Incentives

Buck and I have been having a lot of discussions about incentives in the workplace, such as bonuses, awards, and the like. It started from an article by Joel Spolsky on his Joel on Software website in the midst of a lot of changes in the company, include attrition of most of the staff.

My first reaction was "Bah!" Spolsky has lots of internal motivation, so the idea that he is not motivated by stuff like bonuses or awards. My recollection is that in addition to being a hotshot programmer, including at Microsoft for awhile, he's been an Israeli paratrooper or some such thing. His view of what motivates people has to be skewed from the majority.

Buck's pushing came in handy. He went on to read some of the references Spolsky listed. The main guy behind the "rewards are bad" movement is a research named Alfred "Alfie" Kohn. He's written plenty on the subject, including the fairly good synopsis, "For Best Results, Forget the Bonus."

I won't go into all the nitty-gritty detail here, but the essence of where we've settled is this:

• The average base pay is significantly higher than it was six months ago.
• There is no annual performance review. Instead, we have weekly one-on-one's and make sure that performance, good and bad, is addressed no less frequently than that. Usually, it doesn't have to even come up, but that assures there's a forum for it when needed.
• There is an annual salary adjustment discussion where cost-of-living, changes in responsibilities, and changes in skills, training, and experience are addressed and a new salary is set for the next year.
• There are no bonuses or awards.
• Celebrations, like a company-wide party for the shipping of a new book, make a lot of sense, as they are not tied to individual performance.
• An employee dividend will be proposed to shareholders (and I believe there is substantial support for it,) but again not tied to individual performance, but instead to company performance. A share of profits will be set aside to distribute to all (salaried) employees. Since salary already addresses varying individual contributions, this is split equally.

What's cool is that the salaried staff met (without me) to discuss and refine this plan such that they support it. It's much easier to deal with short-term dissatisfaction with removing things such as bonuses if the staff is already bought in, but it's apparently not necessary.

I like where this is going. A year or two from now, we'll see if Kohn is right.