Crowdsource Your Company’s Bonuses

http://blog.idonethis.com/post/24062277595/crowdsource-your-companys-bonuses

by rguzman • 14 years ago

72 49 14 years ago

blog.idonethis.com

I haven't met anyone with a nice word to say about performance reviews.

If you are performing well and delivering results, to then have this annual review process which gives you a big list of all of the extraneous areas that you 'need to improve on' can be a complete sap on the old motivation.

Especially if it's accompanied by the typical 1-2% pay increment. That can really be a drag....

I've quoted this article on the topic a number of times, but it's spot on IMO - http://headrush.typepad.com/creating_passionate_users/2006/0...

If you're going to do them, performance reviews should be about identifying the areas where people are great, and working out how to extract more of that....

crewtide• 14 years ago

Yeah, the biggest issue with management in general (and performance reviews in particular) is that it's focused on what people are doing poorly at/where they need improvement.

Good managers find out what each employee is awesome at and get them doing it. If you hire someone and what they love to do and are great at isn't what you need at your company, then you've hired the wrong person. But I know lots of people who left a job because they kept asking to be moved to a different role, different team, etc, and nothing happened.

Managers: focus on what each person is great at and loves to do.

ironchef3• 14 years ago

It's a pendulum. If management blows smoke and kissy faces all day at me telling me my poo doesn't stink, that's not helpful. If they only point out what is being done incorrectly, that's not good. A blend between the two plus upward reviews (my opinion) have been best when i've seen them in use.

Unfortunately, most companies and people don't design and execute performance reviews well.

ironchef3• 14 years ago

"If you're going to do them, performance reviews should be about identifying the areas where people are great, and working out how to extract more of that..." I disagree. Performance reviews should be about performance. They should examine what one excels at and what one does poorly. They should then use those results to improve individuals, teams, and the company. Person alpha is great at TDD? Person bravo sucks at it? Pair 'em up.

Similarly the results should influence compensation in a meaningful manner? You blew your results out of the water and only get a 1% raise? That's crap. Management's performance sucks in this case (that's why upward reviews are also key).

nowarninglabel• 14 years ago

Why do you think pairing person alpha and person bravo will magically result in person bravo acquiring the skills of person alpha? Among all the possibilites, you might just bring person alpha down without improving person bravo at all. Then, you've made everyone more inefficient.

bloblaw5• 14 years ago

On the face of it this sounds like a good idea, but I see some problems. For example, this presumes that others can understand the value of my contributions.

If I can accomplish something in 2 hours that takes someone else 16 hours....I could very likely go unnoticed. But if I bring donuts for everyone every Friday I bet I get a bigger bonus because people really like me.

My concern is this exchanges reward for actions highly visible to your boss, to reward for actions highly visible to your peers. A combination of the two would be preferable to me

Actually, this already exists in many companies and it's known as "360 feedback" where your co-workers (in and out of your dept) are asked their opinion of your performance before your review. This feedback is factored in to your review.

http://en.wikipedia.org/wiki/360-degree_feedback

z26002• 14 years ago

Shopify employee here - Unicorn makes accomplishments highly visible to both your boss and colleagues. The bonus is that if you do something for a colleague, your boss will find out via Unicorn rather than you having to say anything.

bloblaw5• 14 years ago

My point is that "Unicorn" is a reporting tool. It still takes peers (instead of just your manager, aka the "old way) to understand and accurately value your contribution.

My concern is that not all actions are equal, but the recognition seems to be.

My question is do I get more "points" for fixing the thread dispatcher in the kernel...or do I get just as many for helping you understand how to upload a file to Sharepoint?

That's where you can disenfranchise people. However, I like the idea and to me it is a good step in implementing 360 feedback as part of a review and bonus allocation.

IMHO, combine peer feedback as an equal component of bonus allocation along with management assessment and I think then you have a winner.

neilkelty• 14 years ago

What he's saying is that the Unicorn system results in "highly visible/likely to be rewarded by others" work being prioritized by employees over the work that is actually most important to the company.

smackfu2• 14 years ago

Is there pressure on employees who don't give out Unicorns very often? It seems like a very valuable currency.

zavulon• 14 years ago

There's also DueProps, who turn this into a game: https://dueprops.com/

jturn• 14 years ago

http://angel.co/dueprops

Looks like this is the tool that shopify uses. See the comment from the CEO.

xal2• 14 years ago

DueProps is loosely modelled on Unicorn

tomjen3• 14 years ago

That is going to work well when the employees starts to gang up together and give each other unicorns in return for their unicorns.

smackfu2• 14 years ago

Yeah, we had a little "thanks" program at work that had similar issues. People tended to just reciprocate praise, because it didn't cause any drama, and both people made out.

therandomguy• 14 years ago

I have seen this happen on Yammer. Now tie bonus to that and you have got a worse system than traditional performance reviews.

hmahncke• 14 years ago

Yup - this system gamifies reciprocal altruism, creates cliques and circular thank-you unicorns, and generally sounds de-motivating by quantifying the exact dollar value of a thank you.

edwardog3• 14 years ago

I wrote the first version of this at Shopify.

