A NOTE ON JOINT VENTURES

There is a further category of 'start-up', different in nature to the entrepreneurial model described above, but which also needs to be considered and will frequently be encountered by the reward practitioner. This category relates to joint ventures or like arrangements set up by two established organizations and often designed to leverage a new technology, break into a new market and so on. Such situations can give rise to a complex reward challenge, for the following reasons:

• The joint venture may be staffed, at least in part, by executives from both partners. In all likelihood, as in a merger or acquisition, the existing reward arrangements on which these executives are employed may be very different and the question then arises as to whether these individuals are secondees, whose entitlements are to be retained, or whether a new reward policy needs to be developed as a basis for new contracts.
• The joint venture may need to attract expertise from outside for whom the remuneration package needs to look very different to anything that currently exists in either partner organization.
• As for the 'genuine' start-up described above, joint ventures are often inherently more risky than employment within the established partner organizations. The business potential for growth may also be significantly greater. In these circumstances, aggressive reward arrangements, designed to offer high earnings opportunities in both the short and medium term, often need to be created. A key consideration here is whether or not long-term rewards should relate exclusively to the performance of the joint venture or, in part, to the performance of the parent organizations. The reward practitioner is often key to resolving these issues at an early stage and allowing the joint venture to proceed on an agreed basis.