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2G Robotics: Designing
a Compensation Plan that Pays Off
Karen MacMillan, Wilfrid Laurier University

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Stephen D. Risavy, Wilfrid Laurier University

Jason Gillham, the founder, president, and owner of 2G Robotics, was engrossed in
the document displayed on his laptop screen and didn’t even hear the first soft knock

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on his office door. Only after the employee tried a second time, more firmly, did
Gillham become aware that someone was asking for his attention. Blinking several
times as he changed focus, he looked up to see Eric Lin, one of his developers, standing
hesitantly at his office door.
Gillham smiled and said, “Hey. How’s it going?” Lin shuffled nervously and said,
“Good. Just wondering if I could talk to you about something.” Gillham nodded
immediately, but snuck a quick glance at the time display at the bottom of his screen.
He was in the middle of corresponding with a potential customer. He said, “Sure, of
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course. But I’m just trying to get something out. Can it wait a bit?”
Lin put up his hand in a stopping gesture and said, “No hurry, we can talk
tomorrow if you want. That’s fine, that’s better, actually.” He started to turn away. But
before he took a step, Gillham stopped him by asking, “What did you want to talk
about?” The employee looked at the ground a trifle uncomfortably, and said, “Nothing
too big. I was just wondering if we could talk about maybe increasing my pay.” Gillham
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smiled, and said, “Sure, we can talk about that. How about tomorrow morning, first
thing?” The employee nodded and began walking back towards his work station.
Gillham watched the employee’s retreat until he turned a corner, and rubbed his
own forehead to ease some of the stress he was feeling. “I guess I knew this
conversation was coming.” he thought to himself. Lin worked for 2G Robotics for just
over a year, since June 2015. His salary remained the same since then. He was a strong
contributor and recently worked a lot of hours on an important project. That was
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usually the point where employees either started hinting about a raise or just came out
and asked.
Gillham realized that compensation seemed to be a trending topic these days; in
one of his recent meetings with his lawyers, they suggested that Gillham consider
implementing an ‘employee trust,’ a benefit that would give some or all of his
employees a stake in the company. Gillham went back to work on the document for
his potential customer but knew that he needed to make some shorter-term decisions,
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1Copyright © 2017 is shared between the Case Research Journal and the authors: Karen MacMillan
and Stephen D. Risavy. The authors would like to acknowledge Associate Editor, Gina Grandy, as
well as the anonymous CRJ reviewers for their helpful suggestions regarding this case. The authors
would also like to thank Jason Gillham for his involvement throughout the case writing process.
Employee names and other details concerning the employees mentioned in this case have been
changed.

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such as what to do about Lin’s pay as well as some longer-term decisions, like
whether he should implement the lawyers’ employee trust suggestion.

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COMPANY HISTORY
Educated in robotics engineering, Gillham founded 2G Robotics in 2007 with seed
money from family members who believed both in him and his passion for underwater

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technology. The company produced 3D laser scanners that operated while immersed
in water.
Traditionally, when people needed to look at structures or environments that were
underwater, they relied on sonar or 2D photography, methods that were sometimes
unreliable, difficult, or time-consuming. Laser scanning, on the other hand, was
cutting-edge technology, which led to more precise and comprehensive information
that could often be collected in a fraction of the time. In the ten years since starting

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the company, Gillham and his team successfully built over 50 laser scanning systems
that were utilized on all seven continents. These custom-made units were used in a
variety of applications, including inspecting pipelines and off-shore drilling platforms,
repairing wells, examining ice formations, documenting seafloors for conservation
purposes, and the archaeological documentation of shipwrecks. 2G Robotics carved
out a niche and developed an international presence as well as a reputation for
delivering a product that worked. Reliability was critical—no customer wanted to go
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to the immense trouble of hauling a laser scanner to a remote off-shore location,
sending it down with a diver or a submersible, only to find that it did not work. The
undersea community was small and word spread quickly. Each system needed to
deliver or orders would dry up.

