A week or so ago I invited people to call or write me (right column) and I thought I’d occasionally share the substance of the (mostly) calls. Here is a summation of a (roughly) forty minute, no-cost discussion.

Caller: The CEO of a growing startup.
Problem:

• All four current vice presidents receive roughly identical salaries and stock options.
• The CEO is handling marketing, but because of their growth, needs to bring on a VP to take over.
• Viable candidates have been few and far between, both technically and culturally.
• The company can’t go much longer without filling the position.
• The current candidate is excellent and all interviewers (included the other VPs and marketing staff) wanted her.
• She is with a large company with a much higher pay scale.
• The candidate is willing to take a 10% pay cut, but that would still be 20% higher than the other VPs.
• The CEO offered additional stock instead of salary,
• The candidate really wants to accept and said that she would be willing to take an additional 5% reduction for six months, but that was the best she could do, since
• her salary requirements were based on the need to support her family.

The CEO had considered and rejected the obvious approaches—

• to keep looking; or
• make a dictatorial, unilateral decision to give her the higher salary which meant a good chance of alienating the other executives (He knows that it’s not reality-based to believe a salary can be kept secret.),

His goal was to involve his other vice presidents in the process, so they would own the decision.

Here is an outline of the approach we crafted during the call.

I suggested he meet his executive team off-site over a meal, so people could relax and focus sans telephones and emergencies. They should

• Review the entire problem:
  • the company’s critical need to fill the position;
  • what efforts had been made to attract candidates;
  • the difficulty of finding a person who matched both technically and culturally;
  • this particular candidate’s qualifications.
• Discuss her
  • enthusiasm for the opportunity and company,
  • current salary,
  • requirements to join, and
  • the reductions she voluntarily offered to take.
• Arrange for additional interviews if needed (the executive team had already interviewed her)

The CEO was confident that he had read his people correctly and that they felt both the same critical urgency to fill the position and that this was the right candidate, but that following this format would give his execs an opportunity to voice any concerns that they did have.

I asked what criteria had to be met to adjust the current salary scale to market level, when he thought it would happen, and if it was public knowledge. After thinking about this, he said probably not. Although the various pieces were known to each department, he didn’t think it had really been looked at as a cohesive whole—everyone was totally focused on their own tasks and there hadn’t been time or need.

I suggested that he share the “cohesive whole,” that way his VPs would know exactly what had to happen for their compensation to rise and what role the new person would play in accomplishing it. Also, that he consider giving each of the four an additional block of stock to tangibly recognize their value to the company (he liked that idea).

They’re meeting in a few days and I’ll let you know what happens.

This entry was posted on Friday, September 8th, 2006 at 4:05 pm and is filed under Business info, Communication, Compensation, Culture, Hiring, Retention. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.