Subscribe to Inc. magazine
HUMAN RESOURCES

The Silicon Valley Effect

Advertisement

Blame it on the Internet. Actually, blame it on the explosion in Internet-company stocks, which has spawned a new class of equity-hungry managers. "This is what the trend from California has done for all of us," says Jeffrey Davis, founder and CEO of Boston-area management-consulting firm Mage. "Stock options are larger, and they have a shorter life span. People are jumping around for deals that will cash in quicker."

In a world where Jim Barksdale, the CEO of Netscape, can cut his annual pay to a dollar yet have stock holdings worth $122 million in the following year, executives everywhere are looking for some wealth-creating mechanisms of their own. Why has the effect spread to so many industries? Because everyone wants to be a success story, according to Charley Polachi, managing partner of executive recruiter Heidrick & Struggles/Fenwick Partners, in Lexington, Mass. "I just had a guy I was pitching for a job ask me, 'Is this one of those "dot-com" opportunities?' " he says. "That's what it's come to."

National media coverage of the Silicon Valley-bred stock-option millionaires has raised the bar in all industries. "When Gary Eichhorn got a million-dollar signing bonus to become CEO of Open Market, everyone heard about it," says Polachi. "Now all the candidates talk about getting 'units of Eichhorn.' "

Before being recruited in 1995 by Open Market, a maker of Internet software in Burlington, Mass., Eichhorn was a general manager for Hewlett-Packard in the Boston area. He says all the focus on money and options misses the big picture--in fact, his big bonus only partly compensated for benefits lost when he left HP.

"I'm glad I can make a contribution to recruiting folklore," he says, "but I think it's kind of silly. Remuneration has to be fair to the individual and the company--it's a base to be covered--but there's other stuff that really matters at the end of the day."

Better than cash, Eichhorn got a chance to run a small, agile business and to keep his family in New England. "My wife is from this area, and my kids are in a good environment," he says. "Plus, I had an opportunity to be a CEO. I thought it would be a tremendous learning experience, and it has been."

The experts agree: the promise of good work can be more powerful than the lure of stock options. "People will be attracted by doing interesting things and by working with people they want to work with," says management consultant David Nadler, chairman of the New York City-based Delta Consulting Group. "The money has to be in the ballpark. But I've seen clients and friends turn down larger amounts of money based on how they will feel every day when they get up to go to work."

Last updated: Jun 1, 1999




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: