Talent Crunch Makes Startups Dish Out Multi-crore Salaries

Pay for CXO-level executives doubled or even trebled in a year-and-a-half; packages include ESOPs
A crunch of leadership talent is pushing salaries in the startup space skyhigh, with headhunters and companies talking in terms of multi-crore packages that include a major portion in stocks.Headhunters such as EMA Partners, Korn Ferry, Hunt Partners, Transearch India and GlobalHunt India are struggling to find the right match for about 20 mandates for leadership positions in ecommerce and startup companies, said industry executives.

“Salaries for top talent at startups have doubled and in some cases even trebled in the last 18 months,“ said Sunit Mehra, founder and managing partner, Hunt Partners. Most of these salaries that have gone up from ` . 70 . 1.5 crore to ` lakh to ` . 2-4 crore were pushed up by the cash component alone, he said.

In one such recent appointment, InMobi in August hired an executive in a director-level position from a leading American technology multinational. Other examples include Snapdeal picking up the head of technology from a California-based computer software company, Paytm hiring a former Amazon India executive to head one of its business units and Flipkart hiring from a leading US based technology major for a leadership position.

BlueStone, an online jewellery retailer, recently started offering multi-crore salaries to attract and retain talent at leadership roles. “Till about a year or so, we were not paying a multi-crore salary to anyone in the company. But now, we are paying multiple people salaries of this amount,“ said CEO and founder Gaurav Singh Kushwaha.“This is in addition to the ESOPs. It’s for the key positions at leadership levels. We are ready to pay whatever it takes to acquire talent.“

BlueStone is funded by investors including Ratan Tata, Accel Partners, IVY Capital and Kalaari Capital. For well-funded companies like these, getting the right talent is the big ger challenge than raising money. These companies are also using employee stock option plans (ESOPs), both as a retention and attraction tool. According to EMA Partners, salaries offered to talent at leadership levels in startups have multiplied to about ` . 3-4 crore from last year, driven mostly by ESOPs.

“Till last year, salaries at leadership positions in startups were around ` . 1-2 crore but now it has doubled, mainly led by jumps in the stock options,“ said A Ramachandran, client partner at EMA Partners. It made seven such hires in the past six months, compared with none a year ago.

Policybazaar.com, which has been around for over half-a-dozen years, has recently started dishing out ESOPs to critical talent.Group chief marketing officer Naveen Kukreja, who is also the managing director of Paisabazaar.com, said: “This is a retention tool as the war for key talent is getting fiercer by the day. We have recently started using ESOPs as a retention tool.“

Madhav Sharan, senior client partner and office managing director at Korn Ferry’s New Delhi office, said startups are following deferred payment route to compensate for stocks given in previous companies.

“We are seeing a trend where startups are packing in more variables to match up with the salaries and stocks paid in previous companies. As an individual or two can make or break the company, the startups are not shying away from offering the best,“ Sharan said.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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