Startups
Compensation and Benefits Policy
All the terms and benefits the company provides its employees are an integral part of their Total Reward package. Beyond components such as salary, options, vacation days, study fund, etc., other factors have to be taken into account, such as the office amenities and the working environment, events, subsidized food throughout the workday, personal and professional development paths and more.
In view of the rapid growth typical to startups, the entire issue of Total Reward is, for the most part, formulated on the go based on needs as they arise from the field and without a clear, systematic or coherent policy. Given these circumstances, it is to be expected that disparities will arise, sometimes quite drastic, between the compensation and benefits given to veteran employees as opposed to new arrivals. This issue can be directly linked to grievances citing unfairness and inequality, leading to a decline in the levels of motivation and commitment to the organization. On the other hand, the company may also find itself in budgetary constraints due to the lack of an orderly, forward-looking policy already in its initial growth stages.
Compvision is one of the most outstanding leaders among the consulting companies in Israel specializing in leading Total Reward processes, from planning and formulating the strategy to implementation in the field through the creation of relevant, practical tools. We lead the process end-to-end, beginning with the initial data collection about the company, understanding the business strategy and future goals when it comes to recruiting employees, and together with the management we formulate the best-suited, most appropriate compensation concept going forward. From there, comparative data (benchmarks) are presented regarding all the usual Total Reward components and the gaps that arise from them. Finally, we offer our recommendation regarding the various compensation components which, when combined, will result in an orderly policy tailored to the company, including salary ranges for the various positions. Once the process has been completed, all subsequent Total Reward issues are addressed more clearly and correctly over time.
Equity Compensation - Options and Stocks
Pre-IPO startups or equity raising rounds are often faced with questions and dilemmas surrounding the allocation of employee stock options – is the allocation of X shares for a particular employee a fair amount? What distinction is made between existing employees and new employees? What are the options distribution criteria? What is the going market rate?
Along with rapid growth comes the realization that an orderly process is required. This realization often occurs when the company is on a growth trajectory and is already highly-diluted. Besides, many startups encounter a proliferation of senior titles as they grow. As a result, it becomes difficult to make the proper distinction between managers and executives when it comes to the allocation of options.
We at Compvision assist dozens of startups in the process and help them with a unique tool that will allow them to make informed, smart decisions along the way. The tool provides a simulation of the options allocation among employees based on clear criteria, and supports the company’s options allocation policy through a systematic methodology. This way critical issues can be taken into consideration, such as: at what stage was the employee hired and the value of the company on the day the options are allocated, adjusting the exercise price and discount to the company’s value, distinguishing between employees according to the nature of the position, rather than purely on their level, and more.
Talent - Identification and Retention
In the competitive job market as it has emerged in recent years, it has become universally understood outstanding managers and employees are in high demand, particularly those with unique experience, skills and knowledge or in other words – talents. The challenges that companies face in relation to talents are the ability to recruit them, develop them within the company and retain them over time.
The first and obvious question is – who is actually considered a talent? How is a talent identified? But no less important and complicated than that is the question – how do you retain talents in a company?
At Compvision, we lead talent processes in companies, in which we define employees as talents according to a division into several groups. In order to identify the employees in the different groups, we use an internal evaluation done by the organization’s managers, who examine employees’ skills from different aspects – current state and looking at their future potential. Employee evaluation is based on criteria such as skills and knowledge, personality traits, day-to-day conduct, leadership and performance.
The talent process makes it possible to provide a targeted solutions for quality groups within the company as well as to proactively promote talents through the development of individually tailored programs. The process enhances the company’s competitive advantage in the market – improving the ability to recruit the right employees for various positions as well as developing the existing human capital in the company over time.
IPO Processes
It seems that the Startup Nation has recently been establishing a refreshing alternative growth path to the exit path which has dominated the industry so far – through the issuance of equity.
The transition to a public company is no trivial matter. There are many aspects to be taken into consideration. One of the most important is the compensation policy for the company executives. Salary and compensation (money!) are always an important, sensitive matter, and it is important to familiarize oneself and prepare for the post-issuance changes. Outstanding among these is the fact that every publicly-traded Israeli company is subject to Amendment 20 to the Companies Law, which requires publicity regarding the compensation of company executives. It adds new formal approval processes inside and outside the company (the Shareholders’ Meeting).
Everything becomes public – including the company’s financial statements, including the salary and compensation data of the 5 highest-paid employees, which are made available to the general public each year. The company will be required to publish the compensation policy for the company executives, and it is not possible to deviate from it without the approval of the General Meeting. Companies going to IPO have a special window of opportunity to formulate a 5-year compensation policy (instead of 3 years for already-trading company), without being required to receive approval from the General Meeting. Therefore, despite the time constraints for publishing the prospectus, it is important to formulate a policy, which conforms to the company’s needs and future strategy and attach it to the prospectus, in accordance with market norms and the requirements of the Israel Securities Authority.
We at Compvision are involved in our clients’ end-to-end IPO processes, according to their various needs, from the presentation of comparative data (benchmark), through accompanying the discussions and approval processes of the policy with management representatives, the Compensation Committee and Board of Directors and institutional authorities and bodies, if necessary, up to an orderly infrastructure for managing the issue of salaries, including detailed, transparent bonus plans and more.
Customized Compensation
The unique concept of “Individually-Customized Compensation” – a compensation package tailored to each employee – is based on the assumption that different people have different needs, different preferences and a different perceived value for the various components of Total Rewards.
The Total Rewards package of employees is directly linked to the level of motivation, commitment and the quality of employee performance, and hence the more a company succeeds in creating a correlation between employees’ preferences and needs for their salary and compensation mix, the more satisfied those employees are likely to be, more highly-motivated and more eager to remain in the company long-term.
Based on our many years of experience, we at Compvision offer a unique process, which begins with mapping the profiles of the various employees in the company, the structure of their current Total Rewards package and identifying the needs and preferences of employees. This is done with assistance from company management and the HR team. Next, we formulate a detailed proposal for a modular Total Rewards package, consisting of multiple choices, which can be offered to the various employees in the company.
