Google Inc.

is showing one reason why its such a wildly successful internet company: Its using money the way it should be usedto motivate people in a meaningful way. Last month, two teams of Google employees were handed $12 million of free company shares, with more so-called Founders Awards planned for other work groups. By giving the stock, the Mountain View, Californiabased Google is seeking to reward, motivate and retain employees. The Founders Award is designed to give extraordinary rewards for extraordinary team accomplishments, Google co-founders Sergey Brin and Larry Page said in their first letter to shareholders. A general rule of thumb is that the team accomplished something that created enormous value for Google. In my graduate psychology training, I was taught that for money to motivate, an employee must: understand what performance is being measured and rewarded; have substantial impact on the performance measure chosen; and be given the reward quickly after his performance has been assessed. Thats the in-school thinking. The out-of-school reality for most companies is: An employee may know what performance is being measured, yet he has no serious input on how its being done, and frequently the reward is given out late, undermining the link between performance and that reward. Why the wrong way? So why dont more companies do things the right way, or the Google way, with rewards targeted at smaller team performance and delivered at just the right time? First, we have the bureaucratic inertia of many human resources departments, where passing out rewards to some people and not to others is simply an untidy way of doing business. And giving rewards at other than year-end compounds the paperwork load. Second, although the usual way is for underlings to envy their superiors higher pay, doing special things for special teams at special times, as Google has done, turns things upside down. Now its superiors envying subordinates. I was a consultant to Mobil Corp. (then an independent company with its headquarters in New York) in the mid-1970s. Shortly after the 1973 Israeli-Arab war and the subsequent oil embargo, the price of gasoline soared and rationing was imposed. Suddenly, the hunt was on all over the world for more oil reserves (an activity that isnt unfamiliar today). Mobil was having trouble keeping its good geologists, so it offered the best of them a retention award. The geologist was told that if he stayed until age 65, he would receive $1 million on top of his pension. In 1974, $1 million was nothing to sneeze at. Unforgettable The plan worked superbly, until the companys top executives noted that they werent getting retention awards. Arguing that they needed to be retained just as much as some rock hound, they promptly moved to

remedy this grave injustice. Eventually, the program was dropped because too many people were being offered retention awards. During my 20-year consulting career, I rarely encountered a company like Google, one that was serious about motivating employees. Yet theres one exception Ill always remember. It involved an outstanding senior executive who was a workaholic. This executive almost never took a vacation and could be seen laboring in the office every Saturday and a lot of Sundays. Understandably, his marriage was headed for the rocks. On top of being a workaholic, the executive was a bit of a miser. He lived quite modestly, drove an old car and put almost every bit of his disposable income into investments. (Another bad omen for his marriage.) His companys CEO, reasoning that the issue wasnt so much motivation as retaining the executive and helping him have a tranquil home life, came upon an ingenious strategy. The Ritz and Hermes He called in the executive, complimented him effusively on the fantastic work he had been doing and told him he was giving him a bonus on the spot (the spot being months before the end of the companys fiscal year, when bonuses were normally handed out). In contrast to most companies bonuses, this one wasnt in cash. It consisted of: A round trip to Paris on the Concorde for the employee and his wife. A suite at the Ritz for a week. A $20,000 gift certificate for the executives wife at Hermes. And a cash payment to handle the executives taxes on all those goodies. Some time later, the CEO told me that his executive was more wedded than everto the company and his wife. For her part, she seemed to be encouraging him to work even harder for the next trip to Paris. That box All this illustrates that for money to motivate, companies need to think more out of that old box, if not blow it up. And the message should be drummed home that its perfectly acceptable for someone to receive a special award that isnt conferred on that persons boss or bosses boss. Companies usually do reward bosses over underlings, yet there is something refreshing about a person making more than his boss, even if it only happens once in a while. Just think of the talk that will be taking place around the water cooler.