Entrepreneurship · Startups

Is it a good idea to share with employees the cap table as well as other staff salaries?

Nidhi Verma Test Team Lead

December 1st, 2016

I have always been for sharing the cap table with the employees. Today when talented and hardworking employees are hard to hold on to and when they have really a lot of employment options all over the globe, I think that it is important to motivate them the right way and to make them truly a part of something, a part of your company. About the salaries I am not sure, but why not. What is your opinion on this, or maybe some experiences, pros and cons?

K. Robbins Head Moose at Moose WorldWide Digital

December 2nd, 2016

Richard's comments are spot on.

There's a common misconception that "it's all about money" - When the truth is that the employee who only cares about money will jump ship at the first opportunity that offers him or her just a little more.

Give a person a raise, it will motivate them for a few weeks, and then they adapt to the new income and forget about it. Create a proper working environment, give people a sense of belonging, value and respect them as human beings, nurture them, help them grow personally and professionally and they will be happy, productive, and a joy to work with.

Younger people have smaller bills and will work for a better future. Older, mature folks with families have bigger bills, and will want stability. You need the proper mix of both to be successful.

So no, I do not share salary information.  We are transparent about project/job margins among managers but not salary.

Dane Madsen Organizational and Operational Strategy Consultant

December 2nd, 2016

I would not share individual compensation (equity or debt) with any that are not part of the HR/finance team. As Richard said, there are too many variables. Get on the team early, take sub-market wages to keep the lights on, accept equity as an offset is a common startup process.  As time passes, those deferrals are not recognized by newer people that came into a fully funded and well developed organization. People that are so focused on their relative ownership without the mitigating factors are likely not good team members. That said, it is fair to disclose the total number of fully diluted interests there are to a recruit so they can understand their individual participation relative to the whole. Having 100,000 shares in a 10 mm share cap table is significantly different than 200,000 in a 50 mm share cap table, and they need to know that part. 

Richard Prati CEO, Life Care Medical Devices (LCMD) Board Member: Centennial Brands, & Singular Medical Technologies

December 1st, 2016

It depends upon a number of variables.  If you are bringing someone in at a very senior level (e.g. partner), then they will require more disclosure. When you are hiring an employee, a lot depends upon how important they are to the organization. You do NOT need to give away stock. You need to compensate people fairly. I am a firm believer in making the entire pie bigger, by allowing greater ownership by those worthy. 
Recognize that your equity should be highly valued. (Most people do not always value and appreciate the value, or at least don't put the same value on it that you do.)
With regard to salaries, I think complete transparency causes jealousy and problems at work. As an organization, you are motivated to pay what is necessary to fill a position with the best employee. It is a value proposition. I will hire a "9" over a "10" if there is better value from the "9" or there are other variables, intangibles, etc. 
Without question, some employees will believe they are worth more than others.  As management, you have to make that call.  A "flat" organization only works so well, and in certain environments. Compensation is a very sensitive issue.  I suggest using discretion, and depending upon your organization, structure, experience, seniority, contribution of the employee or partner - all of these things will weigh in.

Yoash Dvir Sr. Project Manager at Lifion, by ADP

December 2nd, 2016

You should read "Drive" by Daniel Pink
he says that these days, employees are seeking Autonomy, Mastery and Purpose and when you give this to them (once their basic needs of monetize compensation are filled), they will stay with you longer and will be more engaged and productive and will not bounce off between jobs even if you offer them $10K-$20K more a year