Sunday, October 14, 2007

Deferred Gratification

There is considerable research about the way in which humans tend to prefer immediate gratification over deferred reward. Just try offering a child a choice between one candy now, or two candies in 15 minutes. The choice is almost always immediate gratification.

Having had the opportunity to receive share options while negotiating employment contracts, I have always tried to take the more cerebral approach and defer immediate compensation (salary) for the larger potential payoff of stock appreciation. Sadly, my track record has been 1-3 so far, with the options expiring worthless for various reasons.

So it was with considerable wariness that I approached the decision the last time it was required. I still wanted the options, but decided to balance things more to the immediate gratification side.

Too bad, the options actually paid off this time.

Apart from the financial gain, which is always welcome, the more important result has been the feeling of ownership and the resulting subtle modification to behaviour. It is really hard to talk about "them" when you are an owner. If more companies understood the sense of inclusion and responsibility that ownership brings, there would be a lot more empowered and committed employees.

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