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Harvest What You Sow

November 10, 2011

I stumbled across this one while I was avoiding the inevitable boring news.  Hey, I know we liked you earlier, but you’re not pulling your weight… can you give back what I gave you? (Go read the whole thing, its short.)

A published report says Zynga CEO Mark Pincus wants some of the online game company’s early employees to give back stock they own ahead of the company’s initial public offering.

A report Thursday in The Wall Street Journal says that Pincus, who gave out stock freely to keep top talent early on, developed “giver’s remorse.”

By the way, if you don’t know Zynga, you likely know (and block) some of its more popular offerings such as Mafia Wars and Farmville.  The point is that the CEO noticed that employees hired later were doing more, and now he sees an imbalance in the company, especially as it’s about to IPO.  He’s not allowed to elaborate since the company is in its quiet period, so this one will probably stay low key.

This one seems to me to have a couple fun lessons, and I see some leadership learnings as foremost.  So I think his request is a mistake on the merits of what I can see.  Let me elaborate.

It’s very possible that Mr. Pincus was concerned in the early days that he needed consistency in the workforce, and he overpayed to get it.  Well, we say here that all actions have consequences, some of them unintended.  Here’s a great example of that.  Now that the company has hired better people as they moved forward, there’s an imbalance in potential compensation that’s probably causing some employee consternation.

I don’t have all the data, but here’s my suggestion.  Tell people to get over it.  You have to make business decisions and live with them.  If there are people who are valuable, then you have to find ways to show the value, but that’s very difficult to do on the backs of employees that were valuable once and are less valuable now.  Think of the message: Hey, you were great once, but now you’re not so good so I need to whack you to make other people happy.  The other people might be happy now, but what happens if a couple of them slip, and then they have to give back what they demanded?

Business is a tough place.  I know several examples of people who weren’t as good who got rewarded because they were in the right place.  That motivated some of them to excel, and it motivated others to become weak.  That needs to be managed separately, and forcefully, to maintain a good organization.  Taking away what you’ve already given, though, is likely a bridge too far if one thinks about the future reactions.

It’ll be interesting to see how this works out.

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One Comment leave one →
  1. Ellen D. permalink
    November 10, 2011 12:33 pm

    Those employees were probably the ones who helped make Zynga successful in the first place. I wonder if they worked at reduced pay because they got those stocks in hopes that Zynga would go public and their hard work would pay off.

    If I were a new employee of Zynga, I’d also be concerned if this were true. Who’s to say they wouldn’t ask for employees to return compensation in the future if they have already done so in the past?

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