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This case analyzes incentive strategy from the perspective of a company's board of directors and owners. The focus is the role that executive compensation and ownership structure (the composition of, and financial structure between, a company's owners) play in motivating value-creating behavior.

Conventional wisdom says that layoffs are a necessary evil during economic downturns, but new research shows that shareholders tend to punish companies that invoke layoffs solely to cut costs.

Over the last seven years, the Stanford Project on Emerging Companies has tracked a large sample of high-technology start-ups in California's Silicon Valley. The project has examined how the founders of those enterprises approached key organizational and human resources challenges in the early days of building their companies and how it affected the evolution and performance of their ventures. This article summarizes the main findings of this research program. It describes five distinctive HR "blueprints" that high-tech founders embraced in launching their new firms. Those initial blueprints have had important impacts on a wide range of organizational outcomes, including growth in administrative overhead, labor turnover, and bottom-line performance. Moreover, companies that changed their HR blueprints have paid a heavy price in terms of higher turnover and diminished organizational performance. The results suggest that organization-building and high-commitment HR management "pay" and that changes in HR models are extremely destabilizing, even in the turbulent "built to flip" environment of Silicon Valley.

Although popular brands and unique capabilities help sustain a company's competitive advantage, they cannot be built by imitation. Managers have been able to develop sustainable capabilities not by emulating others, but by using their organizational designs and processes to identify, build on, and leverage their "asymmetries"--their evolving unique experiences, contacts, or assets. Such asymmetries may occur even in the simplest organizations. Unfortunately, they frequently are concealed, of little apparent use, and unconnected to value creation. Thus, they require new strategy making and organizational approaches for their discovery, development, and application. Based on lessons from a two-year study of a diverse sample of companies, this article shows how managers can grow capabilities that sustain competitive advantage by constantly identifying and growing asymmetries, embedding and empowering them within an organizational design, and shaping market focus to exploit them.

When it comes to having a high-powered career and a family, the painful truth is that women in the United States don't "have it all." At midlife, in fact, at least a third of the country's high-achieving women--a category that includes high wage earners across a variety of professions--do not have children. For many, this wasn't a conscious choice: Indeed, most yearn for motherhood. So finds economist Sylvia Ann Hewlett, who recently fielded a nationwide survey to explore the professional and private lives of highly educated and high-earning women. Other findings are similarly disturbing. Many of these women who are raising children have suffered insurmountable career setbacks. In general, Hewlett's data show that, for too many women, the demands of ambitious careers, the asymmetries of male-female relationships, and the difficulties of conceiving later in life undermine the possibility of combining high-level work with family. By contrast, Hewlett's research reveals that high-achieving men continue to "have it all." Of the men she surveyed, 79% report wanting children, and 75% have them. Indeed, the more successful the man, the more likely he is to have a spouse and children. The opposite holds true for women. Hewlett urges lawmakers and corporations to establish policies that support working parents. But recognizing that changes won't happen overnight, she exhorts young women to be more deliberate about their career and family choices.

Akamai's stock price declines dramatically with the NASDAQ in 2000, causing virtually all employee options to go underwater. Ownership and retention incentives are largely destroyed, and employee morale falls sharply. Management weighs the pros and cons of various alternative "solutions" to this problem (including repricing, issuing a new supplemental grant, canceling the underwater options and issuing a delayed regrant, and making a tender offer to exchange underwater options for fewer shares of restricted stock).

Supplements the (A) case.

This set of three cases represents a mediation involving three professionals at a consulting firm: two disputants (a new MBA consultant and the manager of a group of programmers) both working on a client team, and an "interested" mediator with his own pressures and agenda, who would prefer to focus on business issues and resolve the dispute quickly. The dimensions of the dispute are both professional (whether changes should be made to a computer system being installed by the team) and personal (issues of respect and authority). The cases are designed to be used as part of a unit on mediation. We use the cases in a series of cases that permits each student to serve in disputant and mediator roles. Class discussion (see Teaching Note) focuses on skills, the process of mediation, resolutions reached, and the role of the "interested mediator," a role in which MBA graduates frequently find themselves.

