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Ducks in a Row: Value-Based Compensation

Tuesday, April 18th, 2017


Yesterday we considered the error companies make by basing offers on salary history, instead of future performance.

That may be about to end, at least in the outliers of Philadelphia and New York City.

In short, the law prevents employers from asking candidates about their current/previous compensation.

Candidates can volunteer the information, but can’t be asked for it by the company or any recruiting process, including third parties.

Doing so opens them up for lawsuits.

Ignoring implementation and legal hurdles, what does it really mean and why do I see it as such a positive?

Primarily because I don’t believe that either performance history or salary history has a damn thing to do with the value candidates bring to their next job.

Companies need to have a hiring range for each opportunity based on the impact that specific position should have on the company’s success.

The low end is based on average performance, while the high end is the result of an over achiever in the position.

The offer should be the highest number within the range based on the hiring manager’s evaluation of the candidate in light of two strong constants.

  1. 98% of star performers become stars as a function of their management and the ecosystem in which they perform.
  2. People who join for money will leave for more money.

Merit raises are then given based on that individual’s actual contribution to the company’s success, as opposed to some number from HR.

This puts most of the responsibility on the hiring manager — exactly where it belongs.

Image credit: gardener41

If the Shoe Fits: Shock and Fear in Coder Heaven

Friday, June 17th, 2016

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

5726760809_bf0bf0f558_mProgrammers in Silicon Valley are reeling.

What are they going to do?

No more clandestine recruiter calls from unicorn startups offering million dollar salaries, six figure sign-on bonuses, thousands of stock options and country club style perks.

And those graduating with CS degrees may find fewer startups bidding against each other for their services.

Not to mention layoffs. Layoff a programmer? Are you nuts?

Nope, that’s exactly what’s happening.

And, as an ex recruiter, all I can say is it’s about time.

Perhaps now candidate focus will return to the mission and the tech, instead of the dollars and bragging rights.

Because, in spite of the all the media coverage, there is a large number of programmers who don’t believe it will affect them — others, sure, but not them.

Of course, it’s hard when you’ve been the golden (mostly) boys and reality rears its ugly head.

But ask anyone in tech who has been around for awhile and they’ll tell you that change is constant and what goes up comes down — and eventually goes back up again.

Programmer jobs not excepted.

Image credit: HikingArtist

Golden Oldies: Ducks In A Row: Culture Creation

Monday, April 25th, 2016

It’s amazing to me, but looking back over the last decade of writing I find posts that still impress, with information that is as useful now as when it was written. Golden Oldies is a collection of what I consider some of the best posts during that time.

Last Monday we looked at both an oldie and current info showing that all generations want pretty much the same things from work. What has changed is the patience factor in getting some of them. There’s also no question that the the intangibles need to be part of the culture and embedded deeply in the company’s DNA. The one thing I would add to Read other Golden Oldies here.

ducks_in_a_rowA Hollister poll of 1000 people, employed and unemployed, in Massachusetts last summer asked them what factors contributed the most to their job satisfaction; the majority of responses in order were

  •     Company Culture;
  •     Opportunities for Growth;
  •     Employee Appreciation;
  •     Work/Life Balance;
  •     A good Benefits Package; and
  •     Competitive salary/pay.

Notice that pay is dead last.

As I’ve always said, “The person who joins for money will leave for more money.”

The interesting thing about this is that numbers two through four are all parts of number one, good culture. Even benefits are a function of the culture, since they reflect the company’s attitude towards its people.

Still more interesting is that the top three are totally free—they cost the company no money—rather, they are a reflection of the corporate and/or manager’s MAP. Even number four is more about management attitude than dollars and any dollars that are spent typically offer substantial ROI.

There are tons of words that you’ll hear are important in creating a good culture, but I believe that it’s a function of two basics, one a belief and the other an action resulting from it.

Belief: People are intelligent, motivated, and they genuinely want to support their company in achieving its objectives. When people know more about their job, company, industry, and how they interact, they perform their own duties better and more productively because they understand the objectives and care about the results.

Action: People are most productive when they have all the information needed to do their job efficiently. This means that all managers, from CEO down, have both the ability and willingness to produce appropriately clear communications as to where the company is going, how it’s going to get there, what’s expected of them and how it all fits together and then disburse it accurately and completely so people can do their work in a timely manner.

If you believe that

  • a key ingredient for success is a culture that recognizes employees as its most valuable (and least replaceable) asset and
  • that people are required to act with initiative and their performance is directly impacted by the quality and quantity of the information they receive
  • then you’ll understand that people seriously resent communication failures that cause them to perform unnecessary, incorrect or wasted work.

Technically, communications is an IBB (infrastructure building block) and we’ll be talking more about them later.

If I was writing this today the one thing I would add is a sense of mission; a belief, based in reality, that what they are doing has a great purpose/meaning than just generating revenue.

