Chapter 194: Is it the management level that is being replaced instead of the bottom level? (First update)
Vesting schedules and cliff periods are undoubtedly one of the biggest evils in the tech industry.
In fact, these two things were not developed by high-tech companies. They were first used in some traditional industrial manufacturing industries in Malaysia and Europe sixty or seventy years ago.
These mechanisms were initially used mainly for employee pension plans and stock option plans, which were linked to years of service, and employees could receive incentives when the years reached.
When used in traditional industries, most companies are actually quite disciplined. Generally, it is only linked to the length of service. When the period is reached, what is owed will basically be paid.
But in the past decade or so, since high-tech companies introduced this thing, the so-called equity incentive has become a carrot hanging in front of a donkey's eyes. You can see it, you want to eat it, and if you want to eat it, you have to call the owner.
When this thing was introduced to the Great Zhou, it was used in even more creative ways.
Equity incentives become a promise that can be fulfilled but comes at a cost because its realization depends not only on years of service but also on performance evaluations and relationships with leaders.
For example, some companies require every team to have a 3.25. You might say your team is highly capable and dedicated, but that won't work. You have to identify one.
What should I do? They are all old employees, who should I give it to? I can only cheat the newcomers.
The relationship is shallow, so it’s easy to take action.
Therefore, in recent years, the so-called equity incentives of many companies have gradually lost their so-called incentive effect.
Even if it is useful, it will only make people stay in the company for a longer period of time and then sell it immediately when the term is up and move on to the next one.
When Fang Yu said that this equity incentive plan did not have any vesting schedule, there was immediately some commotion at the scene.
"Mr. Fang, sorry to interrupt me, but do you mean that I can cash out the equity figures displayed on the big screen now?" A 1.8-meter-tall handsome young man wearing a black T-shirt and long hair, who did not look like a programmer at all, raised his arm and asked the question.
There are supporting actors, which is great.
Fang Yu looked at the handsome young man named Niu Tianrui with approval. Niu Tianrui's skills were not particularly outstanding, and this time he only received 800 shares of equity incentives, 10 Mai Yuan per share, which is 8,000 Mai Yuan, equivalent to more than 50,000 Da Zhou coins.
"Yes, if you want to cash out, you can do so now. The company will repurchase you based on the current company valuation." Fang Yu nodded and replied very affirmatively.
Niu Tianrui's eyes lit up and he wanted to say something, but held himself back.
Fang Yu glanced at Niu Tianrui, his mind a little suspicious, but his expression remained unchanged as he continued, "The reason I set this rule is not because I believe sincerity can be exchanged for sincerity, but because this round of equity incentives itself is a recognition of your previous work."
"As for whether you will still receive equity incentives in the next period and how much equity incentives you can get, it all depends on you. TeamPulse will score your daily work based on your contributions, and this will affect the amount and method of your future annual equity incentive plan."
"The implementation of all equity incentive plans does not require approval from anyone. Everything is determined by the Orange model, and no middle management can exert a negative influence."
"Of course, the TeamPulse contribution algorithm I've set up is only the first version, and there will definitely be many problems. But with continuous adjustments and iterations in the future, this system will eventually become more and more accurate and fair."
All employees were a little agitated. Is this equity incentive given every year?
Moreover, using TeamPulse to connect to the Orange model to measure employee contributions is indeed a relatively fair assessment method.
What Fang Yu has always been thinking about is how to minimize the influence of "people" in performance evaluation and daily work management.
Note that it is daily work management, not overall management.
It just so happens that Youzi Technology’s current organizational structure and industry are very suitable for the management method envisioned by Fang Yu - a comprehensive performance evaluation method led by artificial intelligence.
This method sounds somewhat similar to the scoring table that Meng Guangkang created before, but it is completely different in essence.
First, basketball player selection and playing time can be measured using statistics, but they should be based on game performance. The NBA has matured its analysis of various game statistics, and NBA coaches generally schedule player playing time based on these statistics, making it a common team management method.
Second, Meng Guangkang introduced too many subjective factors, such as the so-called attitude score. Since attitude cannot be accurately quantified, it becomes a subjective score. The existence of this score negates the meaning of the entire table. Instead of reducing the influence of people, it increases it, a misapplication of OKRs.
Third, any approach similar to a rating system can only measure the immediate contribution of a job, not its long-term contribution. Therefore, when evaluating an employee's specific work contributions, managers must still make adjustments based on strategic vision and impartiality.
This adjustment value should be positive and not negative.
Fourth, scoring can be used for rewards, but when it comes to promotions, remember that scoring is only auxiliary. Whether an employee has the corresponding leadership potential is the only gold standard.
In management, there is no absolute fairness, and absolute fairness cannot be achieved.
However, it cannot be absolutely unfair.
At least let everyone see that we are moving in the direction of justice.
So, it’s just that Meng Guangkang himself is too stupid, and he will use the wrong method even if you give him a good method.
"Mr. Fang, I have a question too." Hua Zecheng paused for a moment. "I don't object to combining the Orange Big Model with TeamPulse to develop an employee equity incentive plan."
"But you know, some employees' contributions aren't reflected in the present; they might be long-term contributions over the next three to five years, or even longer. If we mechanically use artificial intelligence to measure employee contributions, wouldn't that be unfair to these employees?"
