When it came time to hire her first employee after a year in operation, Marie Dowling, founder of PR tech company Ezycom, knew she needed someone senior. However, there was a problem – as a bootstrapped new business, it was difficult to compete on salary.
“We grew quickly. I knew I needed someone who could come in and support me and the clients, but I was also well aware of the rates in PR and wasn’t sure we could afford to pay them,” she says.
“I felt a bit lost at first and wondered what I was going to do, then I looked at alternatives and learned about offering equity for start-ups.”
When she found the ideal employee, Jules, she offered her equity through an employee share option plan. This is not only a way to get staff on board, but acts as a motivator for her to stay and achieve good outcomes, Dowling explains.
“It creates an environment where your success becomes everyone's success,” Dowling says.
She also provided a commission structure that is linked to business development.
“Whenever she brings someone on as a client, she gets a direct commission which is quite generous,” she adds.
Dowling adds that while these incentives are common in tech start-ups, it’s something that small businesses would do well to learn more about.
How to make equity offerings work
An employee share scheme involves offering employees shares in the company – but structures vary, so read up on them first to understand the implications.
Dowling shares some of her learnings for businesses wanting to do a similar thing.
First, she says not to offer equity right from the get-go, as you need time to make sure the employee will work out first.
“The employee should be with you for a certain amount of time before they can actively benefit from the equity in the business – which protects you if the person's not right, or if anything happens. You can also have it linked to achieving certain milestones,” she says.
Also, there are companies that are able to help structure the package – in Dowling’s case, it was a company called Cake Equity.
She adds that she also included the offer of equity in the job ad, and also used it as an opportunity to get her new employee behind the company vision, right from the start.
“Front and centre in my job ad were what we're trying to achieve. I was very honest about where we are in the business, that we’ve just launched – so they could see whether it was a business they wanted to be a part of and that it was a role that allowed them to make of it what they wanted.”
She adds that they’re also big on self-led professional development, and use a peer-and-community-led professional development platform for this.
Dowling says other small businesses can think outside the box when offering incentives to compete with the deep pockets of large corporations – and it doesn’t always have to be big or expensive.
“I think small businesses are way more nimble and are able to set incentives that everybody will benefit from. So why not say something like ‘if you hit this target, everybody will have next Friday off’,” she says.
Get the documentation right
However you decide to incentivise employees, it’s important to have the right documentation and policies. Have a look at this Incentive and Bonus Policy, one of the many contracts and policies drafted by industry-leading law firm Australian Business Lawyers & Advisors (ABLA) and available on My Business Workplace.