EMPLOYEES—THE KEY TO SUCCESS

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2G Robotics experienced a lot of success, but Gillham knew his employees were, in
many ways, the key to his company’s success. When Gillham started out, he was the
only full-time employee but he slowly added people and the company grew to 15
employees by 2016. This meant that Gillham’s job evolved over time as well. In 2G
Robotics’ early years, he spent the majority of his time on the technical development
and building of the units, but over time he focused more on managing people and on
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customer relations and development. He relied heavily on his employees to put their
hearts into the units, especially now that he was stepping back from overseeing every
step.

THE EMPLOYEE PERSPECTIVE

As Lin headed out to his car after finishing-up his work for the day he saw one of
his fellow developers, John Barber, putting his laptop bag into his car. Barber turned
around and remarked, “Hey Lin, saw you in Gillham’s office earlier. What’s up?” Lin
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told his colleague about his request to discuss his pay with Gillham and that they were
going to speak in the morning. Barber replied, “Yep, everyone knows that’s what you
have to do to get a raise around here. Gillham is fair and usually meets the request and
I haven’t heard of anyone leaving here recently because of the money, even though it’s
probably a little lower here than you might find somewhere else. But, you know that
overall, the work is interesting, we all love that we get the opportunity to learn new

2 Case Research Journal  Volume 37  Issue 3  Summer 2017

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 things, and I would say that this is the best group of people that I have ever worked

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with.” Lin thanked Barber for his input and after a couple of minutes spent chatting
about their plans for the evening, they bid their farewells.

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THE END OF ANOTHER LONG DAY
By the time Gillham finished the paperwork on his desk, it was pretty late and most
employees had left for home long ago. Stretching and stifling a yawn at the same time,

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he took a quick walk through the facility. Although it was getting dark, he wasn’t too
surprised to see two technicians still at their work tables. A unit was scheduled to be
shipped in a few days and there were always components to be checked and calibration
verification to be performed. He spent a few minutes talking with the employees to
make sure there were no big issues, and then he bid them good night and walked back
towards his office, thinking it would be nice to get home at a decent hour for a change.
As he made his way, he passed Lin’s desk, and it reminded him of their plans to talk

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early the next morning.
Instead of heading home, Gillham sat back down at his desk and opened the
payroll system that detailed everyone’s salary. He quickly found the information on Lin
and sat back as he considered the amount. Lin’s salary was around the same amount as
other low-tenure people in the company, but it was clear that Lin wanted more. Leaning
back in, Gillham quickly opened a document to make some notes for the meeting. This
was not the first time an employee approached Gillham to discuss compensation.
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Gillham’s response was usually to listen to the request and, if it seemed reasonable, to
give the amount the employee requested. If the money was more than the company
could afford, that just meant that capital would be tight for a bit, maybe they would
have to postpone buying a piece of equipment until some additional money flowed in.
Gillham was okay with making the occasional short-term sacrifice if it meant keeping
his strong employees happy in the long run. Occasionally Gillham didn’t wait for an
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employee to ask for a raise. A few times he made the first step and upped an employee’s
salary when that person was a significant contributor. The company strategy of
reviewing salaries on a case-by-case basis worked fairly well. Early in the life of the
company there were some departures due to monetary dissatisfaction, but as far as
Gillham knew, no one left the company for that reason in the previous few years.
However, Gillham really didn’t want to take any chances on losing Lin. Lin was a
great asset to the team and Gillham’s competitors would be happy to hire him. Gillham
started to list the questions he wanted to ask Lin during their meeting. He knew that
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he would mostly be listening to what Lin was going to say, but this would be an
appropriate time to see if pay was the only issue on his mind.

