How to Deal with Salary Ceilings in Your Startup

Salary ceilings are a sensitive topic.

While they may be driven by real, fair business limitations, they nonetheless put a block on the evolution of brilliant employees, and may lead to them leaving for greener pastures.

We may work for love, but we all have basic needs that need to be supplied, and unless you run a charity, you can’t expect people to work for you for less than what they deserve.

Here are some ideas on how to deal with that, and also some points of attention.

Lateral Movement

Encourage lateral movement for anyone, anywhere, anytime, except if business needs prevent that.

This helps keep the employee motivated and you can discover some really exceptional hidden talents.

Lateral movement also gives the company more time to grow and create new roles, as a lateral movement may somewhat (but not entirely) “reset” the current performance cycle, as it should be focused on the current role for the demonstrated level evaluation.

Align the expectations during this movement.

Take Advantage of Freelancing

If you already work with contracts and freelancers, this may help you keep that on check, just let go when the contract ends, or clarify that contract folk are not supposed to expect a pay raise, unless they really exceed the expectations and are hired full-time.

Change Your Thinking

Try to change your mindset from “I don’t have enough work for this guy” to “I have enough talent on the team to dare to expand into new projects”.

Think big, pursue different paths.

Increase Performance Cycle Interval

You can increase the performance cycle interval.

Longer cycles means changes are necessary less often.

Just don’t overly do it. Cycles bigger than a full year are terrible for talent retention.

Pay in the Future

Give your top-tier employees shares within the company.

Empower them to act like owners, so they begin to think on the longer term.

This may not only satisfy the employee compensation expectations, but also motivate them to perform better.

Make sure the compensation is fair, don’t just lay out crumbs.

When People Go Above the Bar

Watch out for people that really outgrow their role.

As a manager, you’ll come across people that are way above the bar, and naturally the rest of your team will look up to them as leaders.

This is a natural process that can’t be avoided, and it shouldn’t be. Take the most advantage you can from that, and count on those people to help with your team building.

Those are also difficult to let go, as it will affect team morale more than others.

Always Reward Accordingly

Never fail to reward workers accordingly.

Make cuts if absolutely needed, but absolutely avoid postponing well deserved promotions for too long.

One cycle is OK, two is risky but can be managed, three is a problem recipe. Team morale can be destroyed by that, and your culture will follow.

Remember that you don’t dictate the culture, you merely encourage it. Your workforce is the one who builds it.