Gerald Weiss left Wall Street for the promise of a CFO position at a well-established corporation. He was given a 10-year options package with a guaranteed floor of $12 million and unlimited upside. To ensure the entire package would be worth at least $12 million after 10 years, Gerald negotiated a special provision, which gave him the ability to "gross-up" his options twice over those ten years. If the stock price fell substantially, Gerald would be awarded more options (at-the-money) to bring the entire Black-Scholes value of his package back up to $12 million. Because of the company's culture of informality, the deal was agreed to with a handshake from the CEO, witnessed by the current CFO and the VP of human resources, but not written down. When the stock price actually fell, and Gerald asked to revalue his options package, the company reneged on the deal. Teaching Objective: To generate discussion about the benefits and pitfalls of mega-option grants, the issue of revaluing options, and the conflict between adhering to company culture and protecting the financial interests of the employee.

This case focuses on the challenges of incentivizing innovation within Moog, an engineering company based in New York state that designs and builds guidance systems for space, air, and land-based travel. The case enables students to grapple with the challenges of using compensation to motivate and incentivize employees to create commercially successful innovations. Thick culture motivates employees to innovate in unique ways that money cannot. Students analyze the ways in which Moog's unique culture and current incentive systems successfully, and unsuccessfully, drive innovation, considering Moog's specific challenge of commercializing and scaling innovations. Throughout the discussion, students will understand the ways in which incentivizing innovation is a structurally challenging problem within large companies. Incentivizing innovation differs from incentivizing other types of performance, and students should realize that money alone cannot drive innovation because of the challenges of measuring performance, especially given the long time horizons and the fact that innovation necessarily involves risk and uncertainty.

This case focuses on Charlotte Blank, the Chief Behavioral Officer at Maritz, as she tries to assist a major automotive manufacturer (CarCo) with increasing their sales by prepaying monthly bonuses to independently franchised car dealers and clawing them back if the sales targets are not reached. This pre-payment structure is what behavioral economists call "loss-framing." Broadly, this prepayment structure is an attempt to increase sales effort by harnessing people's desire to defend their earnings, endowments, and possessions. The case is based on a National Bureau of Economic Research (NBER) working paper that can be read for additional detail on the underlying theory or empirics.

This case centers around the United Arab Emirates' (UAE) national goal of raising the happiness of its residents and visitors through ambitious government initiatives. They combined this bold national goal with an accountability structure (incentive plan) built on Key Performance Indicators (KPIs), as more typically done at a company level. A key case protagonist is Ohood Al Roumi: the UAE and the world's first dedicated Minister of State for Happiness and Wellbeing. She was assigned to this role by Sheikh Mohammed, the Prime Minister and Vice President of the UAE and Ruler of Dubai. Al Roumi attempted to drive national progress towards happiness in UAE society through several means: measuring happiness in the community and happiness with government services; aligning and coordinating government entities towards promoting happiness and positivity at work; and promoting happiness as a lifestyle more generally. The case details the UAE's progress through February 2018. The class discussion gives students a chance to reflect on the role of government in promoting happiness and wellbeing and how a government could go about encouraging happiness. The UAE in effect implemented a complex incentive scheme with the aim of coordinating attempts to increase happiness and wellbeing. The connection between the UAE's efforts and incentive schemes emerges in the course of the class discussion, which enables students to reflect on concrete managerial implications of the analysis.

How should nonprofits design compensation systems to attract and retain talent? GiveDirectly is a respected charitable organization with an unconventional approach. Instead of spending on traditional aid programs in areas such as health care and food access in developing countries, GiveDirectly transfers cash directly to the poor. As experiments have shown this approach to be an effective and efficient way to improve recipients' life satisfaction, the organization has attracted considerable attention among donors and the media. Now, GiveDirectly is looking to grow, and it is contemplating how best to recruit talented employees and keep them motivated. In addition to offering salaries competitive with the private sector, GiveDirectly is considering linking employee compensation to organizational goals regarding the amount of cash transferred-an unusual strategy for a nonprofit.

