Startups operate with limited budgets and resources but hold ambitious growth perspectives and numerous tasks to tackle. This presents unique challenges when it comes to hiring their executive teams. Compensation and a compelling career development proposal are two key factors in this process.
Salary Expectations for Executives in Startups
In Argentina, startups pay their key executives an annual salary ranging from $42,000 to $48,750. Additionally, a variable compensation—linked to company profits or offered as stock options—can account for 30% of this amount.
According to Ludmila Dubini Zerga, CEO of the consulting firm Boost Inc., “The main challenge in hiring executive roles in startups is the scarcity of profiles with the right mindset, meaning the required mentality, skills, and work structure. Executives in startups must be both strategic and operational. Another challenge is finding a balance between the candidate’s seniority and the startup’s culture, as not everyone is prepared to handle the speed, agility, and uncertainty of a newly launched company. They must also work in an environment with undefined processes.”
Given these challenges, startup founders typically rely on their strong network of contacts to fill C-level positions.
Alejandra Márquez, co-founder of the consulting firm CIMA, agrees with this perspective. She emphasizes that executives joining a startup must be “flexible, capable of performing various roles, possess an entrepreneurial mindset, and not just manage from the top but work alongside the team.”
The Value of Corporate Experience in Startups
Márquez highlights the advantages of hiring executives with corporate experience. “A successful startup scales rapidly, but not everyone is prepared for that level of growth. Someone from a corporate background understands how to develop processes and structures, providing the necessary organization while adapting quickly to the company’s evolution.”
Salary Ranges and Variable Compensation
A study conducted by Descubre.vc and the investment fund 500 Global, which analyzed data from 505 startups in the region, found that the median salary for C-level executives in startups is $40,000 per year. However, the highest-paid 25% earn over $75,000 annually, while the lowest-paid 25% make around $20,000 per year.
Startups that have raised up to $1 million in capital tend to offer salaries between $28,000 and $36,000 per year. However, as investment levels increase, so do executive salaries. Companies that have secured between $1 million and $5 million in funding pay their executives approximately $60,000 annually.
For CEOs, variable compensation often represents 40% of their salary. For other executives, such as Chief Technology Officers (CTOs) and Chief Operating Officers (COOs), this bonus typically ranges between 7% and 15% of their salary. In Argentina, startups that have raised over $5 million offer a median executive salary of $48,750 per year, while those with funding between $500,000 and $1 million pay around $42,000 annually.
Attracting and Retaining Executive Talent
When recruiting for executive positions, Márquez recommends prioritizing candidates with international work experience or backgrounds in foreign companies. This is not only because they should be fluent in English but also due to their exposure to different work cultures and methodologies, which enhances their adaptability.
The financial constraints of startups, along with business models that may take time to generate significant revenue, can make attracting top executive talent challenging. Therefore, companies must present a comprehensive offer beyond just salary.
Additional Benefits to Compensate for Lower Salaries
According to Dubini Zerga, creating a talent acquisition strategy in a startup is “almost an artisanal process.” For C-level executives, compensation packages should go beyond base salaries and include stock options, performance-based incentives, and personalized benefits.
In addition to financial incentives, startups must highlight their mission and vision to attract executives. “The startup’s purpose and challenges must be clearly communicated to potential hires, ensuring they are motivated by the company’s goals.”
Another appealing factor for candidates is the autonomy and independence they will have within the company. Unlike bureaucratic corporate structures, startups allow executives to set their own objectives and establish processes, aligning their efforts with business needs.
Finally, Dubini Zerga suggests emphasizing “the culture and leadership of the founding team,” as this can be a decisive factor in attracting and retaining top executive talent.
Recruiting executives for startups is a complex process that requires balancing salary expectations, corporate experience, and cultural fit. Given budget constraints and the need for adaptable leaders, startups should focus on crafting comprehensive compensation packages that include performance-based incentives, stock options, and a clear vision for the company’s future. By leveraging their networks and offering meaningful professional growth opportunities, startups can successfully attract and retain top executive talent to drive their growth and success.