FairSetup offers numerous advantages over existing models:
- Salary/Hourly pay for time, not impact.
- A high salary doesn’t always translate into productivity.
- Paying hourly creates an incentive to spend more time.
- FairSetup: people accept a lower salary and participate in the upside. This “skin in the game” results in employees caring deeply about the outcome.
- Stock Options/Equity are a bad short-term incentive.
- Hard to evaluate actual worth.
- Require significant effort to deploy.
- Equity is hard to take away – there is no divesting.
- Dilution is not a good solution for large dynamic teams.
- Stock options generally expire after an individual leaves.
- Stock options can have reverse vesting, but it’s rare.
- Tax issues…
- FairSetup: impact-based compensation can be paid out as part of salary and an individual automatically divests over time after departure.
- Bonuses – are not an effective way to manage people unless very carefully used.
- Small bonuses – people are upset because they don’t make enough.
- Large bonuses – people are upset because then the boss must make an even larger undisclosed amount.
- FairSetup: the compensation is transparently connected to profits.
