Beer Money

There are many reasons people might work for a company, but for the sake of simplicity, those reasons could be summarized in a Venn diagram as beer money, mortgage payments, or “something else.”

Beer Money employees view employment as a means for supporting their current or desired lifestyle. These individuals value lifestyle over advancement and are highly mobile. They believe that they could find a similar job within a week or two that would pay at least 90% of their current income and they believe that jumping to a new employer every 18-36 months is the best way to maximize their earning potential. These traits don’t necessarily make them lazy or prone to suddenly quit. In fact, they will often work as hard or harder than mortgage payment employees, but beer money employees are very difficult to retain over time, even with higher than average raises and accelerated promotions.

Mortgage Payment employees place a much higher value on stability than the other types of employees. A Mortgage Payment employee often has a partner or a family to support and does not want to put stress on those relationships by changing jobs, even when the likely outcome may be positive, as it would be with the beer money employee. Mortgage Payment employees value consistency, but this often means predictability rather than outstanding performance.

The other group of employees works for “Something Else”, and while there are a variety of things that fall into this category, it is possible to treat them as a single group. Examples of something else are equity plays, prestige, open source, or corporate values, though there could be other reasons. What makes it important to treat these employees as a single group is that it is difficult for most companies to align with more than one “something else” and it is critical that the company and its employees are in alignment.

A startup company is typically designed to be an equity play where employees will work hard with greater financial risk in hopes of reaping greater rewards when the company is bought or successfully goes public with an IPO. Mortgage payment employees are less likely to be comfortable at a startup, depending on how it is funded and managed. Employees who are looking for an equity play are less likely to stay if a company isn’t working toward a clearly defined exit strategy. Beer money employees don’t care as much, since they are portable.

An employee who values prestige may value the brand name of the employer, but is typically looking to maximize personal prestige over time, either by working for that brand name or by using that brand name as a platform to increase personal status within a given field. Prestige employees value the industry group participation and speaking engagements that a position makes available, perhaps more than maximizing personal financial gain or generating profits.

The key takeaways from understanding why people work for you are properly managing risk and ensuring that company strategy and values align with the “something else” employees you are trying to attract and retain.

Beer money employees can be extremely productive, but they should not be relied upon as long-term repositories for unique information and skills. Of course, good risk management is to avoid ever relying on a single employee to have unique information or skills, but the risk of allowing that for shorter periods of time is lower when that employee is working to pay the mortgage or aligned with the company in trying to achieve something else.

“Something else” employees are often the outliers that power successful innovation, but if the company isn’t aligned with their goals, they can be even harder to retain than beer money employees because they can’t be motivated to stick around longer by raises or promotions. Some of the best and brightest employees I have known left quickly for the same or less money once they discovered an opportunity that was more in alignment with their personal goals.

One might think that the best strategy would be to recruit a large group of employees who are all aligned on a singular “something else”, but the likelihood of finding this group is low and the chances of satisfying them all within a growing organization is even lower. As a venture scales, it invariably needs more hands to do less glamorous and exciting tasks. This is where the other two groups become necessary and perhaps even more attractive to the organization.

Of course, people are unique and sometimes their goals and motivations change over time, but plotting people against simple models like this will still help raise your satisfaction and theirs, unless you classify them incorrectly. Why not show them the chart and let them educate you? Just remember the old adage about people voting with their feet. What they do is usually more important than what they say.

Rules of Thumb:

• Deploy people appropriately based on their reason for working with the company.

  • Beer Money – Production – Adding bandwidth to the team as needed

  • Mortgage Payment – Operation – Keeping the team going

  • Something Else – Innovation – Defining what the team does

• Ensure that the company stays in alignment with the goals of key “something else” contributors and that corporate messaging reinforces that alignment. If you have presented the company as an equity play, corporate accomplishments should be framed in relation to achieving that goal.