"For example, when Doug Cutting developed Hadoop, it was just a tool for distributed storage and processing of big data, and not many people used it. But now Hadoop has become the basic framework for big data processing."
"Without a fairer solution for this, I'm worried that employees will become increasingly short-sighted, focusing only on the tasks assigned to them by the system and losing their initiative and creativity. In the long run, this isn't a good thing."
What Hua Zecheng said is indeed a problem. As a technology startup company, Youzi Technology is also a company that mainly focuses on AI software infrastructure. The nature of the work of most scientific researchers is actually innovative.
Fang Yu divides jobs into innovative jobs and imitative jobs. There is no difference in superiority or inferiority between the two, only a difference in nature.
The so-called innovative positions are jobs that rely more on subjective initiative and personal ability. The content and results of the work depend on one's own chosen actions, that is, the strength of one's ability and personal wishes.
For example, most key scientific researchers, military commanders, art practitioners, B2B sales for large customers, etc., basically all have innovative jobs.
The effectiveness of these jobs depends entirely on the personal abilities and optional actions of the practitioners. When managing positions of this nature, too many restrictive conditions should not be set, and their personal freedom should be increased as much as possible. Only in this way can real results be achieved.
Imitation positions rely more on existing processes, standards, and technologies, and do not allow for any unnecessary optional actions. The results of the work depend on whether the above-mentioned process and technical specifications are implemented in place.
For example, low-level scientific researchers who conduct repetitive experiments according to the requirements of their supervisors, assembly line workers, patrolmen, 2C marketers, telephone sales, daily administrative managers, bank tellers, re-drawing personnel in technical departments, judges, prosecutors, grassroots civil servants, formulaic writers, etc. all belong to imitation positions.
For imitation positions, the standard for excellence is to complete one's work in strict accordance with existing processes and specifications, and no optional actions are allowed.
Therefore, for the management of imitation positions, extremely detailed and strict implementation standards and methods must be set. Feedback on work performance is often based on punishment and supplemented by rewards. The key is not to deviate from the route.
However, the management of innovative positions should be just the opposite, with rewards as the main approach and punishment as a supplement.
"What Professor Hua just said is absolutely right." Fang Yu nodded with a smile. "I have always believed that innovation is the lifeblood of a business. A company that can sustainably operate must be one that possesses enduring innovative capabilities."
"The Orange Model is not a god, nor can it tell fortunes. We cannot accurately predict which of your innovations will have a significant impact in the future. Therefore, this part will not be included in the annual equity incentive plan, but will be a separate incentive policy."
"That is what I will introduce next - the policy of covering the pearl with dust."
Fang Yu waved his hand and turned the PPT to the next page.
"After TeamPulse's version update was integrated into the Orange model, the two most important features updated were the contribution panel and historical project tracking."
"You can see in real time your current contributions to the company, as well as the profits and value these contributions create for the company, on the contribution dashboard interface of your TeamPulse client."
"Historical project tracking allows you to linearly track each of your projects for up to ten years."
"During this period, whenever any of your innovations are recognized by the market and reach a certain level, TeamPulse will provide immediate feedback and calculate the weight of the innovation's application in the product."
"For this type of contribution, we can provide two options. First, we can give the employee a cash reward based on the change in contribution weight."
"For example, someone created an algorithm that might not have been included in TeamPulse's contribution dashboard in the early stages, affecting the year-end bonus and equity incentives."
"But three years later, the algorithm's importance was proven and it was applied to a certain model function. This function achieved a total profit of 10 million Malaysian dollars in a year. TeamPulse determined that if the algorithm's weight in this function accounted for 30%, then he would receive 3% of the project's total profit, or 300,000 Malaysian dollars."
"Starting from the year this algorithm is first applied, this money can be received for five consecutive years!"
"Of course, the premise is that, in that year, this algorithm was not included in the contribution panel and did not receive corresponding equity rewards. And over the past five years, the application of this algorithm has consistently generated profits."
Wow!
More than a dozen employees of Youzi Technology started to riot at the same time. Fang Yu’s policy was indeed too shocking.
The rationality of distribution policies has always been the most troublesome thing for all organizations in management.
It’s not that there haven’t been companies that wanted to do similar things in the past. For example, Google once introduced a special innovation incentive policy, where employees could enjoy high profit sharing for their innovations.
Later, this policy made little splash.
Because it is extremely difficult to measure the contribution of a technological innovation to a company. Even if it can be calculated using a complex algorithm, how can human resources and finance apply this algorithm?
With hundreds of thousands or even millions of innovations every year, how can we reasonably evaluate them one by one?
Is the contribution algorithm still applicable after changes in technology and market environment?
These are difficult problems to solve.
Pushed up management costs.
But Yuzu Technology is different!
Firstly, the number of employees is small, the product form is simple, and the initial calculations are not that complicated.
Secondly, Fang Yu introduced AI into this evaluation system for the first time. With the current capabilities of the Orange Big Model, it already has the hardware foundation to implement this management method!
Even if the initial algorithm is unreasonable, it is not impossible to create a near-perfect system after a period of practice and adjustment!
Could it be that the first people to be replaced by artificial intelligence are not the bottom level, but the management level?
"I don't know if this method will succeed, but I'm willing to give it a try," Fang Yu added.
(End of this chapter)
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