You are currently viewing A Guide to Start-up Compensation | How to Pay Employees

A Guide to Start-up Compensation | How to Pay Employees

We read these days that Startups are paying fantastic salaries, and on top of it, they are providing a lot of perquisites like vacation trips, etc.

Economic Times reported that few startups increased salary by 150% and provided several perquisites, and the promoters appeared rather proud.

This is an AVOIDABLE EXCESS unequivocally.

  1. This excess is coming from capital funding Hence, investors should exercise due control on the increment rates by reigning in on such moves in board meetings.
  2. It is not that talent is so irreplaceable that we need to break all rules by doubling salaries totally
  3. This has a negative impact on the other parts of the economy which is fairly large and opts for simplistic inflation plus approach
  4. Productivity comes not only from talented employees but also from a highly productive culture and environment, energizing vision of the entity, and being part of a great team. It is critical that companies spend money and effort creating such a culture rather than frivolously throwing money and thinking that they are buying talent.
  5. I have seen several such employees who have gone way out of the market median finding it difficult to get a new job when such startups go bust (remember mortality is high among startups).

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