This is innovation

Love them or hate them, there’s no denying that Google is innovative. The innovation is usually in the product space, but today they announced a really cool innovation in the HR/stock option space. You can read all about the Transferable Stock Options here.

What a great idea! They are staying ahead of the curve in managing their employees’ upside (or potential lack thereof). As a company matures, usual wisdom states that the stock ceases to rise at the same rate and adopts a more gentle curve. What that means is that employees who join later in a company’s maturity have less upside. And that’s the way it should be since they assume less risk.

However, to feed the hungry beast of innovation, Google is still hiring in vast numbers. And with this little innovation, they are addressing the issue of employees whose strike price is near or below the market price and solving for it — even if your options are underwater, you can trade them and realize value today (instead of waiting). They’ve significantly reduced the risk that employees with underwater stock will leave for greener pastures.

Usually HR is super-conservative. When times are good, they won’t give anything away that they don’t have to. In fact, they can go so far as to imply it is an honor of an employee to be employed at the company. But times change (they always do) and in these situations, most HR departments can’t adapt – they have to be pushed to recognize that there need to be other ways to motivate the newer employees.

What Google has done is dramatic. What makes it more impressive to me is that they have made this innovation when times are good. They’ve been proactive in setting up a program that has significant complexity. That is very, very rare.

Other tech companies need to catch up. Hopefully, for their sakes, soon.