Why should senior managers have the right kind of ambition?
At a macro level, a company will be most successful if the senior managers optimize for the company’s success (think of this as a global optimization) as opposed to their own personal success (local optimization). No matter how well the CEO designs the personal incentive programs, they will never be perfect. In addition, career incentives like promotions and territory ownership fall outside the scope of bonus plans and other a priori management tools. In an equity-based compensation structure, optimizing for the company’s success should yield better results for individuals as well. As my Opsware head of sales Mark Cranney used to say, “2% of 0 is 0.” It is particularly important that managers have the right kind of ambition, because anything else will be exceptionally de-motivating for their employees. As an employee, why would I want to work long hours to advance the career of my manager? If the manager cares about his career more than the company, then that’s what I’d be doing. Nothi