Flickr image credit: zedbee

If the Shoe Fits: Why People Join Startups

Friday, April 8th, 2016

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mI only partly agree with Steve Wozniak’s recent comment.

“I think the money that’s been made has attracted a different kind of people looking at technology today and saying ‘Oh my gosh, I could maybe have a startup and make a bunch of money,'” Wozniak said. “And the ones that come out of business school, money’s the priority. For the ones that come out of engineering school, being able to accomplish and design things that didn’t exist before is their priority.”

Woz gives too much credit to the engineers.

It’s not just the biz school crowd that’s focused on the bucks.

The money bug has bit a good number of techies, too.

Years ago, no matter their role, people joined startups because they craved the bleeding edge, whether software, hardware or services.

This was true of both tech and non tech. In the words of Star Treck, they wanted “to go where no man has gone before” — or at the least go there differently.

Today the journey is more about getting rich and/or making connections for the future.

For decades I’ve told clients, “The person who joins your company for money/stock/perks will leave in a heartbeat for more money/stock/perks.”

That hasn’t changed, if anything it’s just gotten more so.

Image credit: HikingArtist

Entrepreneurs: Tuft & Needle’s Bootstrapped Success

Thursday, January 28th, 2016


You hear it all the time, “build a product that solves your own problem.”

That’s exactly what JT Marino and Daehee Park, both software engineers, did when they quit their jobs to create mattress company Tuft & Needle, seeding it with $3000 from each each of them.

They didn’t take venture money because they wanted to build the company for the long term and borrowed the money they needed to grow.

“The reason why we turned them down all those times is because we figured it would change the way we operate as a company.”

Instead, Marino, 30, and Park, 27, took out a $500,000 loan, at a rate of 10%, from Bond Street, one of the new breed of alternative lenders, in order to keep control of the company and continue doing things their own way.

They built the business online — no showrooms and no salespeople.

No hassles returning a mattress you hate. And, perhaps most important, no gimmicks on prices, which range from $350 for a twin to $750 for a king.

They’ve considered other products, even developed a few, but with no investors to force them to expand, they are focusing on the mattress business.

Is it paying off? Absolutely, so no problem meeting their loan payments.

By its first year in business, Tuft & Needle had reached $1 million in revenues. And then it just kept growing, hitting $9 million in 2014, then $42 million in 2015. This year, Marino and Park expect revenues to reach between $125 million and $225 million, a three- to five-fold increase over last year. And, yes, it’s profitable.

However, recognizing that not everyone, especially older buyers, are comfortable buying a mattress online, they are opening their first retail store at 637 King Street in San Francisco (where else?) — first and possibly last.

“It could very well be our first and last store, or it could be the first of many,” Marino says.

That’s the priceless reward for bootstrapping.

Call your own shots, experiment as you choose and stay true to your values.

Image credit: Tuft & Needle

The Most Valuable Gifts: Time and Books

Wednesday, December 16th, 2015


During the holiday media gift frenzy it is the truly wise who remember that the best gifts aren’t electronic or screen-dependent.

The very best aren’t paid for with money, either, but with a much more precious currency — time.

Time to love.

Time for friendship.

Time to play.

Time to talk and laugh together — F2F

Food cooked and shared together at (someone’s) home.

Not just during the season, but scattered throughout the year like diamonds on a velvet cloth or stars in a clear night sky.

Along with time, the most wonderful gift you can give a child is a love of books — real books.

Real because reading a printed page affects the brain in different and better ways than words on a  screen.

Whether your child reads or you read to them start with the books from Lost My Name, which creates personalized books using your child’s name.

Lost My Name — founded in 2012 by Asi Sharabi and Tal Oron — creates customised books based around a child’s name. The books are created and ordered online, then sent out to printing partners around the world. (…)  “As a technology company, we’re very proud to be innovating on one of the oldest media formats in the world – the physical book,” said Oron. “We think technology equals possibility. And possibility is the dominant currency in wonderful, nostalgic storytelling, where the book’s job is to inspire children to believe in adventure; that anything can happen if they imagine it. As screens become more and more seductive to children, there is an increasing need to inject more magic into books – to find new ways to spark their imagination.”

Even better are the books by Randall Munroe, former NASA roboticist, who specializes in science humor and whose 2014 book, “What If?: Serious Scientific Answers to Absurd Hypothetical Questions,” became an unexpected mainstream hit.

Munroe believes that anything can be explained simply using normal language and proves it in his new book (which is a good choice for anyone on your gift list).

“Thing Explainer: Complicated Stuff in Simple Words.” The oversized, illustrated book consists of annotated blueprints with deceptively spare language, explaining the mechanics behind concepts like data centers, smartphones, tectonic plates, nuclear reactors and the electromagnetic spectrum. In his explanations, Mr. Munroe avoided technical jargon and limited himself to the 1,000 most commonly used words in the English language. This barred him from using words like helium and uranium, a challenge when describing how a rocket ship or reactor works.

