all the levels of new hires. The compensation committee benchmarks the company’s offers against industry survey data and adjusts as necessary.

Why Your Sales Contest is Demotivating Your Sales Team (& How to Fix It)

Sales Hacker

My recommendation has always been to base all compensation paid to sales staff on gross profit — whether it’s their regular pay or a sales contest. Compensating sales representatives on gross profit avoids this. And it ensures you only pay compensation on profitable sales.