Although this article focuses on incentive stock in startups, the principles
apply to any type of compensation.
wisdom says that 90% of the work is done by 10% of the people; therefore, the
trick would be to hire nothing but 10%ers. Since that is impossible, you want
to motivate your people to act like 10%ers by encouraging them to find ethical,
creative ways to meet the company’s goals while continually improving their own
has long been a top incentive for startups and private companies to motivate
their employees. Whether the stock is in the form of options, restricted, or
phantom shares, a strong, well-thought out stock program remains essential to
attract, acquire, motivate and retain people.
entice today’s workers an allocation system must
- be authentic and
- support the company’s
stated values and culture; and
- create an environment
perceived as truly fair and therefore worth supporting.
must please investors by
- making the best use of
employee efforts squarely on the goals of the company;
predicting future dilution; and
- providing an audit trail.
it should make the CEO’s job easier by
- providing one-click
reports for monthly board meetings, employees, etc.
the typical (we’ve always done it that way) approach to awarding stock options
to one that recognizes that people’s past efforts and interviewing skills are
no guarantee of their future performance sounds simple, but if it was it would
have been done much sooner. There are three basic reasons:
- Changing a time-honored,
standard approach requires serious management effort, since people rarely
take kindly to change, including management.
- To adhere to a system
that assures fairness may mean passing on a demanding candidate in order
to maintain system integrity.
- Talking fair is impossible
without walking public, a notion so radical that most companies are not
willing to try it, which is why true transparency is often more of a goal
than an accomplishment.
About the author: Miki
Saxon, fan of What Do You Want From Them, is the founder of RampUp
Solutions and co-creator of Option Sanity™, an automatic system that ties stock option
allocation tightly to a startup’s values and culture, while creating a laser
focus on the company’s goals. Option Sanity is
transparent and provides a large dose of authenticity for any startup that
claims fairness as a basis for its culture. Miki also rewrites executive
summaries, websites, marketing material, etc., for clarity. Her company’s blog is MAPping Company Success. You can reach Miki at 866.265.7267
or email [email protected]