We anticipated the need to see this kind of behaviour, so there's clear auditing trails for everything that HR and Accounting can see where the bonus money's going.

Having said that, we haven't seen this problem appear yet.

xal2• 14 years ago

simple - fireable offence

agentultra• 14 years ago

I hate bonuses. I'd rather get equity or a bigger salary. I'm shy and I don't like pandering for attention. I just like getting things done, finding ways to make it easier to get things done, and shipping code so I can go enjoy a beer. I could really care less for bureaucracy and competition. It's inefficient.

calinet66• 14 years ago

Here's an idea: remove all politics from the process completely and do away with performance-oriented bonus systems.

They've taken what was essentially a way to make their work into a game and... made it into a game.

Making work into a game is an idiotic idea. Make work into work. Pay people a fair salary that gets their minds off of their salary. Align the goals of the employee with the goals of the company, not their own selfish instincts to game whatever system you put in place to try to "reward" them. Make the success of the company be their reward, whether that be with equity or simple fair across-the-board raises.

I worked for a company a few years ago that used to be full of politics and internal conflict. One year they did extremely well and decided to simplify and give everyone a straight $10,000 bonus, from the janitor to the CEO. There was no way to game this: everyone knew how much everyone got. Everyone was proud of the company and each other. Instead of secretly discussing how much bonus other people got behind their back, everyone was excited and happy and asking each other "so what are you going to do with your 10 G's?" It was the best day at that company.

You can argue against this all you want, but I experienced a level of alignment there that was unparalleled. The people who get off on doing all they can to advance their own paycheck and get a bigger bonus only ended up hurting the company through their politics and game-playing. They were invariably working in a self-centered direction tangent to the company's goals. When that was removed, the dynamic changed completely and it was remarkable how much improvement the company saw not just in the workplace but across the board. New products were released that year that were better than the last, quality improved, efficiency improved.

These fears that in order to achieve high performance, we must reward the high performers with carrots and hit the slackers with sticks are a bastardized religious fiction.

http://en.wikipedia.org/wiki/W._Edwards_Deming

bloblaw5• 14 years ago

> One year they did extremely well and decided to simplify and give everyone a straight $10,000 bonus, from the janitor to the CEO

So the guy that watches YouTube videos for 3 hours, and the guy that takes 2 hours worth of smoke breaks a day got the same as the gal that works 50 hours a week and fixes the majority of the product issues?

Contributions are not equal so please don't treat them that way or you will only disenfranchise your BEST employees.

And remember, your best employees are the ones that have the most options elsewhere....

moron• 14 years ago

> So the guy that watches YouTube videos for 3 hours, and the guy that takes 2 hours worth of smoke breaks a day got the same as the gal that works 50 hours a week and fixes the majority of the product issues?

If those guys have jobs at your company, you have bigger problems than your bonus structure. Unless they are doing more work than they appear to be doing, which is entirely possible.

calinet66• 14 years ago

I expected this response, thanks for taking the time to write it.

The problem is one of statistics. Your employees will always, no matter how hard you try, fit on a bell curve.

Here's the hilarious way most people think about this bell curve (just imagine this defines the set of employees actually working at a company, not just new hires; because it does): http://www.intellectcorp.com/images/bell-curve-hiring.jpg

Say you have 100 employees. There will always be 4-5 who will be exceptional—the upper quintile. There will always be 4-5 who are at the bottom—the lower quintile. The problem is, this will always be true. If you fire the bottom 5, then there will be a new "bottom 5". People will always be worried about their job, the pressure of not being fired will be a negative-feedback motivator (or that's the idea), and the top people at the company will continue to be rewarded.

Two questions:

1. Do you truly think that the top employees are working harder because you reward them? How much harder?

2. What about the other 90 employees?

Your top employees aren't what you should be worried about. Firstly, if you depend on them and (as you say they have the most options elsewhere) heaven forbid they leave, where does that leave you? Fucked, that's where. Second, even if you think the top employees are doing the work of 2 people each, or even 3 people (which is a lot to expect of anyone), 80-90% of your work output is still being done by the thickest part of that bell curve.

What's the answer?

Improve the system. Making systematic, broad improvements will help everyone do better work. This is the true reason the straight 10k bonus worked so well: it was a systematic reward. But other things work even better: provide free lunch and your employees won't leave the office as much. Provide free dinner and they'll stay late. Bam, systematic across-the-board improvement in working hours and efficiency that no bonus would ever come close to. Allow frequent employee skill-improvement days, make them focus on honing their skill sets for 1 day a month without the stress of real work. Bam, everyone gets better, not just the top 5%. There are countless others.

