Some Quick Thoughts on Internal Recruiting Bonuses

By David Frankel, Managing Partner

Offering internal recruiting bonuses is a fast way to scale talent at a startup. This is expedient and powerful. But as for any sales comp, incentives are key.

Should bonuses be paid in full at the hire?

Or split, with a balance paid at a retention cliff?

My preference is that the bonus should be split, with 50% at hire, and 50% reserved for a milestone, typically the one-year anniversary. Some argue that retention is the job of direct managers and the executive team, and that’s a very fair point.

Still, if you’ll forgive a sales analogy, churn matters. I’ve been implementing or advising founders on these bonus systems for years and found that incentivizing stickiness … gets more stickiness. What gets measured gets managed. What gets rewarded gets recruited.

There will be times when you just need to put a lot of bums in seats in a hurry. Perhaps that’s a time to be more mercenary and just pay up front. However, company culture is such a critical asset that it just needs to be part of this

Every case will be different and I defer to those at the “coal face” of running a business when it comes to implementing these programs. But whatever you do, your team is watching what you value. What has worked well (or not) for you please? calculation.