Google cuts Founders' Awards

Interesting tidbit in a July 2007 Fortune article, "Close to the Vest", about retention at Google:

Early on Page and Brin gave "Founders' Awards" in cash to people who made significant contributions. The handful of employees who pulled off the unusual Dutch auction public offering in August 2004 shared $10 million.

The idea was to replicate the windfall rewards of a startup, but it backfired because those who didn't get them felt overlooked. "It ended up pissing way more people off," says one veteran.

Google rarely gives Founders' Awards now, preferring to dole out smaller executive awards, often augmented by in-person visits by Page and Brin.

It is not surprising that the Founders' Awards would piss people off. No matter how it was done, I am sure the decision of who received the award seemed arbitrary to many of those who did not get it.

See also my May 2007 post, "Management and total nonsense", where I reviewed a management book by Jeffrey Pfeffer and Robert Sutton and quoted them as saying:

People are more likely to ... see themselves more positively than others see them [and] believe they are above average or not recognize their lack of competence.

People who receive a smaller reward than they expect routinely resent the organization.

See also my April 2006 post, "Early Amazon: Just do it", where I said:

While merit pay sounds like a great idea in theory, it seems it never works in any large organization. It appears to be impossible to do fairly -- politics and favoritism always enter the mix -- and, even if it could be done fairly, it never makes people happy.

Instead, compensation should be high but basically flat. Merit rewards should focus on non-monetary compensation.

Maybe even an stinky old shoe.

[Fortune article found via Marc Andreessen]

Update: See also Dare Obasanjo's thoughts on Marc Andreessen's post, especially Dare's conclusions on "significantly differentiated financial rewards for your 'best employees'."

Dare also points to an April 2000 post from Joel Spolsky called "Incentive Pay Considered Harmful". Note that Joel concludes that there should be no merit-based rewards at all, not even stinky old shoes.