EMPLOYEE REWARDS
A few minutes later, Gillham sighed as he looked at the list of questions he developed.
He wondered if he was doing enough, not just for Lin, but for all of the people who
worked with him. He worried about losing his employees to a bigger company that
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would offer more money, more benefits, and more opportunities. When 2G Robotics
was in its early days, money was really tight. The people who joined the firm were
clearly motivated by something more than just financial compensation—because they
probably could have received more elsewhere. Most of them came from the same top-
notch engineering program as Gillham, and, like him, were techies who lived for the

2G Robotics: Designing a Compensation Plan that Pays Off 3

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 intellectual challenge of building something radical. Gillham joked in the early days that

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half the pay was in fun.
As the company grew, so too did the salaries, but Gillham knew that they were still

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a bit low compared with the larger outfits, considering the level of talent in the firm. A
dental and health benefit plan was added, but it was modest compared with the flexible,
broad-reaching plans that most of the larger tech firms in the region offered. Gillham
tried to make sure that his company culture was strong and that his people were doing
interesting and engaging work. Developing the equipment was still fun, and some

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employees travelled internationally to provide unit support. Gillham kept his office
door open whenever possible, and employees seemed ready to drop in unannounced
to chat. To ensure that he spoke with each employee on a regular basis, he started a
‘Walk the Block’ program three months previously. Every day or so, Gillham invited
one employee to go for a walk with him around the block; this initiative gave Gillham
a chance to talk naturally with each employee.
Communication between employees was also open, frequent, and positive. Every

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week they held a townhall meeting where each employee updated the group on what
they were doing and what they needed. Regardless of their position in the company,
employees were able to speak up and impact company decisions. To Gillham, it still
felt like they were a group of friends, and he thought that there was something engaging
about working with like-minded people, around the same age, who loved the same
things as you.
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IS THE COMPENSATION PLAN SUFFICIENT?
Although there were various tangible and intangible benefits associated with working
at 2G Robotics, Gillham wondered if it was time to change the way that he addressed
employee compensation. The company was doing well, and he wanted to do everything
he could to make sure that continued. Reputations took a long time to build, and only
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a moment to destroy. To keep the momentum going, they needed more successful
projects. He also knew that he would have to attract additional talented employees
while keeping the current ones happy and motivated.
Gillham wasn’t sure if his compensation system was strong enough to support
these goals—maybe it needed more structure or perhaps, more components. Should
he have a system that defined pay ranges and raise schedules to ensure consistency
across all employees? Were there other rewards that he could add? He didn’t like to fix
something that wasn’t broken, but he wondered if maybe it was time to take his
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compensation system to the next level.

ADDING AN ‘EMPLOYEE TRUST’

Gillham also reflected on the suggestion from his lawyers about instituting an
‘employee trust.’ It was a tool, whereby, if the company was bought out, a pre-specified
percentage of the purchase price would be set aside for the employees. That lump sum
would then be divided up amongst the employees based on a predetermined system.
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Essentially, an employee trust was similar to giving employees stock options, but an
employee trust had more flexibility, simpler administrative requirements, and better tax
implications. He could set it up so that the employees who were with him the longest
and who contributed the most would get a payout or a bigger payout than others. This
would be a way to reward the people who stuck with him, and who helped the most to
build the company into a success. If the company continued being successful, it was

4 Case Research Journal  Volume 37  Issue 3  Summer 2017

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 likely that a bigger organization would try to buy them out, and, if they were bought

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out, then the employee trust would be paid out. Gillham liked the idea when it was first
raised, but, at the time, he was not yet ready to put the effort and financial resources

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into making it happen.

AS FOR TODAY …
Gillham drummed his fingers on his desk as he tried to make up his mind as to whether

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it was time to make some changes. Finally, he shook his head. He wasn’t going to figure
this out without some additional time. The immediate issue was to have a productive
meeting with Lin in the morning but he wasn’t sure if he should mention the possibility
of the employee trust during that meeting. Regardless, in the next month or so, Gillham
also needed to decide what to do about the overall compensation plan as well as
whether to institute the employee trust. With a sigh, he grabbed his keys and shut his
laptop. It was time to go home.

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2G Robotics: Designing a Compensation Plan that Pays Off 5

This document is authorized for educator review use only by SHAJI KURIAN, IFIM Business School until Nov 2018. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860