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

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? 

A compensation philosophy is a statement that standardizes your compensation practices and puts the “why” behind every compensation decision your company makes. If all compensation information was made public to every employee at your company tomorrow, your compensation philosophy should be robust enough to justify the decisions that have been made. 

When done well, your compensation philosophy can set the stage for building a more transparent culture and building trust with employees. 

How to develop your compensation philosophy 

We talked with Sabrina Kelly, the VP of Talent at Techstars, to get her advice for early-stage founders who are developing their compensation philosophy for the first time. 

Sabrina explained that compensation philosophy is not one-size-fits-all. It should be created through a process of discovery among co-founders or a core leadership team. She also emphasized the importance of doing this sooner rather than later, because while setting compensation subjectively might not cause any ripples among a team of four to six people, it will undoubtedly raise difficult questions at scale. 

One of the most valuable, and often under-appreciated, tools for setting compensation is benchmarking data. Using benchmarks early on and deciding what ranges you want to target will have a great impact on your compensation strategy, but getting reliable and up-to-date market information can be challenging due to the variety across startup roles. Sabrina recommends using the Option Impact Tool by Advanced-HR: “At Techstars, we use this tool to give our portfolio companies access to updated cash and equity benchmarks by funding stage, geography, and revenue.” She advises founders to tap into free resources like these and use them to build consistency and equity in their pay practices. 

Interested in learning more? Join us for an AMA with Sabrina Kelly and Options Impact on August 28, 2019 at 12:00 pm Eastern Time to learn about setting a compensation philosophy and utilizing compensation data for hiring and benchmarking.  

You will learn about how you can use Options Impact survey data to optimize your compensation strategy and hear directly from Sabrina on steps you can take to build a compensation philosophy for your startup.

See more content like this in the People & Culture Toolkit → 








People Ops Question: How do we define our company culture?

By Sabrina Kelly, Techstars Vice President of Talent

At Techstars, we define our mission in People Ops as the following: “We are strategic partners in building Techstars business by maximizing the value of our most important asset—our people. We attract, retain, develop, and support Techstars employees globally and aim to uphold our culture and values, in a manner that is inclusive to all.” 

As VP of Talent, and former VP of People Ops, I hear a lot of questions from founders. This series aims to answer the most frequent questions. 

Q: How do we define our company culture?

Don’t overthink it. Get your leadership team in a room and talk about why you started the company:

  • Why did you choose this problem? 
  • Why did you choose the people around you and what makes your team uniquely awesome? 
  • What do you want this to be in five years? 
  • What types of behaviors do you value in the people by your side now and want to continue to see in them? 
  • Maybe more importantly, what types of behaviors DON’T you want to see in those people?

Lay all of those cards on the table, get excited, and put together a one-pager based on everything you’ve just gotten aligned around. Take that one-pager and pull out some core values that really seem to jump off the page. If you can do it in a way that feels genuine, create a mantra or vision statement that you’d be proud to put in front of your employees. Take those values and use them as much as possible in company communications, onboarding, interviewing, and management to create and maintain alignment. 

Lastly, while having a strong value-based foundation is critical, you shouldn’t be afraid to revisit and challenge your values often. And don’t be afraid of the people who do; they may just be the people who help drive the company forward at the right moments vs. allowing it to stay stuck in the past. 

Techstars Talent enables you to build highly successful teams! Check out what Techstars Talent can do for you. 

This piece was originally published on Techstars Stories.








People Ops Question: How do we make sure we’re not breaking a bunch of laws?

By Sabrina Kelly, Techstars Vice President of Talent

At Techstars, we define our mission in People Ops as the following: “We are strategic partners in building Techstars business by maximizing the value of our most important asset—our people. We attract, retain, develop, and support Techstars employees globally and aim to uphold our culture and values, in a manner that is inclusive to all.” 

As the VP of Talent and former VP of People Ops, I hear a lot of questions from founders. This series aims to answer the most frequent questions. 

Q: How do we make sure we’re not breaking a bunch of laws?

Spend the money to hire an employment consultant early on to handle your initial setup. 

There is a lot of “stuff” that, if you can it get set up properly early on, will save you from worrying much until you get closer to the 25+ employee mark. There are a ton of companies and consultants that specialize in employment law, so you should be able to find someone pretty easily by running a search or tapping your network. (I highly recommend checking in with the Techstars Talent team for a referral!) 

