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If you're looking to bring in a highlevel executive, be prepared for a high-level price tag-an estimated 20 percent more than you would have paid about a year ago. Want to beef up sales? Hire a sales VP for $165,000 a year. Ready to bring in a new CEO? Expect to pay $200,000 or more. According to venture capital firm VentureOne Corp., that's the kind of money (including bonuses and options) being paid by start-ups nationwide and across industry lines.
VentureOne recently surveyed 800 privately held U.S. companies that have received venture capital. Increased salaries reflect the tightest employment market in a quarter century as well as unprecedented rewards that dotcom and high-tech start-ups use to lure managers.
The average new business "just can't compete with venture-funded start-ups for top-level people," suggests Lois Marshall, whose Carmel, California-based The Marshall Group is an executive search firm. "The cream of the crop is going where the money is." If your business demands high-caliber management, "you must stretch to give them stock, stock options, phantom stock or something," she advises, or you risk losing even existing employees.
Companies offering nothing beyond salaries often must settle for less experienced managers. "Your business may never achieve its potential. It's literally that cut-and-dried; there is no middle ground," says Marshall, whose firm serves high-tech firms, traditional corporations and start-ups. Her clients "provide any kind of equity participation they can on almost every deal."
If your executive search produces the right candidate but at the wrong price and you simply cannot offer equity, don't despair. You have options. Determine how much the individual wants and how much you can afford. Keep in mind that other candidates may be equally qualified and less costly. If you can't agree on a starting salary, suggest incentive pay raises or attractive bonuses tied to performance. For additional leverage, offer a reduced workload to the candidate in return for accepting a lower salary. Conversely, consider expanding his or her responsibilities, which can cut costs elsewhere; the savings could help meet the candidate's salary demands. Finally, consider offing additional benefits in lieu of higher pay, such as more vacation time, a shorter work week or a company car.
Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.
The Marshall Group, (831) 620-1144, www.the-marshall-group.com
VentureOne Corp., (800) 677-2082, firstname.lastname@example.org.