High variation of salaries offered to tech leaders globally for particular roles appear to have led to dissatisfaction over compensation — which along with base salary can include one-time sign-on bonuses, relocation costs and other retention mechanisms — according to the inaugural Compensation Survey Report.
A further quarter (24 per cent) of tech leaders surveyed, meanwhile, stated they were uncertain about exactly how fairly they were being compensated, which demonstrates a lack of awareness around salaries offered elsewhere for the same job, as well as a possible lack of previous benchmarking data available.
Regarding salaries offered in venture- and private equity-backed organisations globally, those in the US were found to offer the highest average compensation, followed by Germany and the UK.
Tech purchasing decisions – how many involved? — At least 16 people are involved in major tech purchasing decisions 21% of the time, according to research. But is this too many?
The investment situation of tech leaders also seems to vary from region to region, with the UK found to exhibit less favourable vesting periods — five years with a one-year cliff experienced by over one in 10 CTOs and VPEs based in the UK, compared to just six per cent of those outside the UK.
In addition, a gender disparity around equity payments was discovered in the study — while female and nonbinary executives surveyed were found to be paid 7 per cent more in base salary than male counterparts, they are allocated 66 per cent less equity in terms of cash value.
How to negotiate improved compensation
- Focus on responsibility, not job title: “In reality, many CTOs are actually VPEs, and many VPEs take on a larger leadership component than a CTO within an earlier stage business. Use each archetype discussed here to determine where your skillset or experience is best fit. Ask the following question: Do I own XYZ?”
- Research which points you can negotiate on: “Some early stage businesses value cash today, over and above cash tomorrow. Therefore, they may have hard lines on base salary, but a greater willingness to negotiate on performance-related bonuses and equity. If you’re being represented by an agency, always ask your recruiter.”
- Look beyond percentage ownership: “This can be a poor form of measurement, however. Cash value is often a better benchmark as it takes into account the valuation at the point of joining. As a starting place, expect a minimum equity cash value of twice your base salary. We often see 3-4x base salary in Europe, and 5x in the US.”
- Consider stock options when leaving the company: “In the majority of instances, a good leaver will be awarded a percentage of the value you have created during your tenure, even if you’re fully vested. A “bad leaver”, if not explicitly defined in the contract, encompasses any scenario that isn’t a good leaver. Most commonly, if you decide to leave the business and join another in a similar field — you would walk away with nothing.”
The most in-demand UK tech leadership roles revealed — According to ECI Partners’ Growth Characteristics study, the chief information security officer (CISO) is the most in-demand hire for SME leadership roles in the UK.