One Million for Me and None for You

How vulnerable are your leadership skills to self-deception?

Imagine you're the President of a thriving technology company. You work to attract the best and brightest students for summer internships. Your goal is to evaluate their potential for permanent positions.

One day one of these interns knocks on your door with an idea. You decide to implement it and the idea ultimately adds a million dollars to your company's bottom line. This isn't a hypothetical example, but is instead a true story.

How should you reward this employee?

First, consider the legal angle. You agreed to compensate the intern for their work. You owe them nothing more or nothing less than the agreed upon amount, regardless of their performance. As the business owner, you're burdened with the risk and are fully entitled to the rewards. From this standpoint, the million dollars is all yours.

So what happened in the real life version of this story? Believing that performance bonuses are problematic, the President was against providing a monetary reward. Instead he offered the student shares of company stock contingent upon him accepting a permanent position at graduation.

The President was open about the fact that the stock, issued by a private company, was "hard to value". Not surprisingly, the employee declined the offer.

Of course, this isn't a performance bonus issue at all, but rather an ethical one. At the time of the compensation agreement, no one anticipated the extraordinary results that would dramatically exceed even the most optimistic expectations.

It's under just such unexpected circumstances that leaders have the duty to seek an equitable solution and do the right thing.

There's also a practical consideration. Given the intern's demonstrated abilities, what further contributions might he have made if the offer had been different and he'd accepted a permanent position?

Was the President's offer based on sound business judgment or self-deception? What would you have done?

Comments

[Susan Mazza]

This points to a dilemma in the way many organizations have come to think about and approach compensation - it is all too often designed as a function of time, experience, and level more often than results.

I once got a $9 bonus at the end of a year for a referral that led to a 100k contract. It was a very sophisticated formula. Guess how many referrals I shared after that?

[Alan Dix]

I think I would have done more to ensure that the intern was motivated to remain with the company. Obviously in hindsight, but can you imagine losing that kind of talent to the competition? Or how many more million dollar ideas that kid is going to have with a few years of industry experience? He'll probably end up buying the company he used to be an intern with.
@dixbert