Buffer decided to release its salaries and compensation calculation formula to the public, and the public reaction was greater and more positive than they would have imagined. The company experienced both an increase in volume and a change in the kinds of inbound applications they received. As the company continued to grow, Buffer's senior leaders continued to revise the compensation formula based on feedback both internally and from the public. Particularly, they hoped to strengthen the link between pay and performance, which in the current version of the formula was incorporated using a loosely defined "experience level" component. However, defining clear performance metrics and experience levels was not an easy task.

Social media company Buffer wanted to establish clear company values early in its growth. One of these values was a commitment to transparency in its company practices. Buffer openly shared its business strategies and fundraising decks, among lots of other information. Even when they were hacked, the company live-blogged updates to keep their users informed as the situation unfolded. Having internally released each employee's salary and equity details with no pushback, the company now contemplated sharing compensation information transparently with the general public.

This note serves as a supplement to any course on incentive design within organizations. The note focuses on the principal difficulties in designing incentive systems, including the trade off between objective and subjective performance metrics, how to design incentive systems in team environments, and the inherent problems with designing incentive systems in environments where workers are involved in multiple activities.

This is the (B) case to P&G Canada: Old Company, New Tricks. It details the outcome of the drastic reduction in office space from eight floors to three floors.

P&G Canada faces ongoing global pressure to increase productivity and reduce spending. Thom Lachman, President of P&G Canada, is seemingly out of options that will make a large enough impact without harming the business, until the idea of a radical space reduction strikes him. The case follows Lachman, working closely with Country HR Manager Jane Lewis, from idea inception to the eve of the company-wide transition to a dramatically scaled-down and reorganized office space. In particular, the case provides a basis for discussion surrounding employee motivation-specifically as it is affected by the change management process and workspaces, benefits versus perks, and sorting effects. A (B) case details the outcome of the office space transition.

Supplement to case 914049. This case is about a compensation change at an automotive service company in the Middle East. The case allows investigation and analysis of many issues related to compensation design and human resource management, and even change management. The focus of the case is all the ways in which bad incentive design leads to dysfunctional behavior. In particular, a crucial issue is whether individual incentives are best or whether team incentives are best, and why. In the B and C cases, the case rolls out in sequence as more and more information is revealed to students so the unfolding of events keeps students interested and engaged in how to solve the various problems that arise, including a near mutiny.

Supplement to case 914049. This case is about a compensation change at an automotive service company in the Middle East. The case allows investigation and analysis of many issues related to compensation design and human resource management, and even change management. The focus of the case is all the ways in which bad incentive design leads to dysfunctional behavior. In particular, a crucial issue is whether individual incentives are best or whether team incentives are best, and why. In the B and C cases, the case rolls out in sequence as more and more information is revealed to students so the unfolding of events keeps students interested and engaged in how to solve the various problems that arise, including a near mutiny.

This case is about a compensation change at an automotive service company in the Middle East. The case allows investigation and analysis of many issues related to compensation design and human resource management, and even change management. The focus of the case is all the ways in which bad incentive design leads to dysfunctional behavior. In particular, a crucial issue is whether individual incentives are best or whether team incentives are best, and why. In the B and C cases, the case rolls out in sequence as more and more information is revealed to students so the unfolding of events keeps students interested and engaged in how to solve the various problems that arise, including a near mutiny.

This case is about the response of the US government to the excessive compensation of executives following the market collapse of 2008. In particular, the case focuses on the special committee that was formed to oversee and regulate any financial companies that had borrowed money from the US government to stay afloat. The protaganist is Kenneth Feinberg, who is appointed as Special Master for TARP Executive Compensation and who has the challenging task of negotiating compensation amidst all of the many competing interests.

This case describes the compensation and performance evaluations at an investment management company. The senior management team of Massachusetts Financial Services (MFS) Investment Management was contemplating an introduction of hedge funds at the firm, but many believed that typical hedge fund manager pay (20% of the upside) would harm the MFS culture, which glorified "star performance but not star egos." The case presents the MFS compensation philosophy and plan (including the plan's emphasis on subjective compensation), the types of people it attracted, the resulting culture, and how the senior management team approached the hedge funds question. It includes side discussion on firm-specific human capital. This is an abridged version of an earlier case.

