Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead

by Laszlo Bock

To make these kinds of extreme rewards work, you need two capabilities. One is a very clear understanding of what impact is derived from the role in question (which requires a complementary awareness of how much is due to context: Did the market move in a lucky way? How much of this was a result of a team effort or the brand of the company? Is the achievement a short- or long-term win?). Once you can assess impact, you can look at your available budget and decide what the shape of your reward curve ought to be. If the best performer is generating ten times as much impact as an average performer, they shouldn’t necessarily get ten times the reward, but I’d wager they should get at least five times the reward.180 If you’re adopting a system like this, the only way to stay within budget is to give smaller rewards to the poorer performers, or even the average ones. That won’t feel good initially, but take comfort in knowing that you’ve now given your best people a reason to stay with you, and everyone else a reason to aim higher. The other capability is having managers who understand the reward system well enough that they can explain to the recipient, and to others who might ask if word were to get out, exactly why a reward was so high and what any employee can do to achieve a similar reward.