Exercise Your Options
Offering stock options could help you nab the most desirable employees.
When is a whole pie worth less than a piece? If your business is
that pie and you're holding all of it, you may be hindering the
company's growth, making it worth less than it could be.
That's because a huge trend today--in companies as diverse but
as successful as Microsoft and Starbucks--is the distribution of
slices of the business to employees. "There are plenty of
strong reasons to give employees an equity stake," says David
Lewin, a professor at the University of California, Los
Angeles' Anderson Graduate School of Management. "Every
employee should have some compensation at risk. They'll share
in the downside and in the upside."
This thinking is big news for small companies. Until just a few
years ago, only the senior-most executives in the majority of
companies were offered equity stakes. What changed all that?
Entrepreneurial businesses, mainly in high-tech industries, began
making stock options available to all levels of staff. Suddenly,
stories of Silicon Valley office managers worth several million
dollars began to emerge--and that turned options into a very
powerful human resources tool. The payoffs have been obvious, with
many companies that are most generous in options awards--notably
Microsoft--emerging as growth pace-setters.
Robert McGarvey writes on business, psychology and management
topics for several national publications. To reach him online with
your questions or ideas, e-mail rjmcgarvey@aol.com
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