Nailing Compensation for a Senior Executive

Hiring at the senior executive level can be tricky– and compensation is one area that tends to trip people up. It’s crucial to start the compensation phase of the hiring process with the right mindset. Rather than “What can we get this person for?”, think “What will it take to get this person on our team?”

 Successful executives at the top of their field are inundated with offers, whether they’re looking or not. In this market, if you’re a startup looking for someone who can help you meet aggressive goals, you need this person more than they need you. 

They could easily snag a great job at a much-larger company. You’re looking for one of the few people in the world with a track record of successfully scaling a promising startup, building world-class brands, or doubling sales of a promising new product. Staggering goals like these should put compensation in a different perspective. What’s paying an extra $25,000 a year if you’re hiring someone you’re expecting will double your revenue or facilitate a successful exit, particularly in a difficult market?

But too many companies approach hiring senior talent the same way they approach hiring a middle manager — when the process should be completely different. Here are five common compensation mistakes companies make when hiring senior executives: 

1. Assuming a candidate who’s not working is desperate to work. 

If you’re interviewing someone for a mid-level position and they’ve got a gap on their resume, you can assume they need the job. But at the senior level, it’s common for executives to take time off between projects — because they can afford to. Maybe they just had a successful exit, or wanted to travel or be home with their kids. 

Whatever the reason, you can assume that a senior-level executive is financially stable enough that making rent is not a concern. Therefore, a gap on this person’s resume does not mean you can expect to get this candidate for less money or approach the conversation that way. 

2. Not letting your recruiter serve as go-between.

The hiring process often goes more smoothly if a recruiter handles the conversation. If you’re working with a recruiter you trust, let them serve as a buffer between you and the candidate. They can mediate the negotiations, keeping any tension or frustration out of your relationship with your new colleague. That way, you’ll be sure to start your working relationship off on a positive note. 

Recruiters negotiate offers every single day. While you are no doubt a savvy negotiator, recruiters are the ones in whom the candidate often confides because we’ve worked months or years to build their trust. Candidates regularly tell recruiters things about their personal situation, such as what their spouse thinks about the opportunity or concerns about taking this role over another. Finally, it usually pays to let recruiters handle the sticky conversation around compensation.

3. Not considering the time factor when trying to land a senior hire. 

Recruiters are constantly speaking with senior-level executives. As a CEO, hiring manager or HR professional, you might hire one top executive in a year. Internal teams that handle hiring for other positions at your company tend to assume, as they would for any other position, that if this candidate doesn’t accept an offer, they can always get more resumes and start again. 

Recruiters know that there may be four people in the world with the skill set you need for a particular role. If this candidate doesn’t work out, it could take nine months to identify another good fit. Trust your recruiter to know what it’s going to take to get your preferred candidate on board. We’re the ones with the most current knowledge of compensation for this role, sector or industry. 

4. Expecting passion for your mission to translate into a compensation discount. 

Anyone who’s willing to take a risk on a smaller or earlier-stage company is passionate about your mission. But that doesn’t mean money doesn’t matter. Senior executives have a compensation history, and they’ve worked hard to get to that level. They care about your company, but they still need to be paid the current market rate for their unique skills and experience — and they can back up these requests with data. Other factors, like heavy travel for a new role, can also influence how they value a job. 

Keep in mind: This person is not a founder. He or she is not getting the same level of equity as the team who’s been with you from the beginning — and yet they’re still taking on more risk than they would if they took a job at a more established company. Don’t be offended just because they expect to be paid what they’re worth.

5. Forgetting how stressful this process is for the candidate. 

Think back to your last job shift – remember how stressful the process was? Now put yourself in your new hire’s shoes. This person is making a big decision. They’re trying to figure out what’s the right next move for their career while balancing work-life considerations like the commute, potential travel, long hours and what’s best for their family. 

A role at an early-stage startup is very different from a role at a public company. Candidates are considering a multitude of factors when they consider an early-stage role. But don’t forget all the “soft stuff” they’re weighing, like where they think they’ll be most valued and happy, and which team they want to spend endless hours with. 

As much as possible, companies should try to take the emotion out of their side of the conversation and respect the candidate’s decision-making process. 

Again, your overall goal is to get this person on your team and start out with a positive working relationship. Taking the whole person into account will go a long way towards starting on the right foot.

The information contained herein is based solely on the opinions of Battery Talent & Recruiting Team and nothing should be construed as investment advice. This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity.
This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is for educational purposes. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build their businesses and not recommendations or endorsements of any particular business.