Giving away a stake in your company speaks volumes about your vision for its future.
It says you’re serious and confident about business growth – and about rewarding the talent that makes that happen.
Sharing your big dream in such a tangible fashion is proof positive that you and your company operate at a certain level.
Equity should – note the ‘should’ – be a great way of attracting star needle-movers to your sales team but it must be handled the right way.
Otherwise you run the risk of sending out the wrong messages and doing more harm than good to your talent acquisition strategy.
Let’s rewind a few steps to explain what we mean…
A Very Brief History Of Equity In Sales Recruitment
Way back the late 90s, equity was a seriously big draw. The world’s stock markets were riding high and everyone wanted a slice of the action.
Then came the early 2000s recession. Markets plunged. Suddenly the party was over. What remained of the champagne went flat…and there was claret on the carpet.
Sales executives who had previously raved about getting a cut were now licking their wounds. They wanted no more promises. No more jam tomorrow.
Only jam today would suffice.
No more paper shares. Executives wanted cold hard cash: a reassuringly solid basic salary with generous On Target Earnings (OTE)…a fitting reward for those capable of saving the day in tough times.
And today – in these times of lingering uncertainty – many still cling to that pragmatism. They like the surety of earning £80/90/100k basic plus £80/90/100k OTEs.
Steady Eddie v The Risk Takers
But not everyone in sales falls into the pragmatist category. Equity stills holds allure for two certain types of people.
First are the Steady Eddies. They like equity – but only if the shares are in a big and well established employer that continues to go places. Where growth is all but guaranteed.
And then there are the risk takers. Those happy with a stake in an exciting start-up they believe could go stratospheric with their new technology.
Calculated risk takers like this may be in the minority. But they’re still out there.
Offering Equity The Right Way
Before you start handing out equity, take a long hard look at your motivations for doing so.
Employers looking to hire generally offer shares for one of two reasons:
as an added incentive to help them secure the very best people
so they can lowball them with a lower upfront pay offer.
Which best describes you?
Whatever your reasons, you will need to communicate very clearly the forecast value of the shares and the period over which they will vest.
You need to speak the right language when it comes to executive search. You must convey the right message.