How do you reduce headcount when almost everyone gets the same scores on performance reviews? HR vice president Nils Ekdahl confronts that question at Circale Corporation, a fictional electronic-components distributor that has just completed a series of acquisitions. Ekdahl wants to make the personnel cuts objectively, but the company's new performance-review system yields disappointing results: On a five-point scale, virtually every employee gets a 4 or 5 on each dimension. So Ekdahl instructs managers to redo the evaluations, tells them they're not allowed to give just 4s and 5s, and requires an average score of 3 across each manager's direct reports. This time the scores indeed average 3, but they are nearly all 3s. Grade compression at the top of the scale has merely shifted to the middle. Should Ekdahl initiate yet another round of performance reviews or make do with the data he has? The authors of this fictionalized case are Brian J. Hall and Andrew Wasynczuk, both of Harvard Business School. Expert commentary comes from John Berisford, currently of The McGraw-Hill Companies and formerly of Pepsi Beverages, and from Stephen P. Kaufman, currently of Harvard Business School and formerly of Arrow Electronics (the company whose performance-review system was the seed for this case). HBR's readers also weigh in.

How do you reduce headcount when almost everyone gets the same scores on performance reviews? HR vice president Nils Ekdahl confronts that question at Circale Corporation, a fictional electronic-components distributor that has just completed a series of acquisitions. Ekdahl wants to make the personnel cuts objectively, but the company's new performance-review system yields disappointing results: On a five-point scale, virtually every employee gets a 4 or 5 on each dimension. So Ekdahl instructs managers to redo the evaluations, tells them they're not allowed to give just 4s and 5s, and requires an average score of 3 across each manager's direct reports. This time the scores indeed average 3, but they are nearly all 3s. Grade compression at the top of the scale has merely shifted to the middle. Should Ekdahl initiate yet another round of performance reviews or make do with the data he has? The authors of this fictionalized case are Brian J. Hall and Andrew Wasynczuk, both of Harvard Business School. Expert commentary comes from John Berisford, currently of The McGraw-Hill Companies and formerly of Pepsi Beverages, and from Stephen P. Kaufman, currently of Harvard Business School and formerly of Arrow Electronics (the company whose performance-review system was the seed for this case). HBR's readers also weigh in.

How do you reduce headcount when almost everyone gets the same scores on performance reviews? HR vice president Nils Ekdahl confronts that question at Circale Corporation, a fictional electronic-components distributor that has just completed a series of acquisitions. Ekdahl wants to make the personnel cuts objectively, but the company's new performance-review system yields disappointing results: On a five-point scale, virtually every employee gets a 4 or 5 on each dimension. So Ekdahl instructs managers to redo the evaluations, tells them they're not allowed to give just 4s and 5s, and requires an average score of 3 across each manager's direct reports. This time the scores indeed average 3, but they are nearly all 3s. Grade compression at the top of the scale has merely shifted to the middle. Should Ekdahl initiate yet another round of performance reviews or make do with the data he has? The authors of this fictionalized case are Brian J. Hall and Andrew Wasynczuk, both of Harvard Business School. Expert commentary comes from John Berisford, currently of The McGraw-Hill Companies and formerly of Pepsi Beverages, and from Stephen P. Kaufman, currently of Harvard Business School and formerly of Arrow Electronics (the company whose performance-review system was the seed for this case). HBR's readers also weigh in.

This case describes a compensation negotiation between a global HR director and a candidate for a high-level executive position. The situation becomes awkward when the candidate feels insulted because he is given a monetary incentive to join the company more quickly than originally planned. The case provides an opportunity to analyze negotiation strategy and the importance of emotional intelligence and effective interpersonal communication during a negotiation.

This case describes a compensation negotiation between a global HR director and a candidate for a high-level executive position. The situation becomes awkward when the candidate feels insulted because he is given a monetary incentive to join the company more quickly than originally planned. The case provides an opportunity to analyze negotiation strategy and the importance of emotional intelligence and effective interpersonal communication during a negotiation.