Suppose a potential employer made you an offer. You could either have a fat salary cheque every month or you could have a salary of Re 1 a month and stock options which you could encash a year down the line for a small fortune. (This is a going concern and there is little chance of the options going underwater. Underwater is management-speak for the market price being less than what you are paying for the options, so that you would actually make a loss if you try and sell.)

Which would you choose?

There is no one answer. If you have plutocrats lurking in your lineage, and the stock option is as near a sure thing as you can get, that’s what you should opt for. Likewise, if your other half is making enough to keep you both in the lifestyle you want, a salary becomes relatively unimportant. (Make sure, however, there are no divorce proceedings in the offing; you might be left holding both baby and depleted bank balance.)

On the other hand, you may be like most of us, who need a regular income to keep the home fires burning. Stock options are fine as an additional incentive. But what really matters is your take-home pay.

A recently released report on disposable incomes underlines how options can skew perceptions. The Hay Group study — styled the World Pay Report — has hit the headlines because it says that US managers are poorly paid compared to their emerging economy brethren. They are ranked 24th amongst the 46 countries surveyed.

The survey factors in the cost of living and the tax rate. So it should not be a surprise that Saudi Arabia and the UAE (with a buying power equivalent to an average salary of $1,04,905) should be at the top of the pack. For the record, Russia, Turkey and Mexico are also ahead of the US. India, however, is 36th while China is 14th.

All this could cause a certain amount of surprise. Remember, however, that China has no stock options, while India does. And in the US, apparently the land of relatively penurious managers, it’s the options that make the world go round.

Ask Steve Jobs of Apple who is in the dock over backdating options. How much would they have been worth? The issue involved 7.5 million stock options at an exercise price of $18.30 a share. Apple is quoted around $145 today. So the options (if they hadn’t been cancelled after the brouhaha) would have meant an additional $900 million plus. Apple is among more than 100 US companies facing investigation today because of stock option fiddles.

Look askance at US CEOs taking home salaries of $1. These are only PR exercises. In an article posted on MSN last year, it was revealed that $1 warriors such as Google founders Larry Page and Sergey Brin made $1.5 billion and $1.45 billion from selling Google shares since the start of 2005. CEO Eric Schmidt made $387 million. Their salaries — before they went on the $1 bandwagon — were chicken feed compared to these numbers.

In the real world of corporate salaries, such numbers create problems. “Even in India, stock option earnings can be huge,” says Mumbai-based HR consultant D. Singh. “But you need to maintain a fine balance. You do not have so many rich youngsters around who can afford to opt for future earnings. The rich kids come from a limited number of political and babu families. Even business scions are not so many.”

Singh admits, however, that the compensation issue is getting more complicated. “Gone are the days when you had scales and you just fit people into that,” he says. “Today, you have to design a different package for each individual.” Says a report by global management consultant Accenture, “Leading companies are increasingly seeking high performance by treating each employee as a workforce of one.”

A DIFFERENT HIERARCHY

Satisfying Maslow’s needs at the workplace

Not all people are at the same plateau and are, therefore, not motivated by the same types of incentives. While some people may be motivated by money (a physiological and safety need to assist them in their pursuit of basic requirements like food and shelter), others may feel that they have already adequately satisfied that need. These people will be more likely to join a company or stay with it based on the relationships and social support mechanisms (this includes co-workers and bosses) they have established (or believe they are able to establish) there. Still others will join or stay with a company to achieve their esteem needs by feeling a sense of accomplishment in their work or believing that their work is contributing to establishing a good reputation for them. Finally, there are those that will move on to a new assignment to do something that will help them feel as though they are making a difference, contributing the most they can, and “being all they can be” (self-actualisation needs).

What it all boils down to is that there is no one sure-fire way to make everyone happy.

Source: Adapted from ‘A Hierarchy of Needs for Retention’ vault.com