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One of the most powerful forces for managing people, and determining the direction of a business is compensation. That which can be measured and that upon which people will be paid, are both core drivers of a business. The goal of this element is to seek a healthy balance between keeping the entrepreneur focused and driven vs. comfortable and overly satisfied. Is the Management Team paying themselves an excessive amount of money? Do they have a clear bonus structure or is their comp plan way off base?

money

Ideally, we’d like to see a compensation structure that keeps the entrepreneur and his team committed, focused and driven to succeed. There should be strong long-term and short-term equity incentives for all employees as well as below market salaries with detailed strategic bonus structure in place.

wall-street

The boys (and girls) on Wall Street have been getting into huge trouble these days because of their absurdly high compensation packages despite taking on TARP funds. In many ways this is analogous to the way we look at new ventures. If the company is making no money, or losing it for that matter, than is it fair that employee salaries be above market value?

This is just one of the key criteria forward-thinking investors use when evaluating the strength of entrepreneurs and their new ventures. How do you measure up? Go to www.venturephenomeproject.com to read all 80 criteria and swap knowledge with other entrepreneurs & investors.

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