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How to Attract Top Talent: Transforming Your Startup Into a Talent Magnet

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Your talent is a key driver for the long-term success of your company. If you don’t have cash, you need to use the tools of stock options, benefits, and payroll to attract top talent. This deck looks at the current marketplace, stock options vs restricted stock, using 409a valuations to set the strike price for employee stock options, PEO or open market for benefits, payroll options, employment law considerations, and more.

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How to Attract Top Talent: Transforming Your Startup Into a Talent Magnet

  1. 1. How to Attract Top Talent: Transforming Your Startup Into a Talent Magnet… #talentmagnet Sirk Roh Chief Operating Officer Early Growth Financial Services Tom Byrne Vice President Wells Fargo Insurance Amanda Christoff Managing Director Premier, Inc Karen Reinhold Shareholder Hopkins & Carley © 1999 - 2014 Wells Fargo. All rights reserved. 1
  2. 2. © 1999 - 2014 Wells Fargo. All rights reserved. 2
  3. 3. Why Worry About Attracting Talent? Your talent is a key driver for long-term company success. If you don’t have cash, to attract and retain top talent, you need to use the tools of: Stock Options Benefits Payroll © 1999 - 2014 Wells Fargo. All rights reserved. 3
  4. 4. Presentation Overview • Hiring plan • Current marketplace • Sourcing • Stock options • 409a valuation • Benefits / PEO • Payroll • Legal considerations © 1999 - 2014 Wells Fargo. All rights reserved. 4
  5. 5. Talent Acquisition 101 • Identify and Prioritize Your Hiring Needs - Based on your corporate objectives, create a hiring plan and the metrics around achieving them before you dive into hiring. - Office Manager is often the first strategic hire for a small growing start-up. • Current Market Place - High salaries - Competing with public stock - Talent expects money and more… • Sourcing: - Employee referrals are ideal! - Form a partnership with a recruiting firm who understands your organization and can deliver top talent quickly - Leverage social media to find passive candidates. - Depending on the volume of hires, consider a contract recruiter © 1999 - 2014 Wells Fargo. All rights reserved. 5
  6. 6. Is Your Organization a Talent Magnet? • Understand your company’s unique value proposition – Whether you’re an underdog or an innovator, speak to your differentiators and their scalability • In this “war for talent,” you must understand your unique value proposition to the candidate’s future • Be clear on your company’s mission and values - Hiring practices should reflect this and employees should embody them. - Ask interview questions that address these criteria Being connected is the key to happy employees! Take a holistic view of employee development © 1999 - 2014 Wells Fargo. All rights reserved. 6
  7. 7. Stock Options Structuring stock options What is the strike price? Stock options vs restricted shares © 1999 - 2014 Wells Fargo. All rights reserved. 7
  8. 8. Understanding Equity Compensation • Aligning incentives • Long-term vs short term • Individual contributors vs strong teams • Employee pool • Vesting is a powerful tool • Early exercise (or not) © 1999 - 2014 Wells Fargo. All rights reserved. 8
  9. 9. 409a Valuations • What is a 409a valuation • When do you need a 409a • What considerations go into a 409a © 1999 - 2014 Wells Fargo. All rights reserved. 9
  10. 10. Benefits • When do you offer benefits • PEO or Open Market? • Short & Long-Term Considerations • Benchmarking • Building Culture © 1999 - 2014 Wells Fargo. All rights reserved. 10
  11. 11. 350 Understanding How Growth Impacts Talent 2-3 Start-Up (Seed/Angel) Acquisition 20 Emerging Company (Series A) 75 Maturing Company (Series B, C, International,…etc.) IPO © 1999 - 2014 Wells Fargo. All rights reserved. 11
  12. 12. Building a Culture: The Open Market Perks Employee Benefits • Days off for Volunteering • On-site Fitness Classes • Open Vacation policy ($100 to buy something cool for the office) • Employees can give awards to co-workers for going above and beyond • Onsite Haircuts, board game nights, pool tables, foosball, D&D, Scooters in the hall… • Homebrew/Winemaking competitions • Onsite Bar, Daily Bacon • Leave of Absence: 4 months- Paternity and/or Maternity, Extended Personal Leave • Dependent Coverage • Customized Communications • In-house HR Personnel and Resources • Wellness Incentives © 1999 - 2014 Wells Fargo. All rights reserved. 12
  13. 13. Payroll PEO Call Center FSA, Leave of Absence Administration, Outsourcing COBRA Administration Human Resources Employee Benefits Workers’ Compensation Employment Practices Liability © 1999 - 2014 Wells Fargo. All rights reserved. 13
  14. 14. ADVANTAGES OF THE OPEN MARKET • Significant savings by eliminating administrative fees & returning the tax benefits. • Worker’s compensation premium reduction. • Autonomy with employer/employee (ER/EE) relationship – no co-employment. • More flexibility in plan options. • Other potential savings, i.e. Prepayment Assurance charge, payroll tax caps, 401(k) tax credits. • Ancillary product savings & enhanced benefits by bundling to your advantage not just their all or nothing bundle. • Broker contacts with expertise in employee benefits and P&C, negotiating with carriers and direct access for employee and employer customer service. • The latest in cloud HR technology and end-user experience. • HR support and guidance tailored toward your organization’s needs. • A more customized approach to servicing your employees. • No contracts, long-term commitments, or cancellation fees…renewal period can be when you want it. • Good for Start-up, Emerging, Maturing, and IPO stages and beyond ADVANTAGES OF A PEO • Significant savings potential by being on their tax payer ID and leveraging pooled rates. • All in one provider, all in one access to all things employee related for the employee. • Shared legal risk due to co-employment. • Can help a small group compete with larger group style benefits more affordably. • COBRA is integrated into payroll and HR termination process. • Can help a small group get SOX compliant, but usually not ideal for later IPO and M&A stages due to contracts and co-employment arrangements. • Good for Start-up and Emerging stages © 1999 - 2014 Wells Fargo. All rights reserved. 14
  15. 15. Moving out of the PEO: The 6-9 month Process • HR Director (3-4 months) • Payroll (2-3 months) • Benefits (2-3 months) step 2 • Payroll System • Benefits (Plan Design, Carrier Mkt., Open Enrollment) • Infrastructure • Unplug PEO • Implement all systems • All at the Same Time! step 1 Select Vendors/Partners Implementation Execute step 3 © 1999 - 2014 Wells Fargo. All rights reserved. 15
  16. 16. Legal Considerations Restrictive covenants (non-solicitation) Illegal or unenforceable comp agreements Exempt vs. non-exempt Employee vs. contractor Confidential information Basic employment policies you need © 1999 - 2014 Wells Fargo. All rights reserved. 16
  17. 17. Conclusion © 1999 - 2014 Wells Fargo. All rights reserved. 17
  18. 18. Thank You and Q&A Tom Byrne 650.413.4209 tom.byrne@wellsfargo.com @WellsFargo Sirk Roh 415.234.3437 contact@earlygrowthfinancialservices.com @EarlyGrowthFS Karen Reinhold 408.286.9800 kreinhold@hopkinscarley.com @HopkinsCarley Amanda Christoff 415.273.3504 AmandaC@pstaffing.com @EarlyGrowthFS © 1999 - 2014 Wells Fargo. All rights reserved. 18

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