Google Stock Options Rub Me the Right Way

The New York Times ran a story yesterday titled Google Options Make Masseuse a Millionaire. It’s a heartwarming story of…ach, who am I kidding, she made millions upon millions by rubbing shoulders with and rubbing the shoulders of the geeks who started Google. Millions.

Ah, the choices we make. Sometimes they’re good ones. Here’s what new Googlers get:

The average options grant for a new Google employee — or “Noogler” — who started in November 2006 was 685 shares at a price of roughly $475 a share. They also would have received, on average, 230 shares of stock outright that will vest over a number of years.

The NYT calculated that new Googlers are worth over $275,000 because of GOOG’s stock appreciation. And there are over 1,000 employees of Google who are holding more than $5 million.

Um, wow. I don’t know what to make of all this except to wonder how any company can compete with that kind of stock performance. You’d better be doing something a lot more than touting your clever mission statement and casual Fridays to get the best and the brightest. Because even if you don’t like it, even the best and the brightest know how to use a calculator. (Yep, people do work for money, no matter what you heard.)

Readers Respond about Hiring Superstars and Paying Big Bucks

I wrote a quick article a couple of days ago titled What If You Hired Only the Best People and Paid Them Like Superstars?. The big idea: Get great people and pay them like it. Forget paying at the 50th percentile. I feel strongly about this issue and about hiring for mediocrity. (Okay, people who make the market average aren’t mediocre by any stretch of the imagination, but I’m talking about break-through thinking here, not just doing what everyone else is doing. Wasn’t copying what everyone else is doing proved to be a losing proposition years ago?)

That article didn’t go far enough. It was a poke at an emotional issue. Fortunately, there are smart people who read and comment on KnowHR. And rather than bury the comments on Superstar Pay or make you work to find them, I brought them up front here so that more people can get the benefit of that wisdom. Here’s what they said.

There’s One Company Already Getting the Best and Paying Big Bucks for Great Talent
Albert Yee, Philadelphia photographer extraordinaire and author of Dragonballyee, says they pay for performance at a certain company whose stock price has soared from $85 to $675 in three years:

One word: Google. (And they’re not just hiring top execs for big bucks, it’s the people on the ground actually coding.)

Don’t Hire “Cheap” Employees; Know What Makes a Great One
Rick, author of the thought-provoking 48Facets and a top-notch executive compensation consultant, says paying big bucks won’t work if companies don’t know what defines a superstar.

I generally agree with your basic concept. I have worked with far too many people who were hired because they were ” cheap” and it was reflected in the quality of their work.

Before larger companies go paying at the high end of the market they need to know what qualities make a quality employee for them. Many do not. Pay cannot substitute for good selection, training, environment, etc.

Hiring a Team That Works as a Team is Essential
Leadership guru Wally Bock of Three Star Leadership makes a point about a team full of superstars and the issue of having too many ball hogs on the team. Great point.

There are two issues here. The first is: Can a team of all superstars win? The answer is “probably not.”

The idea is that you want the best team possible. That usually includes a few special-purpose tools and a few support staff who aren’t superstars. For the baseball angle on this, read Moneyball about Billy Beane and the Oakland Athletics.

I was a passionate playground basketball player growing up. I wasn’t ever the best play on the schoolyard. But I found that if I was willing to hustle and play defense and pass a lot, I kept getting picked to play by the schoolyard superstars.

When we say we want “the best people,” what we should mean is that we want the people who will fit together in talent and temperament to make the best possible team. That leads us to the second issue: “warm body” hiring.

Don’t do it. Don’t settle. I’ve seen individual managers do it and I’ve seen whole companies do it.

What always happens is that you’re filling in or checking on the “warm body.” It ups your stress level and trashes your productivity.

There’s a lot more to say on the topic of pay-for-performance. And it’s this kind of thinking and perspective that make that discussion so much more substantive. Many thanks to all who read KnowHR and add to the discussion about HR practices.

What If You Hired Only the Best People and Paid Them Like Superstars?

