San Francisco has lots of tall buildings, so we need those cool ladder
fire trucks that you see in the cartoons. There is a fireman in the
front seat and another with a steering wheel in the back. As one drove
by on an emergency call my nephew asked me who was in charge steering
the truck. It took me a second, but my answer was, “both.”
As so many things tend to do, this immediately popped into my mind
when discussing performance-based equity compensation with a client.
Like the firemen, participants in a performance equity plan are all
working to get to the same place. They generally follow a similar path.
And, like the firemen, each key player must steer their own set of
wheels and depend on everyone else to do the same.
The fireman in front of the truck is like your executives. He must
know the direction, be able to change course when the path is blocked
and pay attention to traffic and obstacles, all while moving forward as
fast as they can safely. He is focused ahead and implicitly trusts that
the guy in the back is doing what he must to keep the truck on the road.
The fireman in the back of the truck must depend on the guy (or gal)
in the front to aim him toward his destination. But, it is just as much
his responsibility to get the truck to the fire on time. He must also be
able to make decisions on the move. The front of the truck may choose
to drive on the wrong side of the road. The fireman in back must make
that work. The driver may choose to make an unfamiliar, or unexpected
turn. The fireman in back is accountable for making sure his half of the
truck navigates the turn safely.
Consider this in the context of your company. Just like everyone
can’t be in charge of driving the truck, everyone in your equity plans
should not be measured against the same metrics. The key goal of the
firemen is the same, just like the key goal of your employees (in your
employees’ case it is probably attaining corporate success, not putting
out fires). The path for getting to the goal must be blazed by those at
the front (or the top). Everyone else must be trusted to follow their
own path along this trail.
It is critical to remember that the fire department drills and trains
nearly every day. They also work in close teams, spending time to get
to know each other. Their trust is built over a thousand small and a few
enormous moments. Sometimes we forget the practice and small stuff and
focus only on the enormous moments. We would all do our companies and
our employees a favor if we considered firemen as we build, design and
operate complex performance plans.
Let’s face it most of us wanted to be firemen when we grew up
anyway. Now’s your chance to put your childhood dreams into action!
Dan Walter is the President and CEO of Performensation
an independent compensation consultant focused on the needs of small
and mid-sized public and private companies. Dan’s unique perspective and
expertise includes equity compensation, executive compensation,
performance-based pay and talent management issues, Dan is on the board
of the National Center for Employee Ownership, a partner in the ShareComp virtual conferences and the founder of Equity Compensation Experts
a free networking group. Dan is frequently requested as a dynamic and
humorous speaker covering compensation and motivation topics. Connect
with him on LinkedIn or follow him on Twitter @performensation.