A strong employment consultant can easily handle stuff like ensuring you have compliant payroll and benefits systems, building an employee handbook, and drafting all of the templates and processes (offers, contracts, separations, etc.) that you’ll need to handle different scenarios compliantly as they come up. You’ll likely pay a one-time fee for a compliance audit and some additional set up work (+/- $5K), but for the time and headaches it will save you down the line, it’s totally worth it. Once you have that relationship, you’ll also benefit from knowing that you have employment counsel you can call if you run into any complicated situations along the way. 

Today, a lot of payroll and HRIS vendors have all-in-one solutions where they offer additional services to support compliance and give advice on employment processes, so it’s worth looking into what you might already have available to you. Another option is a Professional Employer Organization, more commonly referred to as a “PEO,” that can manage all payroll, benefits, and employment compliance for you. They will charge a fee as a percentage of payroll that’s likely more expensive than other options, but it’s an all-in-one solution that can be particularly helpful if you plan to set up operations in multiple geographies.  

Whichever path you choose, the moral of the story is that labor law is complex (and different) in every geography. It’s really easy to get into trouble without the right guidance early on, so invest early in external help and you’ll be in good shape until you need to hire HR in-house. 

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Techstars Talent enables you to build highly successful teams! Check out what Techstars Talent can do for you. 

This piece was originally published on Techstars Stories.








People Ops Question: How do we compete for talent in such a competitive market?

By Sabrina Kelly, Techstars Vice President of Talent

At Techstars, we define our mission in People Ops as the following: “We are strategic partners in building Techstars business by maximizing the value of our most important asset—our people. We attract, retain, develop, and support Techstars employees globally and aim to uphold our culture and values, in a manner that is inclusive to all.” 

As VP of Talent, and former VP of People Ops, I hear a lot of questions from founders. This series aims to answer the most frequent questions. 

Q: How do we compete for talent in such a competitive market?

This is a big one and there’s no easy solution. My best advice is to be very thoughtful about what differentiates you as a company and when you think about recruiting, think about what gets you out of bed every morning. 

It takes a certain kind of person to join a startup—and they should know what they’re in for. It’s going to be fast-paced, generally super chaotic, likely not highly paid for long hours in comparison to established companies, but the right person will love it because they believe in the mission and the people working on it by their side. Hire those people, set those expectations, and don’t sacrifice on belief in the vision. 

In order to attract those people, you need to get aligned with your leadership team on what makes your company great and why the problem you’re solving is more interesting than the problem the other five startups sitting next to you at your coworking space are solving. Make sure that everyone on your interview panel is sending the very same message about who you are as a business, why it’s awesome, and what it is you care about in the people and the role you’re hiring for. 

Once you have that, get out there. As an early stage company, you can’t expect that candidates know you exist, so you can’t expect that the ‘post it and they shall come’ methodology is going to work. You need to get creative and quite frankly be a little scrappy to compete in your market. Attend events, promote your company through local startup marketing (e.g. Startup Digest), speak on Startup Week panels, ask everyone on your leadership team to dedicate one hour a week to making sure that talent in your market knows about you. Lastly, see my former post on your first recruiting hire. You’ll know it’s time when interviewing becomes your second job, and you know you have the runway for multiple hires over the next 12 months.  

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Techstars Talent enables you to build highly successful teams! Check out what Techstars Talent can do for you. 

This piece was originally published on Techstars Stories.








Build Highly Successful Teams With Techstars Talent

Techstars, the worldwide network that helps entrepreneurs succeed, today announced the launch of Techstars Talent: a new offering that will enable startup founders to build highly successful teams and gain a competitive advantage when it comes to Talent. 

Founders can take advantage of Techstars Talent by connecting with our referral network of top talent, learning best practices from our content center, and leveraging best-in-class partners and services.

The broader network can benefit by connecting into the Techstars Talent Network. It allows candidates to access job opportunities across one of the largest entrepreneurial networks in the world. 

“Techstars is always adding to our amazing Talent Network. Through our accelerators, our community programs and more, we attract amazing people year after year. Now, Techstars Talent enables you, as a portfolio company, to get access to that great talent network.”  — David Cohen, founder and co-CEO of Techstars 

After spending five years as the VP of People Ops for Techstars, Sabrina Kelly is now spearheading Techstars Talent. She is joined by Bala Girisaballa, President of Techstars India, to build out the offering internationally and give our companies exposure to global teams. Jason Thompson, Techstars VP of Diversity and Inclusion, will focus on building diversity and inclusion into the foundation of the Talent Network.

Want to get connected to the Talent team today? Go to talent.techstars.com to get involved.