Entrepreneurial Compensation
What CEOs, Board Members, and HR needs to know about keeping entrepreneurial employees engaged
When compared to the stereotypical corporate persona, entrepreneurs are stoic individuals. They work out of basements and garages and hire their friends and family when no one else will work for them. Many go without pay for months, if not years, through ups-and-downs, for the chance at making something out of nothing.
Considering this level of determination, why do they often quit a year into being acquired by a larger company, or why would they never consider working for another corporation in the first place? Corporate politics and bureaucracy are just another obstacle that can be learned and overcome. In fact, they’re relatively insignificant compared to the adversities entrepreneurs have to otherwise overcome. Considering the fact that entrepreneurs can leverage greater resources and a networks inside a company, why does the thought of that make them sick?
The answer is compensation. Not that big companies don’t compensate them enough, but that the compensation structure is not aligned with an entrepreneur’s world view.
Entrepreneurs are not motivated by money (except for a god-like amount), but compensation informs perception. Entrepreneurs look for up-side and the ability to arbitrage the system. Even though the potential for an exponential outcome is slim, entrepreneurs are overconfident in their chances. An entrepreneur’s ideal situation is closer to a less than one percent chance to rule the world and a ninety-nine percent chance to be broke.
So when entrepreneurs say they hate working for big companies, it’s not because they can’t deal with the obstacles. It’s because they perceive the best case scenario as being a waste of time. They see a better opportunity outside the system.
If enterprise innovation is to succeed as a new paradigm in corporate America, big companies need to develop new rules of entrepreneurial compensation. This means giving employees significant potential upside, while paying them minimum wage (if anything at all). There’s a special kind of motivation that entrepreneurs get from taking the money of the world’s most influential people, and betting their entire careers on a two year period.
Even Google, for all its innovative DNA, let the founders of Instagram, Pinterest, Twitter, & Foursquare, walk out their door. If it’s happening to Google, it’s happening to every big company.
I’m writing a book with my co-author, Obie Fernandez, on corporate entrepreneurship called The Lean Enterprise.
Learn more on our book’s website:http://LeanEnterpriseBook.com
You can also follow The Lean Enterprise collection on Medium for regular updates and ideas on the subject.
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