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| If you choose to add performance conditions to your Westing, please ensure that the performance | |
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| matrix is simple and easy to understand. | |
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| You could link them to company performance or individual performance or a combination | |
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| of the two. | |
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| For senior roles, it is better to use either only company performance parameters or if | |
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| you should use individual performance, assign a much higher weight to the company performance. | |
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| For junior roles, you might do the opposite. | |
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| Either only individual performance or a much higher weight attached to it. | |
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| Depending upon your long-term objective, you might even consider everyone linked only | |
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| to company performance. | |
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| The message you send out here is that the fortunes of everyone ultimately depend upon | |
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| the fortunes of the company. | |
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| So we all sink or swim together. | |
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| We all have one not-star. | |
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| Let us focus on how the company performs overall and not how you perform individually. | |
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| Again, this will depend upon how your work is structured within your company, the interdependencies | |
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| it has and the work culture you have decided to create based upon your vision. | |
| 18 | |
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| You may consider a scale or ranges of performance rather than a binary performance matrix. | |
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| A binary matrix would mean a yes or a no. | |
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| If we hit this number, the options west, if we are shot by even one, nothing rests. | |
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| A range, on the other hand, means if we reach between this and this, then 100% of those | |
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| options rest. | |
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| If we reach between 90 and 100% of that number, then only 80% options rest and so on. | |
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| You should have a reasonable minimum below which nothing rests. | |
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| You may not waste all the options based on performance. | |
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| Some could waste only on tenure or continued employment with the company. | |
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| You see now we are talking about multiple layers. | |
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| The challenge is to balance fairness with simplicity. | |
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| So try a few alternatives. | |
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| Consider how each fits with your long-term objective and then make a decision. | |
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| Here are a few examples. | |
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| Let's start with the simplest. | |
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| Standard options granted with the 10, 20, 30, 40 Westing but all options west only on | |
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| tenure, no performance condition. | |
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| Second, all options west on performance. | |
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| Third, 100 options with the 10, 20, 30, 40 Westing but 70% options west on performance | |
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| and 30% west on tenure. | |
| 38 | |
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| So after the first year, when the first 10 options are due to west, three of them will | |
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| west automatically due to tenure. | |
| 40 | |
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| There is the balance seven would west based upon some performance parameters. | |
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| Now that performance condition could have more layers. | |
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| Is everything linked only to the company performance or is it also split between company | |
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| and individual performance in a certain proportion? | |
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| What weights are assigned to company performance versus individual performance? | |
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| And the last layer is the performance matrix structure. | |
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| Is it a yes, no binary kind of a matrix or is it a range matrix? | |
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| So you could have 10 options due to west in the first year but seven of them west based | |
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| on performance which is then split as 50% individual and 50% company performance. | |
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| But individual performance has a scale that says that if you achieve the highest rating | |
| 50 | |
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| A, all of that 50% chunk, if B, then 75% of those 50% options west and so on. | |
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| The company performance could have a similar range with respect to company parameters. | |
| 52 | |
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| Be careful about adding layers. | |
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| Add new layers only when you are absolutely convinced that you must do it because it | |
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| furthers your long term objective or the culture you are trying to create. | |
| 55 | |
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| Simple is always more beautiful. | |
| 56 | |
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| You could also create milestone options. | |
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| As the name suggests, these do not west annually or quarterly but west only on meeting a certain | |
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| milestone or an event occurring. | |
| 59 | |
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| This might sound very interesting but be very very careful about these. | |
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| Use them only if you can define your milestone really, really, clearly and objectively. | |
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| The milestone need not be the achievement of an entire product or the discovery of a | |
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| molecule. | |
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| It is a milestone so should be a certain critical and a very clearly definable stage you reach | |
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| in your journey. | |
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| Creative milestones are better than subjective milestones. | |
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| So you could west simply based on continued employment or west based on performance. | |
| 67 | |
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| Choose whatever fits best with your vision and the culture you wish to create. | |