Stop Paying People So Much
Hard-working employees deserve to be rewarded for their efforts. But making those rewards the default will drag down your company in the long run.
Every startup leadership team wrestles with the trade-offs between growth and profitability. This is fitting and ever shall be.
What teams don’t reflect on sufficiently is how a flawed compensation philosophy can make those trade-offs far more painful than they could be.
As a former entrepreneur, I know that every venture relies on the exceptional efforts of supermotivated professionals, and I am certainly in favor of rewarding them when they defy the odds and create something out of nothing. And of course, any discussion of tech industry pay must acknowledge that all technology jobs are highly paid relative to other industries, even after adjusting for education and location. I am not passing sanctimonious judgment as to what level of pay is “fair.”
That said, deciding to pay premium wages for premium talent places an unnecessary burden on the journey of building a valuable company.