I like a lot of the ideas shared here and I agree, but on the subject of the team how concretely do you think we could share the downside of the incentive in such a competitive environment to attract the best talents? The idea of reputation seems good to me but in the long run it seems to me to give a bad signal for potential future hires to know that your reputation is at stake if you join our team and underperform.
Thanks for your comment. All employees commit time by working all day for one company instead of another. They also put their reputation on the line by being associated with the success or downfall of the company. Regarding time and reputation, they have skin in the game. Think of how much more opportunities an ex-Stripe employee has versus an ex-Theranos employee. They have, however, no financial skin in the game because stock options are granted freely. With the current market conditions, it seems unlikely it will change anytime soon. If one requires employees to put significant money on the line, it will likely get harder to hire talents. It might be easier to ask a board member to invest a lot before joining the board. Even if one finds the perfect incentive plan, it will hardly be accepted unless it corresponds to market practices.
Yoemsri has a good point! I think we also have to look at it from the employee's perspective.
Unforunately recruiters do not seem to care that much about reputation or past companies performance. I personnaly have had recruiters telling me my past job was a great match for them, even though the company actually went bankrupt. As such, it becomes easy to game the system by chasing jobs with big names.
In conclusion I would agree, it all comes down to financial skin in the game.
Talking about financial skin in the game, I recently came across Constellation Software's board of directors criteria. It specifies that the candidate has to "believes in the motivational power of equity ownership" and is "willing to make a significant equity investment in CSI, above and beyond board comp." Apparently, Constellation Software's execs are required to invest 75% of their after-tax incentive bonus into the companies' shares held in escrow for a minimum of 4 years. They have 3000+ managers buying shares on the open market. No wonder why Constellation Software is the Berkshire Hathaway of the tech industry!
I think it's a good incentive plan for long-term-oriented managers.
I like a lot of the ideas shared here and I agree, but on the subject of the team how concretely do you think we could share the downside of the incentive in such a competitive environment to attract the best talents? The idea of reputation seems good to me but in the long run it seems to me to give a bad signal for potential future hires to know that your reputation is at stake if you join our team and underperform.
Thanks for your comment. All employees commit time by working all day for one company instead of another. They also put their reputation on the line by being associated with the success or downfall of the company. Regarding time and reputation, they have skin in the game. Think of how much more opportunities an ex-Stripe employee has versus an ex-Theranos employee. They have, however, no financial skin in the game because stock options are granted freely. With the current market conditions, it seems unlikely it will change anytime soon. If one requires employees to put significant money on the line, it will likely get harder to hire talents. It might be easier to ask a board member to invest a lot before joining the board. Even if one finds the perfect incentive plan, it will hardly be accepted unless it corresponds to market practices.
Yoemsri has a good point! I think we also have to look at it from the employee's perspective.
Unforunately recruiters do not seem to care that much about reputation or past companies performance. I personnaly have had recruiters telling me my past job was a great match for them, even though the company actually went bankrupt. As such, it becomes easy to game the system by chasing jobs with big names.
In conclusion I would agree, it all comes down to financial skin in the game.
Talking about financial skin in the game, I recently came across Constellation Software's board of directors criteria. It specifies that the candidate has to "believes in the motivational power of equity ownership" and is "willing to make a significant equity investment in CSI, above and beyond board comp." Apparently, Constellation Software's execs are required to invest 75% of their after-tax incentive bonus into the companies' shares held in escrow for a minimum of 4 years. They have 3000+ managers buying shares on the open market. No wonder why Constellation Software is the Berkshire Hathaway of the tech industry!
I think it's a good incentive plan for long-term-oriented managers.