This set of three cases represents a mediation involving three professionals at a consulting firm: two disputants (a new MBA consultant and the manager of a group of programmers) both working on a client team, and an "interested" mediator with his own pressures and agenda, who would prefer to focus on business issues and resolve the dispute quickly. The dimensions of the dispute are both professional (whether changes should be made to a computer system being installed by the team) and personal (issues of respect and authority). The cases are designed to be used as part of a unit on mediation. We use the cases in a series of cases that permits each student to serve in disputant and mediator roles. Class discussion (see Teaching Note) focuses on skills, the process of mediation, resolutions reached, and the role of the "interested mediator," a role in which MBA graduates frequently find themselves.

This case serves as a supplement to any course on incentive design and implementation. The analysis first locates incentive strategy within the larger structure of organizations and markets and then helps to define the central components and difficulties of incentive design. The case focuses on the principal difficulties in implementing 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.

Jared Gordan, the president of the Industrial Products Division for Compunext, is a first-rate manager. In just three years, he's turned around a flagging division and increased sales and profits by 50%--a dramatic shift from five years earlier, when analysts were suggesting that the company sell the division. But that's not all. In addition to being a turnaround expert, Jared has shown a special aptitude for recruiting and developing talent. Many executives have noticed this faculty, and--unfortunately for Jared--those running Compunext's biggest, most glamorous divisions are poaching his best managers. In fact, Industrial Products has just been raided for the tenth time in two years, and Jared is spitting mad. This time, the Telecommunications Division has wooed--and won--Stan Simpson, Industrial Products' VP of sales. Jared, right or wrong, confronts Hank Dodge, president of Telecommunications, for not coming to him before offering Stan the job. Still furious, Jared then meets with Sue Patel, Compunext's VP of human resources, to discuss what can be done to avoid future raids. Does Jared have good reason to be angry? What lies at the root of the problem, and how can Jared solve it? In R0203A and R0203Z, Peter Browning, Frank Morgan, Hubert Saint-Onge, and Charles H. King weigh in on this fictional case study.

Jared Gordan, the president of the Industrial Products Division for Compunext, is a first-rate manager. In just three years, he's turned around a flagging division and increased sales and profits by 50%--a dramatic shift from five years earlier, when analysts were suggesting that the company sell the division. But that's not all. In addition to being a turnaround expert, Jared has shown a special aptitude for recruiting and developing talent. Many executives have noticed this faculty, and--unfortunately for Jared--those running Compunext's biggest, most glamorous divisions are poaching his best managers. In fact, Industrial Products has just been raided for the tenth time in two years, and Jared is spitting mad. This time, the Telecommunications Division has wooed--and won--Stan Simpson, Industrial Products' VP of sales. Jared, right or wrong, confronts Hank Dodge, president of Telecommunications, for not coming to him before offering Stan the job. Still furious, Jared then meets with Sue Patel, Compunext's VP of human resources, to discuss what can be done to avoid future raids. Does Jared have good reason to be angry? What lies at the root of the problem, and how can Jared solve it? In R0203A and R0203Z, Peter Browning, Frank Morgan, Hubert Saint-Onge, and Charles H. King weigh in on this fictional case study.

Jared Gordan, the president of the Industrial Products Division for Compunext, is a first-rate manager. In just three years, he's turned around a flagging division and increased sales and profits by 50%--a dramatic shift from five years earlier, when analysts were suggesting that the company sell the division. But that's not all. In addition to being a turnaround expert, Jared has shown a special aptitude for recruiting and developing talent. Many executives have noticed this faculty, and--unfortunately for Jared--those running Compunext's biggest, most glamorous divisions are poaching his best managers. In fact, Industrial Products has just been raided for the tenth time in two years, and Jared is spitting mad. This time, the Telecommunications Division has wooed--and won--Stan Simpson, Industrial Products' VP of sales. Jared, right or wrong, confronts Hank Dodge, president of Telecommunications, for not coming to him before offering Stan the job. Still furious, Jared then meets with Sue Patel, Compunext's VP of human resources, to discuss what can be done to avoid future raids. Does Jared have good reason to be angry? What lies at the root of the problem, and how can Jared solve it? In R0203A and R0203X, Peter Browning, Frank Morgan, Hubert Saint-Onge, and Charles H. King weigh in on this fictional case study.

