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? . When done well, your compensation philosophy can set the stage for building a more transparent culture and building trust with employees. . What is a compensation philosophy? . How to develop your 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? Bear on thing in mind: You can fix a lot of things in equity later before you sell — if you are still in charge. So you can always grant more equity to someone that outperforms, is promoted, etc. on your watch.

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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. Whether you’re building a sales compensation plan from scratch or re-building an old one, you should take the following steps in order: Understand the Basic Requirements of a Good Sales Comp Plan. Plan Compensation for Onboarding and Training. Capping Compensation.

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. But … I think if: someone respected by VCs connects you to a top investor that funds you … because they believe in you, especially if (x) they give you your lead investor, and.

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? What is Variable Pay Compensation Anyway? Variable pay compensation consists of paying employees based on (usually) some fixed “base” salary as well as a variable component based on performance.

A Framework For Your First SaaS Sales Comp Plan

SaaStr

SaaS Enterprise Sales Compensation Pl an. Blog Posts Company Stage Compensation Hiring Resource Type Role / Function Sales TopicsI’m not ashamed to admit that when I set up our first SaaS sales comp plan, I had no idea what I was doing. In my first start-up, yes I sold to the enterprise. I sold $6m our first year (man, that sounds good looking back on it). But I did all the sales myself, and stupidly, had no sales comp plan at all ??.

There Are Never Enough Stock Options To Go Around

SaaStr

Blog Posts Compensation Q&AQ: What amount of share options is fair? Boy this is a tough question. Options are rarely worth as much as anyone expects , unless the start-up is worth $10b+. One big problem: the pie only adds up to 100%. That sounds silly, but it isn’t.

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? Because you’re selling products, at your own flexible time, and with significant earning potential. With their unique MLM pay plan, this is a very attractive form of entrepreneurship. Looking to get a start with MLM?

When Startup Compensation Isn't About the Money

Tomasz 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

Tomasz 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 Four Stages of Sales Compensation Structures in Early Stage Startups

Tomasz Tunguz

The ultimate goal of any compensation plan is to ensure account executive success at each stage. Your startup is just getting off the ground. You might have a few account executives and a sales leader in place; maybe some revenue and a handful of customers. The sales team costs real money, and the question before the company is: how do you know what quota plan to assign to the account executives? I’ve seen four stages in early stage software companies.

Why Do Some People Consider Venture Capital a “Young Person’s Game”?

SaaStr

Blog Posts CompensationBecause it takes so, so long to make money from it. At least from very early-stage investing. So while not a young person’s game per se, it really helps to start early. It doesn’t take that long in venture to make a decent salary.

The Surprising Compensation Trends of Startup Executives

Tomasz 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.

5 Quick Thoughts on Raises

SaaStr

Many founders like to tie compensation to results and like bonuses for overachievers. Blog Posts Compensation Q&AQ: When should you raise the salary of your employees as a startup? A few thoughts to at least think about: Try to pay “market” to all your employees as soon as you can. Some folks that join a start-up will be OK taking a salary cut when you have almost no revenue or money in the bank. But you do have to go to market rates once you can afford to.

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). And I generally thought that was the default, albeit was many exceptions. Well, I was wrong.

The Optimal Compensation Plan for Customer Success Teams

Tomasz 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

Tomasz 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.

SaaStr Podcasts for the Week with Matrix Partners and EZPR — February 21, 2020

SaaStr

How should founders think about sales rep compensation? Because I always struggle slightly when they’re rewarded or compensated on MQL or even, sales accepted leads, I always think they should be tied directly to a number associated to revenue.

3 Key Ingredients of a Sales Compensation Plan

Tomasz 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.

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 annualMark Roberge is a senior lecturer at Harvard Business School and the former CRO at Hubspot. His session was our highest-rated session at SaaStr Annual 2019 and you’re about to see why.

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

Tomasz 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

SaaStr Podcasts for the Week with Mapistry and Slack — November 29, 2019

SaaStr

Career Growth & Advice Compensation Hiring Marketing Podcasts SaaS Product Pricing Sales allie janoch dannie herzberg founder's favorites Kevin egan mapistry Slack286: Allie Janoch is the Founder & CEO @ Mapistry, the startup that makes environmental compliance simple.

