Equity compensation is a truly unique element in the total rewards toolbox. The one thing we all agree on is that equity is not as effective as it could be, because so few HR and compensation professionals truly understand it. This article boils down to some of the most important things you need to know about equity compensation if you want your programs to work better.

Given enough Lego and you can build just about anything. Sales compensation is similarly simple, flexible, and potentially complex. Do you focus people on volume, quality of sales, profitability, growth, long-term builds? This list is nearly endless. How you motivate people to stay focused is similarly flexible. Do you use commissions, SPIFFs, spot bonuses, long-term incentives, quarterly goals, annual goals, team metrics, or individual achievement? Do you focus on granularity or stay tuned with the big picture? Any program requires buy-in from so many people and groups. The final result is something that people depend on to pay their own bills and keep their company afloat. Making small changes is simple, but real change is hard.

When the approach to sales incentives precedes the establishment of a defined sales structure and process, improving sales incentives can be driven by guesses. A compensation professional likes to mix just a little bit of science with their art, and sales incentives without a structure are basically 100% art. So, what do you do when you are asked to help fix these programs?

Everyone who has ever worked on sales incentives has heard people refer to roles as “farmers” and “hunters”. These two terms are used to simplify the focus of sales roles and the type of pay they receive. Unfortunately, this clouds the roles of salespeople in many of today’s businesses. Professionals who have the responsibility of bringing in new revenue are more complex than we often recognize. In truth, many are more like ranchers than they are farmers or hunters.

Equity Compensation has been slowly going through its own version of climate change. Much like our planet, the environment for equity compensation has been changing for decades and very few have adjusted or even noticed. Whether you agree with the causes of climate change it is hard to deny that weather is different than it was even 50 years ago. Regardless of the driving forces, it is impossible not to recognize that equity compensation is delivering different results than it was when it became the major currency of tech startups in the 1980s and 1990s.

It’s time to be honest and evaluate what your talent acquisition team and managers are telling prospects and employees about their awards. Are you Tom Sawyer getting people to whitewash a fence or just one more employer looking to put another cog in the machine?

Most human resources and compensation professionals are peaceful people, but we are all fighting for talent. It often surprises me how many startups fight that war using the same tools and techniques as their larger combatants. There are, of course, rules that generally are followed, but they are few and relatively unrestrictive. When you are battling for the existence and success of the company that aligns with your passions and puts food on the table, perhaps you should consider not following the leaders. While cash is limited at startups, annual incentives can still exist and are compelling.

During challenging times, focus your efforts on the things that are absolutely required for future success. Every working veteran who has survived tough times in their career has become stronger for the experience. Dealing with challenging conditions is a vital, if not career-essential practical lesson. Solid contingency plans followed with calm resolution, patient endurance, and unflappable confidence can and will succeed.

Stop selecting and modifying data to match your past pay decisions. Just let the market data tell its story and use your intelligence to decide what to do with that data. You do not have to follow those ahead of you, and they may not be traveling in the same direction. Don’t be afraid to take your own road.

This is a short article about well-meaning but misguided short-term incentive plan design. When we ask business leaders to identify critical metrics for success, we often get two types of answers.

Rather than stress the inherent risks in a quick path to IPO, try to remind people who they will be compared to once the company is publicly traded. Provide your staff with examples of companies that have weathered five or more years of post-IPO media and investor coverage. Explain what those companies did right and how your company can do similar things. In the end, a SPAC is…

In a sense, the SEC is asking if the Emperor is wearing any clothes. Many SPAC transactions have been completed successfully. Some have seriously less successful. This is to be expected and is not dissimilar from the traditional IPO market. Some succeed, some fail. But the SEC has seen…

New year brings new opportunities in compensation. In 2022, we will get our feet underneath us, gather our balance and leap forward into a new approach to pay that may provide a foundation for the next ten years. There is no reason to wait. The future of compensation is yours to create!