This exercise provides an opportunity to gain insight about designing, negotiating, and responding to incentives. The setting is investment management. A class is divided into a certain number of investment firms. Each company has one CEO and begins with four portfolio managers (PMs), who manage their portfolios by choosing from a restricted set of assets. The game takes place over approximately two weeks and is divided into three periods. Each period will last from two to four days. At the end of each period, new funds flow to high-performing portfolios, wheras funds flow out of poorly performing portfolios, simulating contributions from investors. CEOs and PMs negotiate compensation arrangements and PMs may move from one company to another, subject to some costs and rules regarding how much of their portfolio they take with them to their new companies. CEOs try to maximize the value of their companies at the end of the game, whereas PMs attempt to maximize their total compensation during the game.

Managers will tell you that the resource they lack most is time. If you watch them, you'll see them rushing from meeting to meeting, checking their e-mail constantly, fighting fires. Managers think they are attending to important matters, but they're really just spinning their wheels. For the past 10 years, the authors have studied the behavior of busy managers, and their findings should frighten you: Fully 90% of managers squander their time in all sorts of ineffective activities. A mere 10% of managers spend their time in a committed, purposeful, and reflective manner. Effective action relies on a combination of two traits: focus--the ability to zero in on a goal and see the task through to completion--and energy--the vigor that comes from intense personal commitment. Focus without energy devolves into listless execution or leads to burnout. Energy without focus dissipates into aimless busyness or wasteful failures. Plotting these two traits into a matrix provides a useful framework for understanding productivity levels of different managers. This article will help you identify which managers in your organization are making a real difference--and which just look busy.

In this essay, business thinker Peter Drucker examines the changing dynamics of the workforce--in particular, the need for organizations to take just as much care and responsibility when managing temporary and contract workers as they do with their traditional employees. Two fast-growing trends are demanding that business leaders pay more attention to employee relations, Drucker says. First is the rise of the temporary, or contract, worker; 8 million to 10 million temp workers are placed each day worldwide. And they're not just filling in at reception desks. Today, there are temp suppliers for every kind of job, all the way up to CEO. Second, a growing number of businesses are outsourcing their employee relations to professional employee organizations (PEOs)--third-party groups that handle the ever-mounting administrative tasks associated with managing a company's employees. Temps and PEOs free up leaders to focus on the business rather than on HR files and paperwork. But if organizations outsource those functions, they need to be careful not to damage relationships with their people in the process, Drucker concludes.

Companywide incentives often produce disappointing results; individuals assume they will receive rewards regardless of their efforts. But at Continental, such a program resulted in more efficient employees and more timely flights. Here's how the airline did it.

This case describes compensation and incentive issues in one of the major U.S. professional sports leagues, the National Football League (NFL). It first provides some background information on the labor market for players and the salary cap and then describes incentive issues facing players and their agents.

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.

In 2003, Norman Walker, head of HR at Novartis, received approval from the management board to implement a global human resources information system (HRIS). Although Walker had made substantial progress in transforming the HR function, much of their efforts remained transactional and not strategic. If successful, the implementation of HRIS would change the role and responsibilities of not only the HR organization but how it added value to the company. Since its formation in 1996, Dan Vasella, the CEO, had transformed the organization from one with slow-moving functional silos into a high-performance company. His goal was to make Novartis a "premier talent machine by 2005." The new global HRIS was a key element in this transformation. It was clear to Walker that this was a major organizational change effort, not simply an IT implementation. The case describes the changes Walker had already made and poses a set of challenges that need to be addressed to implement the new HRIS project.