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!

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 annualBuilding a hyper-growth company is hard anywhere, but building one outside the Bay Area comes with its own unique challenges. Learn how Pendo built a product, team, and culture in its Raleigh hometown that could scale coast-to-coast and continent-to-continent.

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

Tomasz 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.

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! Bridget Gleason is VP of Sales @ Logz.io, the startup that uses predictive analytics and machine learning to provide monitoring, troubleshooting and security. To date, Logz have raised over $45m in funding from the likes of Openview, 83North and Vintage just to name a few.

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. Over Leyla’s incredible 11 year journey with Salesforce she has seen the team scale from 1,800 to over 40,000 and revenue scale from $500m to over $16Bn.

Mobile 112

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. Prior to Harness, Stephen was VP of Marketing at Glassdoor, managing a team of 52 in product marketing, helping grow B2B revenue from $19m to $90m in just 2 years, leading to their $1.2Bn acquisition.

SaaStr Podcast for the Week with Redpoint Ventures and Cloudflare — January 3, 2020

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.

SMB 29

Dissecting outbound sales with Aaron Ross and Jeremy Donovan on The “Hey Salespeople” podcast

Predictable Revenue

An effective outbound machine – from your outreach, to your meetings, follow ups, even compensation plans – is a holistic process. Too often we think of outbound sales as a collection of piecemeal artifacts, typically with email templates occupying the most important position.

How Do I Structure My First 1-25 Sales Reps?

SaaStr

CEO hires 2 reps, in the beginning, each barely pays for themselves, but by months 4–6 they are able to close 3x-5x their total compensation. By 15 sales reps, you probably need a first head of sales operations to handle training, onboarding, compensation, quotas, etc. Q: What is a typical organizational structure for a SaaS startup with sales reps? A rough structure from 1–25 sales reps: Early days: CEO acts as VP of Sales.

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?

What’s typical commission for SaaS salesperson? [Really 10%?]

Incredo

What are 5 common SaaS sales compensation models? The reason is that commission-only position doesn’t guarantee a fixed financial compensation at the end of each month. Pros: With this way of compensating, you reward high-performing sales reps when they show they can do more for you! You aren’t going anywhere without these 6 golden rules No matter which SaaS sales compensation structure you will go for, here are 6 rules that will help you make smarter decisions.

What’s typical commission for SaaS salesperson? [Really 10%?]

Incredo

What are 5 common SaaS sales compensation models? The reason is that commission-only position doesn’t guarantee a fixed financial compensation at the end of each month. Pros: With this way of compensating, you reward high-performing sales reps when they show they can do more for you! You aren’t going anywhere without these 6 golden rules No matter which SaaS sales compensation structure you will go for, here are 6 rules that will help you make smarter decisions.

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. Their upcoming 2015 Inside Sales Metrics and Compensation report will feature expanded coverage and focus of SaaS inside sales benchmarks in an extra effort to service the SaaS community.

Best Business Insurance

Neil Patel

Workers’ Compensation Insurance. Once you hire your first employee, workers’ compensation should be immediately added to your business insurance policy. Your business can be compensated for lost income in these types of scenarios.

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? Arguably not if compensation is designed to motivate action that aligns the objectives of the customer, the vendor and the quota carrying individual.

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? Arguably not if compensation is designed to motivate action that aligns the objectives of the customer, the vendor and the quota carrying individual.

My Product is $500 a Month. How Much Should I Pay My Reps?

SaaStr

A bit more here: The ultimate guide to SaaS Sales Compensation Plan | SaaStr. Q: What is a good model for SaaS product sales commission? The average package price is USD 500 for subscription/month. At the end of the day, most SaaS companies pay their reps from 20%-25% of what they close in total comp — base + bonus. Often at roughly at 50/50 ratio.

The 7 Best Pieces of Business Advice I Was Ever Given

SaaStr

Hire them immediately, over-compensate them with equity, appreciate them … and most importantly, get out of their way. Here’s my list of the best golden advice I was given as a first-time — and second-time — CEO: Manage People — In General, and Earlier.