A Grounded Mentality On Year-End Compensation
This post is prompted by a number of conversations I’ve had over the past several weeks with friends and colleagues in the technology and investment industries. As year-end approaches, the primary topic of these discussions has been how they should approach compensation, bonus, and promotion discussions in their respective situations. For the most part, we’re in a pretty good cycle. The stock market is up. The IPO window is open. Technology is hot. Things are good. For the most part, these specific individuals can make a strong claim that they have performed really well. And, for the most part, they come with the mentality that they expect to get rewarded generously for their performance. At the highest level, I don’t have any issue with this point of view.
That being said, my guidance in these conversations is rarely about money, but about mentality.
First and foremost, we need to remember that it’s easy in the good times for us to take too much credit for our success. While undoubtedly we may deserve a lot of credit, in reality, our successes are probably dependent on other factors as well. Our success probably begins with someone giving us the opportunity to be successful, even when it might not have been obvious that we deserved that opportunity. There are probably many people around us who have contributed to that success – whether professional colleagues, family and friends that supported us, or that one person whose vote of confidence made all the difference. Our professional success almost always has some dependency on the assets of the company that we work at – assets which we may have largely inherited. Especially in the investment business, our success is also influenced by external factors completely out of our control like economic growth, Fed policy, the stock market, and consumer sentiment. Before we claim full credit for our success and expect to get paid accordingly, it’s important to be grounded in the reality that our success is never solely our own. It would be a healthy exercise to thank some of the individuals that helped us achieve our successes this year, before going into some of these compensation discussions, to help get into the right frame of mind.
Secondly, we need to maintain perspective. In the good times, especially in this business, it’s important to remember that bad times are inevitable. None of us will have careers without hard times. Therefore, we need to remember to represent ourselves during the good times in a way that we will still be proud of and not regret when the bad times come. If we claim all of the credit and operate with a sense of entitlement during the good times, it’s very easy to erode the foundation of support from longstanding relationships that we all need to sustain us through the bad times. Once we lose that support, we have lost something that is far more valuable than any near-term compensation. It’s hard to see that when we’re in the moment, but it’s the most obvious observation in hindsight.
Finally, we need to remember that in the long run, it’s not money that will bring the most happiness. The fulfillment of increased income is typically a fleeting fulfillment. It’s often other aspects of a job that drive a person’s joy in their careers. It’s working with people we enjoy and respect. It’s being in a position to learn and grow as a person. It’s about being part of something we value. It’s about having fun and contributing. It’s about being able to achieve professionally while still being able to be the person we want to be at home and with our families. If we’re fortunate enough to be in a situation where all of the intangibles line up for our enduring professional fulfillment, it would be unfortunate to compromise that over something like money that will never quite fulfill us.
That being said, this doesn’t excuse people making compensation decisions from being generous with the talented people around them. They absolutely should be. This is more of a reminder for us not to lose ourselves in near-term financial decisions when over the long-run, so many other things matter more.