WARNING: US-Centric Post about Baseball and Company Performance Ahead. (Come back in the next section when I say it’s safe.)
Last night the Boston Red Sox won the ALCS and are headed to the World Series. At one point in the series they were down three games to one. But they were never out of it. Know why? They have some of the best talent in baseball. And they pay for it.

In fact, the team payroll for the Red Sox is the second highest in all of baseball, and is more then double that of their opponent, the Cleveland Indians. That payroll pays off. The BoSox have the third best teams stats this year. Guess who has the best? The New York Yankees, which is the team with the highest payroll in baseball. My take: Getting the best talent works. (Yes, baseball aficionados will cite Moneyball, but where are the low budget teams now?)

Now, for the Non-Baseball Fans (it’s safe to come out now)
All that success by high budget teams must mean something. Getting the best talent works. But it’s not cheap. What I’m wondering about is what would happen if a company — big or small — decided that they were going to hire only the most extraordinary talent at every position. I’m talking about getting superstars for everything from the CEO to the lowest level employee. Know how to do it? Pay a lot and make people want to be part of your exclusive club.

Just Say No to ‘Warm Body” Recruiting
What would it take to stop recruiting for “warm bodies” and hire only the best? I’m talking about a real talent solution, one where you cared as much about hiring a dishwasher as you did about hiring your chief executive. I think it would take money. And a boldness that’s not seen except in the world of sports. (Now for the international audience: The same idea goes for Real Madrid and Man U as it does for the Boston Red Sox — great players command big salaries and deliver great victories.)

Sure, I’ll bet there would be rabid criticism of this “go for it” approach to talent. Sure, let’s all rise up in a chorus and sing “We’re all in it for the long term” as our corporate kumbaya. Funny, though, it seems like most public companies release earnings reports every quarter and put financial pressure on their people to win-win-win every year. Cool with me. I say get the superstars. Pay them. And reap the rewards.

How’s that for an HR strategy?

(I have a business idea here that applies to HR I’m going to talk about once I get it fleshed out. It’s about HR superstars.)

NB: John Windsor of The You Blog points out that the Red Sox will be playing the World Series against the team with the 25th highest payroll in baseball. So, my baseball argument might be all wet. But would getting all superstars on your team, in a real company, work?

What Are You Doing with Your Dollar-Paid Expats?

Several years ago, when I was with a a big consulting firm, I had a job in Europe. I was based in Amsterdam and spent my time flying all over Western Europe doing work. Things were good. Then the idea of a long-term assignment came up.

Expat assignments are messy no matter how you slice it. They can be good, but the odds are not on the side of the expat. It’s easy to bargain when you’re getting a job in your home country. You know the place and you know the risk. Plus, you don’t have to know currency arbitrage.

In my situation, the firm wanted to fix my pay in U.S. dollars. At the time, the exchange rate was 1 euro to $0.85. The euro was at a discount and life seemed pretty good. But I asked around to many people I knew who were expats. They all told me the same thing: Get a currency exchange guarantee. Without it, they told me, you’ll regret it.

Well, for any number of reasons I turned down the long-term assignment. One of them was the unwillingness to offer a currency correction. And when I saw the news this past week that the dollar was at its all time weakest against the euro — trading at 1 euro for $1.40 — I breathed a sign of relief. Can you imagine the price of goods increasing 65% and your play staying flat? Now that’s some kind of inflation!

Note to companies offering expat assignments: Your expats aren’t currency arbitragers, but they can read the newspapers. Do it right, and provide currency fluctuation protection. Your expats are working hard for your company and you would never ask your local employees to take a 65% percent haircut and expect them to stay, would you?

Top HR Pay

Somebody’s gotta get paid at the 99th percentile. (Wouldn’t it be great if it were you…just once?)

Workforce Management posted a list of The 30 Highest-Paid HR leaders. These people have a place at the table, all right. And I’d say it’s more like mahogany than Formica.

[via JT International News Wire]

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