Compensation Serves Multiple Purposes in Startups

In this excellent post from Digitalyst the multiple roles compensation plays in startups is examined. Among the topics covered are:

Aligning the goals of the individual and the company
Providing flexibility
Conserving cash
Internal equity
External equity
Incentive compensation

The Bottom Line
"How the company compensates its employees says a lot about the company's philosophy and contributes to its culture. Everything management does in a startup is closely watched by employees who are always trying to read the tea leaves in an atmosphere of uncertainty. The more carefully architected and articulated your comp plan, the more comfortable your staff will be."