Startups often appeal to talent by offering them shares in the company. It can be great for both recruits and the companies that want them. However, a report by the Telegraph highlighted some of the issues that can arise too.
For start-ups, it’s a way to dangle the promise of enormous riches in front of recruits that they can’t yet afford to pay, since the shares cost nothing to give out but can be worth millions when the company matures. For established firms, it’s a way to win scarce talent away from rivals and secure its loyalty while keeping the wage bill low. But stock compensation has a dark side, and some tech workers are speaking up about it. They blame it for exacerbating the industry’s internal problems, such as inflated living costs and a lack of diversity.
Check It Out: The Dangers Of Startups Offering Shares to New Staff