Do stock options make a good job offer?

Q: Some people associate stock options with the surge of startup companies in the dot-com era, and they think options are gone from the job scene. Fewer companies might offer stock options today, but don't be surprised if a young company suggests stock options as a component of a job offer to you. If you had your choice when joining a new company, which would you prefer?

Nick's reply: There's no right or wrong answer to this challenge. Stock options pose a risk, and people's tolerance of risk varies. People also differ on whether they believe there's a brass ring to be grasped nowadays. What's interesting is how public opinion changes about this topic. I'm betting employers will learn more from the results of this poll than employees (or job hunters) will.

The economy is once again shifting. My intent in this challenge is to explore how we all feel about the shift. I don't have any real advice to offer you because, again, this choice depends on how you feel about taking risks. But I hope the results help you see how other folks are thinking about risk and reward.

So where do you find yourself falling in the results of this challenge, and are you surprised at what other readers would do? Do you think there's a shift back to more risk-taking -- even a bit -- since we're going through a long downturn? Are people more hopeful?

I've been through several up-and-down cycles since I became a headhunter in 1979, and I've watched people's reactions to career (and financial) risk. Over the years I've noticed that younger workers and entrepreneurs tend to like trading their work for ownership -- they want stock options in their company. Their hopes are high, and they want a shot at the brass ring. They're also willing to lose a bit of their "work investment" if a deal doesn't pay off. Younger workers seem to be more tolerant because they know they've got time to recover financially. And entrepreneurs, well, they just like taking risks and have less fear. Or maybe they're just more confident (or less prudent!).

Once risk-oriented people go through the startup cycle a few times, get older and begin having families, the equation seems to change for them and they begin to lean toward compensation based on their own performance. (This natural growth of self-confidence might stimulate some people to start their own small business). Those who have been burned again and again by stock options sometimes put a salary stake in the ground: "Keep your stock options. I'm worth X dollars. Pay me that much or don't hire me."

It's worth noting that today's trend toward consulting and independent contracting isn't just a financial necessity for some. Not every consultant and contractor was forced into that kind of work because of a layoff. Lots of folks prefer this form of performance-based compensation. That's what contracting really is. The worker isn't so concerned about how the client company is managing its business, as with whether he or she is delivering valuable, high-quality work that will earn good money. Many consultants can charge a lot for their services simply because they're very good at what they do. Likewise, some companies are looking at performance-based compensation because it helps them ensure that they get what they pay for.

I think those readers who responded that they would like more salary and performance-based bonuses are indicating that they want to be paid for what they can do. They don't want to hook their wagons to a company's ability to perform. I hope employers are paying attention.

Copyright 2008. Distributed by Universal Press Syndicate

Nick Corcodilos is author of "Ask The Headhunter: Reinventing the Interview to Win the Job" and the host of www.asktheheadhunter.com. He can be reached by e-mail at seattle@asktheheadhunter.com or at North Bridge Group, P.O. Box 600, Lebanon, NJ 08833. Sorry, no personal replies.