Offering equity as part of the overall compensation is an excellent way to increase employee commitment.
Read time: less than a min.
Most public companies apply this practice as part of their hiring and retention strategy. With that, one becomes an owner and an employee.
The expected outcome of this, I suppose, is to generate an ownership mentality, encouraging employees to operate as an owner – maximize efficiency and profitability.
However, is it possible that this approach could result in opposing interests?
As an employee, one expects fair and healthy compensation, job security and a conducive work environment. In contrast, an owner desires to keep the overheads to a minimum and increase efficiency and profitability to the maximum.
Is there a conflict here? Who wins the tug-of-war?
Everything boils down to what’s at stake.
The metrics that are tied to one’s compensation promote desired or undesired behaviour. Essentially, what is the core livelihood of an individual linked to will exert the necessary behaviour.
Our decisions and behaviour rarely go against what’s at stake.
Now stretch this thought to other aspects of our lives where we end up competing with ourselves.
The answer to those conflicts lie closer than we think – What is at stake?
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With gratitude, until next week.