Rule #11 The Best Way To A Persons Heart Is Through Their Pocket

November 29, 2017

Don't think just coz you’re this super cool entrepreneur with a Harvard degree and a cute smile that your staff will follow you blindly. You may even have the best idea in the world, but, if your first or even second batch of employees, while most likely receiving below market salaries, don't feel like they have a vested interest in whatever they're working on, then its highly likely they'll leave you high and dry when a better opportunity comes along. 

 

So for cash-strapped startups, a good way to mitigate this is is to offer equity (options) in return for a term served, however small the share may be. The average is 3 years, which they'd have to serve, after which they’ll be liable to receiving their shares. Its called a windfall period. This form of payment preserves precious capital and incentivizes employees by making them partial investors in the business, and at the same time ensures a degree of loyalty and longevity in their service to you... 

 

 

 

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