If those in technology roles in small startups have received a pay hike of at least 15 per cent, it has come after a lot of strategic planning and resource optimisation, reveals a report. Techies in early-stage startups are witnessing wage hikes in the range of eight to 12 per cent, whereas, on the whole, salary increment patterns are showing signs of a dip in the tech space.
Small startups with less than 40 techies in their team have given 15 to 20 per cent increments to their entry- and mid-level techies, basis the requirements of the organisation. They have been trying to retain their talent because they know that these employees will be responsible for the success of the business in the future. While it is true that those in the tech function have received significant hikes of 20 to 25 per cent, only about 10 per cent of the workforce has enjoyed such hikes, says the Elevation Startup Paypulse Report 2023.
The average hike in pay for those in leadership positions in startups has been in the range of eight to 10 per cent. A significant number of firms deferred pay hikes or grant of new stocks in lieu of pay hikes.
When it comes to equity compensation, the significance of the same has increased amongst startups. With liquidity events becoming more frequent, the popularity of employee stock option plans or ESOPs has grown. Equity compensation is becoming common amongst unlisted companies and startups, making ESOPs more appealing than ever before. In fact, in recent times, about 70 per cent of companies have admitted to witnessing a positive shift in outlook towards ESOPs.
More people in the senior ranks are willing to accept ESOPs than in the lower ranks. About 80 per cent of senior-level executives accept ESOPs, while only 40 per cent at the entry level and 50 per cent at the middle level are open to ESOPs.
For entry to mid-level roles in startups (from seed to Series B stages), ESOP allocation comprises 10 to 50 per cent of the cash component granted to candidates. When it comes to CXOs or senior leaders, the allocation is in the 0.2 to 1.5 per cent range of the firm’s equity.