Big bucks or a modest salary—what level of pay works best for start-up C-suite executives? POSist co-founder and chief enabler Ashish Tulsian lists the leading factors that should influence executive compensation.
 
 
Cost of living
What does it take to maintain a ‘decent’ standard of living in the place the start-up is located in?
 
Granted, ‘decent’ will mean different to different people. Still, cost of living was the biggest influencer of C-suite salaries at POSist, a company offering restaurant billing software, shares POSist co-founder and chief enabler Ashish Tulsian.
 
Parity with salaries of senior team members
News reports abound of CEO pays that are a couple of hundred times the pay of ordinary workers, and how pay disparity is a great social tragedy.
 
Extreme inequality in compensation is a big turn-off for other senior team members.
 
To maintain a semblance of equality, the founders of POSist opted to draw a starting salary not exceeding that of the highest paid employee on the team, shares Tulsian.
 
Industry norms
“Industry norms was the third biggest influencer of founders’ salaries because we wanted to pay ourselves competitively,” says Tulsian.
 
POSist C-suite executives as well as employees earn higher than industry norms.
 
Sufficient motivation
Compensation that is commensurate with the effort invested and challenges faced brings out best performances. “People must feel they are growing, in terms of their roles as well as remuneration,” says Tulsian.
 
Simultaneously, founders’ salaries shouldn’t be a drain on the company’s finances. “Both the founder’s and senior employees’ growth must be sustainable,” adds Tulsian.
 
One way to motivate top honchos without imposing on the company’s financials is to split the pay into a fixed and variable component, suggests Tulsian. “My salary is 70% fixed plus incidentals. We will consider introducing incentives when we start making a profit.”
 
Growth rate
Closely allied to pay is pay raises.
 
Until the company becomes profitable, it is not mandatory to increase C-suite execs’ salary packages, says Tulsian. However, POSist gives employees quarterly increments to reward good performances.
 
If the company grows, in terms of revenue, number of users, stock value and number of employees, some C-suite exec pay raise is in order, because that growth can be traced to their performance.
 
At POSist, the founder’s pay has risen by 50% in the last three years, with board approval.
 
“The idea should always be to feed the company first, and the founder thereafter,” says Tulsian.