I’m spending a lot of time with offer letters these days. In the very early stages of a company, in “prove” mode, these tend to be loosely written. In particular, bonuses are unspecified, benefit aren’t mentioned, and key requirements are left unwritten. It’s not ideal but perfectly understandable.
Fast-forward to “build mode”, though, and this won’t work anymore. One primary concern is intellectual property, and in particular that created by developers or people who interact with a company’s customers, operations or sales process – that is, everyone. Another is that people who are pretty intelligent become mysteriously confused once they quit about being paid bonuses for things that might have happened had they stayed. The list goes on.
When times are good, this is a headache. When times turn bad, it could be the end of your company. WeWork is about to get tested for how their offer letters were written. My membership lapsed over a year ago and I still have a membership card that works anywhere in the world, so I’m guessing their operations overall are pretty sloppy. They are about to find out what happens when you terminate thousands of employees who have unclear and unrealistic expectations.
To execute on this appropriately, I implement a checklist for my companies that includes the following:
- Offer letters that specify that we will need to check citizenship (I’m in the middle of one of these right now – it’s amazing that in this environment that people don’t take this more seriously) and require you to sign a form NDA and assignment of inventions. Yes, the offer letter is in part sales document, which is appropriate. It is also a document that you might need to rely upon someday.
- Bonus templates that very clearly specify conditions under which bonuses are paid, when they are paid (pro tip: don’t promise them in the first payroll of the next month if you pay biweekly) and exactly how they are calculated. If you want to force adherence to a particular policy (example – keep Salesforce updated), this is the place to do it.
- NDAs that are straightforward and to the point
- Assignments of Inventions that ask employees if they’ve brought anything with them and make clear that what they develop on your payroll belongs to you. This is going to feel like overkill and could save your company one day. VC’s in particular want to see this before they write a 7 or 8 figure check
- Handbooks that lay out vacation and other benefits, but also are your opportunity to make your anti-discrimination, harassment and other policies crystal clear. You won’t want to need them, but someday, you will. Then you’ll want to stick to what they say.
These are the basics. As you move into scale mode, the compliance headaches will multiply. Even more reason for good employment hygiene while you are in build mode.