R&D Compensation & Incentives

We analyze the compensation cost of modern-day engineering organizations in 2024, with a particular focus on the impact of factors such as stage of company and location.

Download Full Report

Resources from this report:

The R&D Reporting Guide

Download Guide

The Essential R&D Board Slides

Access Template

Within R&D OpEx, compensation costs comprise the largest portion, usually accounting for ~70-80% of total spend; as such, setting up a strong incentive structure is a critical point of leverage for R&D organizations

Company stage and geography are the primary drivers of variance in total cash compensation (TCC), while revenue growth rate and sector show less impact on cash compensation levels

Total Cash Compensation (TCC) by Stage and Geography

  • Late-stage companies tend to offer higher TCC for all R&D roles, paying a median of 29% higher relative to early-stage companies
  • Employers that have the majority of their employees in 'tier 1' geographies tend to offer higher TCC for all R&D roles, paying a median of 21% higher compared to 'tier 2' geographies

Performance reviews are often conducted bi-annually, with assessments based on a mix of quantitative and qualitative metrics such as story points, number of PRs, and autonomy

Commonly Used Evaluation Metrics

  • Qualitative
    • Autonomy
    • Productivity
    • Collaboration & Communication
  • Quantitative
    • Velocity and completion time
    • Number of PRs, commits, and bugs
    • Story points completed

While some companies have started to leverage quantitative metrics for performance evaluations, it is important to note that these metrics are never viewed as standalone performance indicators and usually assessed in comparison to median performance to identify any potential performance issues. We generally do not recommend evaluating engineers purely based on development velocity metrics as these can be easily manipulated and incentivize the wrong behaviors.

Related Reports

Other Reports

Disclaimer

Unless otherwise indicated, the views expressed in this presentation are those of ICONIQ Growth (“ICONIQ" or the “Firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision. Information used in this presentation was obtained from numerous sources. Certain of these companies are portfolio companies of ICONIQ Growth. ICONIQ Growth does not make any representations or warranties as to the accuracy of the information obtained from these sources. 

This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services.  Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein. 

Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized.

This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ.

Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information.

All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events. Numbers or amounts herein may increase or decrease as a result of currency fluctuations.