In the UK there were 47,000 millionaires at the end of 1998 including 9,114 described as earners. This is predicted to rise to 142,000 millionaires and 33,248 earners by this year. These are less likely to be Lottery winners (which account for just 1,050 millionaires) and more likely to be high-flying city bankers or the entire workforce of a trendy new dotcom start-up.
Microsoft is estimated to have some 9,000 millionaire employees world-wide and Citigroup is reported to have 150 employees worth more than 30 million. But its not just the big names: one in five workers at the small Cambridge-based microchip designer, ARM Holdings, are millionaires.
The reality in these days of economic boom, particularly in the high-tech and financial markets, is that, as a human resources director, you are increasingly likely to be managing the rich. But how do you motivate and retain this group of employees who could just walk out of the door or cash in their options and move on to the next start-up, at the merest whiff of boredom?
Motivating the monied
Robin Saxby, head of ARM, who as a company founder is worth about 150 million, recalls how bankers had expressed concern that he and his colleagues would take their fortunes and leave after flotation: So I talked to everyone and what came out was that if people were still having fun after the float, then theyd keep on working. (Human Resources, June 2000)
Likewise, the US multi-millionaire, Louis Burns, who runs Intels Platform Components Group, recently told the Harvard Business Review: It has never really been about the money for me. Its nice to have, but once you have it, the work is what matters. It forces you to get clear and to ask yourself, Why do I do this every day? and when you can answer that with, Because I love it, you can feel good about getting out of bed in the morning.
Chip Chambers III, spokesman for the web site, Millionaire.com, agrees: Why do millionaires work? Because they enjoy what Donald Trump gave as the title of his book, The Art of the Deal. Ultimately it revolves around the enjoyment one gets from ones work.
The drive is well articulated by Michael Lewis in his book, The New New Thing, in which he describes how millionaire computer engineers clamour to work with Netscapes Jim Clarke for the sheer excitement of being in on the next big thing.
Likewise, companies such as Cisco and Microsoft find they have no shortage of high-flying high-earners sending in resums on the basis of their cutting-edge technology image. As one Cisco UK employee says: Sure the money is nice everyone wants to feel valued. But it goes way beyond that. People want to work here because of the culture and environment. We are pushing the boundaries of the internet. Its very, very exciting to be directing what people will be using several years down the line.
Meanwhile, a Microsoft employee describes the UK division of the software giant as amazingly exciting. You are working with really smart people who have a real passion for technology. It is a fast-paced culture which is really empowering and challenging.
These people are not about to give up the adrenaline rush of making and breaking deals or risk missing out on the next ground-breaking piece of software. However, they could easily go to the competitor or set up their own venture if they feel the tiniest bit disgruntled. So how do you keep them?
Retaining the rich
The Kent-based marketing services group, WPP, has created just under 100 new millionaires in the past five or six years the majority are options millionaires through the company equity scheme. WPPs chief HR director, Brian Brooks, says: When people have larger amounts of long-term capital derived from their involvement in our business, we expect this to positively influence their attitudes towards our efforts to build shareholder return. In very few cases do people simply lose interest in the business because they do not need to work for financial reasons. This is partly due to the high level of passion found in our business for clients and the work we do.
We make great efforts to influence peoples attitudes about equity holding through a system of formal ownership goals and an ongoing effort to build an ownership culture in the group. We have also tried to ensure that people focus less on current cash compensation and more on the total wealth they are building up through ownership in the company.
Rarely do we find that increasing levels of personal wealth affect the level of motivation in our people. Where it does, there are also usually other forces at work which detract from someone's motivation level.
Gaining wealth by stock options is also used by Microsoft to foster a long-term culture and deter get-rich-quick merchants. A spokesperson explains that there are many people in the UK company who are financially well-off but because this was usually generated from options, almost all have been with the company for five years or more.
Cisco claims motivation and retention comes from giving autonomy and empowering employees. The lack of hierarchy is a very big motivator. We also offer a lot of training, personal development, growth and learning. And of course its a fun place to work, as well as fast-paced and challenging, says Ciscos head of communications, Angela Hesse.
Intel UK also believes that the key to retention of employees is to create a rewarding and challenging environment. This can mean regularly moving employees from project to project and recreating start-up conditions over and over again.
Microsofts human resources literature,
(at www.microsoft.com) is equally compelling: Our goal is for everyone at Microsoft to develop a challenging career with opportunities for growth, competitive rewards and a balance between work and home life. In a fast-paced, competitive environment... we want our employees to wake up every day with the passionate belief that their work is contributing to the evolution of technology, and making a real difference to the lives of millions of people...
In reality what does that mean for the HR directors at the most famous software company in the world? It means, as at Intel, career ladders can be diverse with salespeople moving to marketing, and business strategy before becoming consultants. Microsoft (UK)s managing director, Neil Holloway, is no exception. He managed among other things the Organisation Customer Unit and the Enterprise Unit before being promoted to the top job.
