Who Pays Best? Startups, IPOs or Multinationals

How much does this job pay? Is that the first thing that pops into your mind when you get a call from an IT recruiter about a job opportunity? Maybe you have yearly salary in mind, or a target hourly wage if you're an IT contractor. IT World Canada has a salary calculator to help you figure out the going rates. But I'm going to tell you about some more creative compensation packages that companies are offering.

Startups, companies with publicly traded IPOs and the big multinationals are all competing for the same talent pool. To compete with the big guys, startups and companies with less cash flow are offering a whole range of perks, bonuses and options to sweeten the deal beyond the regular pay cheque. These are the kind of things you might be offered.

  • Would you consider being paid partially in stock options or equity?
  • Would you take a lower salary to work in a creative work environment with cool people, flexible work hours, opportunity to work from home, or beer and video games?
  • Would you be willing to meet certain performance targets such as code KPIs to qualify to receive a bonus to increase your pay?

5 Types of Companies Hiring IT Workers

Don't limit yourself to searching for jobs at the big name multinationals. I manage an IT staffing company in Toronto, and these are there are five types of companies that create the most new jobs for IT programmers.
  1. Boot strapped startups
  2. Startups with angel investors
  3. Startups with venture capital investment
  4. Startups that become publicly traded companies
  5. Big corporations – the multinationals

You may jump to the conclusion that more established companies pay the best. Not necessarily. Each type of company typically has unique payment strategies to attract the best IT talent and to motivate them to do their best work.

Startups – Balancing Risk and Reward

Startups are more likely to offer you creative compensation packages:

  • They might sell you on the company's earning potential after you finish helping them build their solution.
  • You may be asked to take some of your pay in stock options. Or as a bonus based on your performance or the performance of the company.
  • Startups are also big on creating a fun, flexible and creative work atmosphere. You may not get rich immediately but a you'll be having fun everyday and you'll have the potential to get rich down the road. And that's worth a lot.

Research the Startup

Research the president, the executive team and the board of directors to see if they have previous experience with building a successful startup. This gives them access to more investors and shareholders to make sure that your work pays off for you.

How IPOs Have Fared

This table was published in the Moneyville section of the Toronto Star on August 20, 2012. It demonstrates the gamble you take when you accept some of your compensation in stock options.

How IPOs Have Fared

Publicly Traded IPOs – Less Risk, More Money

Publicly traded companies are more established and are able to offer better compensation right off the bat. These companies can hire premium talent for contract positions because they have the ability to pay higher salaries. If they offer you stock options, they will be more likely to bring you a return that you can count on.

Multinationals – Premium Pay, Lower Risk

Contractors: The big name companies hire well-established contractors with experience at other big corporations. They hire more contractors for longer contracts at higher pay rates. But you can get laid off from one of these contracts.

Full-time Permanent Employees: One of the benefits of being a full-time employee with a multinational is Intranet jobs boards that enable you to be transferred within the organization and grow your career. Another benefit is that you will receive a health benefits package, training to upgrade your skills, RRSP matching.

Outliers with the Biggest Earning Potential

Some skills sets are so hot and in such high demand that these people can write their own ticket at whatever kind of company they choose to work for. Examples of these outliers:

  • Contractors with unique and highly in demand experience building successful mobile apps for iOS or Android
  • Developers with great people skills in Professional Services roles that require travel over 60% of the time

Bottom line

Are you better off working for a startup, a startup with a publicly traded IPO or a big name multinational? It all depends on the demand for your skills and how comfortable you are with taking on risk for the potential of a greater reward. Weigh the financial pros and cons of the package you are offered with the stage you are at in your career.

How about you?

  • Are you willing to be paid with stock options?
  • Are you willing to be paid less to work for a cool, creative company?
  • Do you prefer to work for a multinational?
  • What perks are good enough to make you consider working for less money?

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Jim Love, Chief Content Officer, IT World Canada

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