For book links and great comics (sample above; chosen for enabling holiday restraint) visit Munroe’s site.

Books are good for adults, too. Check out this month’s Leadership Development Carnival for critiques of books that run the business gamut from being a better boss to upping your game wherever you are in your career.

Another great thing about real books is what you can do when you are done reading them.

  • Some you’ll want to keep for your own library;
  • some you’ll share with friends, colleagues and those you mentor; and
  • the rest can be donated to your local library.

Happy reading! Happy discovery!!

Image credit: Randall Munroe

If the Shoe Fits: Revenue Makes It Real

Friday, October 30th, 2015

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mYou build an app that is greeted with raves.

You have 15 million installs and counting.

You have 36 talented, motivated employees.

You raise 35 million dollars from top investors, including Draper Fisher Jurvetson.

What’s your next step?

You shut it down before you run out of money.


Because you can’t identify a viable business model.

In short, you can’t figure out a way to generate revenue.

That’s what just happened to Everything.me.

The startup had seasoned founders and did everything right.

The investors were smart, savvy and experienced.

But one thing slipped by everyone’s radar.

No clear, or even murky, path to revenue.

Not profit.

You can live without profits, but you die without revenue.

Lesson learned: no vision/business plan is complete without a viable way to make money.

Image credit: HikingArtist

People Come and People Go

Wednesday, October 14th, 2015


The media loves making it a big deal when people leave companies, especially if

  • they have been there a long time;
  • they have a high profile/big title; or
  • the company is one of the golden ones, e.g., Apple, Google, Facebook, Uber, Salesforce, etc.

Not counting layoffs or termination, why do good people leave good companies?

Actually, it’s not so much where they are leaving from as it is what they are going to.

No matter how great the company; how talented the boss; how good the career path; at some point people just want to see what’s on the other side of the mountain.

That isn’t a reflection on the current company/boss/career, it’s a reflection of the natural desire to challenge/test oneself in a new environment.

That doesn’t always mean starting their own company.

It simply means they found something attractive enough that they decided to pursue it — and it is rarely found in compensation..

One of the few constants I’ve found through decades of dealing with people in the workplace is that those who join a company for compensation (money/stock/perks) will leave for more compensation.
However, this is a concept that seems beyond most media understanding — or perhaps it’s not what the public wants to hear.

So the next time you see one of those stories, think “where is she going” as opposed to “why is she leaving.”

Would you hire someone who was fired?

Join me tomorrow for the reasoning behind the unexpected answer.

Flickr image credit: BK

Ducks in a Row: the Dark Side of Adam Smith

Tuesday, September 1st, 2015

https://www.flickr.com/photos/24874528@N04/17187535692/Gallup regularly polls workers around the world to find out. Its survey last year found that almost 90 percent of workers were either “not engaged” with or “actively disengaged” from their jobs. Think about that: Nine out of 10 workers spend half their waking lives doing things they don’t really want to do in places they don’t particularly want to be.

Pretty sad, but what happened to bring us to this sorry state?

Not what, but who.

Disengagement was born in 1776 with Adam Smith wrote Wealth of Nations, became the father of industrial capitalism, and gave birth to the belief that “people were naturally lazy and would work only for pay.

The more that philosophy was embraced over the centuries the more it became a self-fulfilling prophecy — in other words, people live up or down to expectations.

An excellent essay by Barry Schwartzauga, professor of psychology at Swarthmore College, provides great insight to how much damage has been done by this one assumption.

When money is made the measure of all things, it becomes the measure of all things.

To be sure, people should be adequately compensated for their work. (…) But in securing such victories for working people, we should not lose sight of the aspiration to make work the kind of activity people embrace, rather than the kind of activity they shun.

For decades, study after study and survey after survey have placed money (assuming a living wage) around number five on what’s important to workers.

How can we do this? By giving employees more of a say in how they do their jobs. By making sure we offer them opportunities to learn and grow. And by encouraging them to suggest improvements to the work process and listening to what they say.

Work that is adequately compensated is an important social good. But so is work that is worth doing. Half of our waking lives is a terrible thing to waste.

Autonomy. Challenge. Learning and growth. The chance to make a difference. Compensation.

If you want your people engaged then provide them reasons to engage.

If not, just pay them and don’t complain.

Flickr image credit: Airwolfhound

If the Shoe Fits: Understanding the Gender Fuss

Friday, July 31st, 2015

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mThis post is for all the male founders out there who don’t understand the fuss about diversity, especially gender diversity.

After all, why bother finding female talent when it’s so much easier to find male talent?

What difference does it really make? (click “Resources”)

Venture-backed companies with females as founders or executives are more likely to go public, turn a profit or be sold at a steep price (source: DowJones)

Globally, companies with diverse executive boards enjoy significantly higher earnings and return on equity. (source: DowJones)

Download the Report

The difference is money, stupid; it’s the money.

Hat tip to KG for sending me the link.

Image credit: HikingArtist

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