But Microsoft offers all employees a range of non-financial benefits too, including free fruit and drinks, an on-site occupational health service at its Reading campus, a wide variety of social functions and flexible working conditions, including sabbaticals, to help with the work/life balance.
The money-rich, time-poor conundrum is one that Bill Parsons, human resources director at ARM, is all too familiar with. With culture, work design and motivation all pretty much sorted when he arrived, Parsons decided that the work/life balance should be the main focus of his retention strategy. To this end he has introduced a policy of allowing employees to take six weeks holiday instead of five for a 5% cut in pay, a fully-paid four-week sabbatical after four years employment, and a sympathetic policy towards job-sharing and flexible working.
And if a recent MORI survey is anything to go by he is on to a winner one in five people said that they would take a pay cut in return for more free time, and more than half of the 780 full-time workers interviewed said that they were worried about their work/life balance, with concern being greatest among managers and high earners.
Filthy lucre
But does money mean anything to those that already have a lot? A new book, Bobos in Paradise, by David Brooks, suggests that many of the US millionaires were rebellious students in the 1960s and the fact that they are richer than their parents embarrasses them no end. In the US, the rich are university-educated sophisticates, who want to show that just because they are rich they are not crass Donald Trump wannabes, he says.
But a survey of 275 chief executives from the fastest-growing tech companies, carried out by the management consultants, Deloitte & Touche, suggests that, embarrassed or not, cash is still king, with 98% of companies saying that money was a key incentive in this high-earning sector.
As one US recruitment specialist says: They always claim the job is never about the money, once theyre rich. But as you negotiate the terms of the job, you discover that there is no such thing as enough money any longer. It is a rare person who will take a pay cut for the work alone.
Cary Cooper, professor of organisational psychology and health at UMIST, has this theory: These people are not interested in money per se but as a measure of value. They are troubled by comparative earnings. Money as a measure of value is important.
There is a baseline above which everyone thinks I have enough money this is different for each of us but once above that baseline other things matter more. Non-financial rewards such as promotion become much more important, he says.
Chambers agrees: I think pay does matter simply because that is how you keep score. However, he adds: Im sure that Bill Gates didnt develop Microsoft into the ultimate mega-force it is simply to make money. He had a dream to offer his software, had the desire and the will to carry out his dream and now benefits a majority of the people in this world because of it. Setbacks? Im sure he has had them. After all, Gates has seen his stock plummet in the past year due to his impending litigation with the United States Supreme Court. Yet his company continues to flourish.
Chambers points to the fact that many monied people give large chunks of their wealth away witness media mogul Ted Turners $1 billion donation to the United Nations.
But many in the high-flying technology sector find that where money fails other financial incentives flourish.
Novasoft Information Technology Corporation, for example, offers top-of-the-range Mercedes-Benz and Rolex watches to cash-rich employees who meet high targets.
Being the best
Millionaires are no different to the rest of us, according to Cooper, who believes that we are all motivated by the same factors: opportunity and autonomy, praise and feedback, involvement in decision processes and, most importantly, fun.
You need to create opportunities and then give people the space to do the job. You need to think about the design of the environment and, in particular, the social environment... Its not that difficult really. Its the kind of approach which you should be taking with everyone.
This was a view echoed by Simon Barrow, chairman of the consultancy, People in Business: The money is a red herring; holding on to great people has never been a real function of money. It just sharpens the problem.
So many people with millions stay and do well in companies, Barrow believes, because they are appreci-ated, respected, stimulated and like their colleagues. But these are the reasons that we all go to work.
This explains why the Virgin boss, Richard Branson, is still chasing deals from the Lottery to train networks, BBCs director general, Greg Dyke, still cares about feedback from chairman Sir Christopher Bland, Microsofts Bill Gates still passionately wants to be on the winning team and the New Statesmans Geoffrey Robinson still wanted to make a difference in government despite all of them having accumulated millions.
Gone are the days when millionaires retired to the country. They are here in the workplace and demanding the very best HR management can provide: salaries which accurately reflect their worth, stock options, flexible working, ample feedback, challenging work, personal development, a good work/life balance with a few perks and some fun thrown in. It could be that the next best thing to actually being a millionaire will be working with one.
Further reading
Who Wants to Manage a Millionaire? by Suzy Wetlaufer, Harvard Business Review at Large, (report)
The New New Thing: A Silicon Valley Story by Michael Lewis, Hodder & Stoughton
Liars Poker by Michael Lewis, Coronet
The Art of the Deal by Donald Trump, Prentice Hall
Bobos in Paradise The New Upper Class and How They Got There by David Brooks, Simon & Schuster
