Your product isn't burning your runway. Your payroll is.
Updated: Jan 20
Most founders I meet are guessing at their compensation strategy.
Here is a 5-Point "Comp Health Check" you can use to stop the guessing game.
1. Philosophy: Do you have a written statement defining how you pay relative to the market?
Warning Sign: "We pay what it takes to get them."
Healthy Sign: "We target the 75th percentile for engineering and 50th for admin." (For example).
2. Data: When was the last time you benchmarked your roles against real market data?
Warning Sign: Relying on what candidates tell you they made at their last job.
Healthy Sign: Using data sets less than 12 months old from a verified survey source.
3. Equity: Does your team actually understand what their options are worth?
Warning Sign: "Here’s 10,000 shares." (With no context).
Healthy Sign: Providing a total rewards statement that shows the potential value at different exit scenarios.
4. Transparency: If two employees in the same role compared pay stubs today, could you explain the difference without stuttering?
Warning Sign: "Don't discuss your pay with coworkers." (Note: This is often illegal).
Healthy Sign: Objective criteria (experience, performance, location) that justifies every dollar.
5. Incentives: Are your bonuses driving the behavior you actually want this year?
Warning Sign: Paying bonuses based on last year's goals that are no longer relevant.
Healthy Sign: KPIs that align directly with the current 12-month roadmap.
The Takeaway: If you failed more than 2 of these, you aren't scaling—you're gambling.
📌 Save this cheat sheet for your next quarterly review.
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