Figure out how to make the 90% in the middle work the hardest—and trust me, it's not by promising them bonuses if they can make it into the top 5%. That might be motivating for the upper 10% or maybe 15%, but not the rest. Improvements to the system they're in are the only good answer. The antiquated structure of bonuses and rewards and the punishment of firing is a religious myth left over from protestant and catholic beliefs in punishment and shame. They're not based on behavior, they're not based on science, and they're simply not true.

Are monetary rewards entirely bad? No, of course not, people should be rewarded for doing good work. I personally think that this reward should be in the form of simple, understandable fair compensation, with as few barriers to that as possible. Other reward systems may work too. But they should not be the focus—the focus should be on improving the system your employees work in, as it will result in gains an order above what's possible with carrot and stick.

Again, please read http://en.wikipedia.org/wiki/W._Edwards_Deming

bloblaw5• 14 years ago

> These fears that in order to achieve high performance, we must reward the high performers with carrots and hit the slackers with sticks are a bastardized religious fiction.

The point is to incentivize everyone with the carrot, and forget about the stick. Getting a small bonus or no bonus is not a punishment because a "bonus" is precisely that....a bonus is the reward/carrot.

Not being rewarded with a bonus is not the same thing as being punished.

calinet66• 14 years ago

You are correct, but keep in mind that it is a negative reinforcement, and carries with it many of the demoralizing effects of being punished.

My main issue with the bonus structure is that by motivating everyone with a bonus you turn the workplace into a social game where the focus is on the bonus or reward itself, and frankly, only 10-15% of people really care about it or think they have a shot at it, and those who do are more into the game than the work itself.

Point being, I don't really want my employees chasing carrots, I want them writing software. The negative effects of the game playing and misdirected goals outweigh the positive motivation effects for the tiny percentage of the workforce who cares.

I'd rather bring the whole company up.

jeremyarussell• 14 years ago

from the janitor to the CEO.

It's cool to hear that, too many people forget that the janitor's, maintenance crews, and other misc jobs that most people would see as beneath them are all extremely important.

How much work would get done if every day you had to go dump your own trashcan? Getting you out of whatever grove you might have been in before? Or how demoralizing it would be to go to a workplace that has sticky floors?

(to anyone who might think I'm being sarcastic, I'm being sincere. Too often these positions aren't looked at as important to the working of the whole company, when it couldn't be farther from the truth.)

pcopley• 14 years ago

As someone who used to be a janitor I can tell you exactly why most people don't care about them: 95% of the time they're not employees, they're contractors. Every office I've worked in has contracted out the janitorial work to a business that strictly does office cleaning n days a week.

gawker• 14 years ago

This sounds similar to what Rypple is doing: http://rypple.com/

From the comments, it seems like no one has tried to game the system but I'm wondering if in a large corporation, anyone would try to game it?

eof• 14 years ago

I don't remember the exact details, but I have been a long time happy customer of hotdrupal.net

The owner Steve made something like a request for bonuses for his employees and any extra money sent went straight to the employees.

I thought it was a nice gesture. Not exactly what the article is talking about, but it does seem to literally be crowdsourcing bonuses.

systematical• 14 years ago

article snippet: "logs into unicorn"

me: vomit and close browser

_pferreir_• 14 years ago

I think a hybrid performance reviewing system would be the best: supervisors, supervised and peers. It is frustrating that managers do not get evaluated for their management capabilities - why not let those who they manage have a saying? They, better than anyone else, know how good of a leader this person is.

edwardog3• 14 years ago

Shopify employee/original author of unicorn here.

This bonus/props thing is really just for fun and recognition more than anything else. Performance reviews and salary adjustments have their own separate process.

ashliana• 14 years ago

Initial issue/concern I see is that it would seem people who have more internally-interactive/colleague-facing job roles would unfairly receive more unicorns/more $$. So workers who are pretty independent or mostly external-facing would be less likely to receive equitable bonus/appreciation for a job well done. Of course the client-facing positions can more easily have another metric for determining bonuses, though I think many times those metrics are pretty flawed.

Anyway. I like the idea of crowdsourcing a bonus, but think it needs to have a lot more nuance in it than it appears exists in Shopify's approach in order to actually be a fair and robust tool for bonus determination. Love the unicorn touch, though!

zeroonetwothree• 14 years ago

There is also this older hacker news item that's relevant: http://news.ycombinator.com/item?id=620546

codeonfire• 14 years ago

My approach has been to just to ignore reviews, compensation, and bonuses altogether. People are simply not capable of getting this right. Everyone knows how dishonest people can be, especially in the workplace. To have any sort of review system requires and assumption of honest reviewers, which isn't even close to reality.

The job market will sort things out in most cases over the long term.

Crowdsource Your Company’s Bonuses

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