1 00:00:00,000 --> 00:00:08,000 If you choose to add performance conditions to your Westing, please ensure that the performance 2 00:00:08,000 --> 00:00:11,920 matrix is simple and easy to understand. 3 00:00:11,920 --> 00:00:16,480 You could link them to company performance or individual performance or a combination 4 00:00:16,480 --> 00:00:17,960 of the two. 5 00:00:17,960 --> 00:00:23,720 For senior roles, it is better to use either only company performance parameters or if 6 00:00:23,720 --> 00:00:30,640 you should use individual performance, assign a much higher weight to the company performance. 7 00:00:30,640 --> 00:00:33,280 For junior roles, you might do the opposite. 8 00:00:33,280 --> 00:00:38,640 Either only individual performance or a much higher weight attached to it. 9 00:00:38,640 --> 00:00:43,380 Depending upon your long-term objective, you might even consider everyone linked only 10 00:00:43,380 --> 00:00:45,560 to company performance. 11 00:00:45,560 --> 00:00:51,200 The message you send out here is that the fortunes of everyone ultimately depend upon 12 00:00:51,200 --> 00:00:53,240 the fortunes of the company. 13 00:00:53,240 --> 00:00:56,160 So we all sink or swim together. 14 00:00:56,160 --> 00:00:58,500 We all have one not-star. 15 00:00:58,500 --> 00:01:03,760 Let us focus on how the company performs overall and not how you perform individually. 16 00:01:03,760 --> 00:01:10,880 Again, this will depend upon how your work is structured within your company, the interdependencies 17 00:01:10,880 --> 00:01:16,640 it has and the work culture you have decided to create based upon your vision. 18 00:01:16,640 --> 00:01:22,520 You may consider a scale or ranges of performance rather than a binary performance matrix. 19 00:01:22,520 --> 00:01:25,880 A binary matrix would mean a yes or a no. 20 00:01:25,880 --> 00:01:32,320 If we hit this number, the options west, if we are shot by even one, nothing rests. 21 00:01:32,320 --> 00:01:37,840 A range, on the other hand, means if we reach between this and this, then 100% of those 22 00:01:37,840 --> 00:01:39,380 options rest. 23 00:01:39,380 --> 00:01:46,000 If we reach between 90 and 100% of that number, then only 80% options rest and so on. 24 00:01:46,000 --> 00:01:51,500 You should have a reasonable minimum below which nothing rests. 25 00:01:51,500 --> 00:01:55,220 You may not waste all the options based on performance. 26 00:01:55,220 --> 00:02:00,540 Some could waste only on tenure or continued employment with the company. 27 00:02:00,540 --> 00:02:03,860 You see now we are talking about multiple layers. 28 00:02:03,860 --> 00:02:08,620 The challenge is to balance fairness with simplicity. 29 00:02:08,620 --> 00:02:11,100 So try a few alternatives. 30 00:02:11,100 --> 00:02:16,620 Consider how each fits with your long-term objective and then make a decision. 31 00:02:16,620 --> 00:02:18,580 Here are a few examples. 32 00:02:18,580 --> 00:02:21,100 Let's start with the simplest. 33 00:02:21,100 --> 00:02:26,860 Standard options granted with the 10, 20, 30, 40 Westing but all options west only on 34 00:02:26,860 --> 00:02:30,460 tenure, no performance condition. 35 00:02:30,460 --> 00:02:34,980 Second, all options west on performance. 36 00:02:34,980 --> 00:02:42,140 Third, 100 options with the 10, 20, 30, 40 Westing but 70% options west on performance 37 00:02:42,140 --> 00:02:45,100 and 30% west on tenure. 38 00:02:45,100 --> 00:02:52,260 So after the first year, when the first 10 options are due to west, three of them will 39 00:02:52,260 --> 00:02:54,940 west automatically due to tenure. 40 00:02:54,940 --> 00:03:00,780 There is the balance seven would west based upon some performance parameters. 41 00:03:00,780 --> 00:03:04,940 Now that performance condition could have more layers. 42 00:03:04,940 --> 00:03:09,180 Is everything linked only to the company performance or is it also split between company 43 00:03:09,180 --> 00:03:12,820 and individual performance in a certain proportion? 44 00:03:12,820 --> 00:03:18,100 What weights are assigned to company performance versus individual performance? 45 00:03:18,100 --> 00:03:22,980 And the last layer is the performance matrix structure. 46 00:03:22,980 --> 00:03:28,500 Is it a yes, no binary kind of a matrix or is it a range matrix? 47 00:03:28,500 --> 00:03:34,500 So you could have 10 options due to west in the first year but seven of them west based 48 00:03:34,500 --> 00:03:41,060 on performance which is then split as 50% individual and 50% company performance. 49 00:03:41,060 --> 00:03:46,220 But individual performance has a scale that says that if you achieve the highest rating 50 00:03:46,220 --> 00:03:57,140 A, all of that 50% chunk, if B, then 75% of those 50% options west and so on. 51 00:03:57,140 --> 00:04:03,100 The company performance could have a similar range with respect to company parameters. 52 00:04:03,100 --> 00:04:06,420 Be careful about adding layers. 53 00:04:06,420 --> 00:04:11,940 Add new layers only when you are absolutely convinced that you must do it because it 54 00:04:11,940 --> 00:04:17,260 furthers your long term objective or the culture you are trying to create. 55 00:04:17,260 --> 00:04:19,940 Simple is always more beautiful. 56 00:04:19,940 --> 00:04:23,340 You could also create milestone options. 57 00:04:23,340 --> 00:04:29,140 As the name suggests, these do not west annually or quarterly but west only on meeting a certain 58 00:04:29,140 --> 00:04:32,660 milestone or an event occurring. 59 00:04:32,660 --> 00:04:37,980 This might sound very interesting but be very very careful about these. 60 00:04:37,980 --> 00:04:44,700 Use them only if you can define your milestone really, really, clearly and objectively. 61 00:04:44,700 --> 00:04:49,020 The milestone need not be the achievement of an entire product or the discovery of a 62 00:04:49,020 --> 00:04:50,340 molecule. 63 00:04:50,340 --> 00:04:56,900 It is a milestone so should be a certain critical and a very clearly definable stage you reach 64 00:04:56,900 --> 00:04:59,220 in your journey. 65 00:04:59,220 --> 00:05:03,220 Creative milestones are better than subjective milestones. 66 00:05:03,220 --> 00:05:09,300 So you could west simply based on continued employment or west based on performance. 67 00:05:09,300 --> 00:05:14,340 Choose whatever fits best with your vision and the culture you wish to create.