Intro

Compensation is a difficult topic, especially when it comes to teams with limited resources. During my second month in the Co.Lab Fellowship I focused on studying and building a map of the compensation space, trying to categorise and understand all the social and practical intricacies of the topic. This article aims to summarize the space and bring clarity in the problems and important aspects to consider for finding a solution.

For context, here’s the learnings from the first month in the fellowship.

Learnings from the Co.Lab Fellowship

The Problem

The primary problem I want to lay down is the challenge of motivating and rewarding contributions within an early-stage team, especially if the project is running on a limited budget. The founders struggle to find an appropriate way to compensate their contributors, as they don’t have the resources to give competitive salaries, at the same time, in order for an early stage project to become sustainable, it needs a committed and motivated team. The contributors need to be confident that even with limited capital, they will be rewarded fairly.

Let’s start with a Why..

My research showed that the topic is critical for several reasons:

1. Sustainability: If contributors are not compensated adequately or fairly for their contributions, it can lead to dissatisfaction, loss of productivity, or even the loss of valuable team members.
2. Longevity : Maximising runway is essential for early-stage startups. The longer they can operate before running out of capital, the better their chance of reaching a sustainable income stream.
3. Fairness : All contributors must be recognized and compensated for their efforts accordingly in order to build a solid and stable team.
4. Onboarding: Projects need an easy way to onboard new members, and test their alignment and skills without hiring, because recruitment mistakes are too expensive in early stage projects.
5. Decentralization: In order to keep the contributors motivated and build a good company culture, the evaluation of everyones work and measuring value should not be done top-down, but rather in a collaborative manner. This keeps the contributors engaged, as they have not only “skin in the game” but also decision power.

Addressing these challenges is crucial to increase work satisfaction among contributors, boost team morale, ensure fair compensation.

Contributor Types and Motivation

Understanding the different actors and their needs and desires is crucial to grasping the overall picture of the problem.

It is important to acknowledge that not all contributors in a project have the same dedication and needs. In many cases the early stage contributors are financially stable people with high seniority level, who want to contribute from a place of deep belief in the founders and project. On the other side of the spectrum, we have bounty hunters, who want to do task-based work, paid immediately in cash. Those people might evolve into committed contributors with time.

There is a correlation between the motivation and the commitment of the contributors. The more committed they are, the more intrinsically motivated they are.

We can see commitment level increasing with increasing motivation and vice versa.