Read the case study and answer the following questions

One motivational issue that Google pays particular attention to concerns its star performers. Most organizations treat performance evaluation ratingsand accompanying compensation differencesmuch like grades in a college course. Just as a distribution of grades might have a few As, more As, B+s, Bs, and Bs, and a few Cs, so too do performance evaluations wind up with a few 5s, more 4s, 3s, and 2s, and a few 1s. Thus, scores and rewards have a bell curve distribution, with fewer people in the tails and more in the middle. Moreover, just as an A is only a bit more rewarding than an A, so too does a 5 get just a bit more than a 4.

Although theres a logic to that view of evaluation and compensation, it misses an important insight from scientific work on performance. That work suggests that the top 1 percent of performers contribute 10 percent of the firms productivity all by themselves. Similarly, the top 5 percent of performers contribute 25 percent of the productivity all by themselves. Put differently, stars arent just a little bit better than typical employeestheyre worlds better. This is especially true in white collar jobs where there are no equipment or process constraints on what employees can do. As Bill Gates once argued, A great lathe operator commands several times the wageof an average lathe operator, but a great writer of software code is worth 10,000 times the price of an average software writer.

Laszlo Bock, the former head of Googles People Operations group, followed such advice when rewarding star performers. He argues, Internal pay systems dont move quickly enough or offer enough pay flexibility to pay the best people what they are actually worth. The rational thing for you to do, as an exceptional performer, is to quit. Thus, Google prac- tices what he calls paying unfairlywhere unfairly means a rejection of the notion that 5s should only get a little more than 4s or 3s. If the best performer is generating ten times as much impact as an average performer, they shouldnt necessarily get ten times the reward, Bock notes, but Id wager they should get at least five times the reward. He continues, The only way to stay within budget is to give smaller rewards to the poorer performers, or even the average ones. That wont feel good initially, but take comfort in know- ing that youve now given your best people a reason to stay with you, and everyone else a reason to aim higher.

1. Do you agree with Bock that star performers should get a lot morenot just a little morethan average performers? If someone earning a 3 on Googles evaluation system gets a 2 percent raise, what should employees earning 4s and 5s get?

2. Given the budget issues created by giving star performers more, should someone earning a 3 get a 2 percent raiseor should they get less? What are the arguments for and against a 2 percent raise level for average performers?

3. Consider all the things Googles People Operations group does to motivate its employees. Which motivation theories do they seem to be leveraging, and how?