Why Ownership Is Not A Salaried Position

Companies are started by people with a willingness to invest.

Money and talent usually. Supported by passion and pragmatism. Both are required.

For those investing talent, the commitment is a full-time one. Sometimes paid. Often not. Or at least not until everyone else is.

When compensation comes, it does so slowly to begin with. And always below market rates. A sacrifice on every level. One made in the hope of a more rewarding tomorrow.

For some, this investment is part of the deal. A small cost to pay for the benefit of owning your own business.

For others, it forms part of an emotional ledger. A debt to be repaid in full as circumstances allow. Often in the form of reduced effort for the same pay.

This is not a malevolent point of view. But it is an entitled one.

A difference difficult to separate for those founders still fully committed to the day to day. And for whom a growing company has brought greater responsibilities. An imbalance that can lead only to resentment and mistrust.

The solution is simple. Based in two age-old economic truths.

1. Pay profits based on ownership.

2. Pay salaries based on current contribution.

A formula that aligns interest to effort.

And keeps everyone focused on long-term success.