
Joel Spolsky: Thanks or No Thanks - twampss
http://www.inc.com/magazine/20090101/how-hard-could-it-be-thanks-or-no-thanks_Printer_Friendly.html?partner=fogcreek
======
te_platt
My best friend came up with a system that saves the company he worked for
around $100,000 a year. His boss took notice and gave him two free tickets to
a movie theater. He quit that afternoon. He told me a sincere thank you would
have been ok. He was getting paid to work there already after all. The token
bonus was taken as an insult, as if that was the value of his contribution. If
you give a bonus make sure it matches the value of the action. If you can't
measure the contribution in dollars, find some reward that isn't in dollars.

~~~
tamersalama
I say that's insulting for the reason that its value is low. A 2 free tickets
or an XBox is a reflection of how bad a manager is, rewarding sincere efforts
disproportionately.

The friend wasn't hired to save a business. If an external company was hired
to do that, they would have been compensated accordingly.

Why would making him a partner or offering him a 'good' percentage of the
generated revenue be out of the question?

~~~
netcan
Interesting side no.te:

If you ask a bunch of people on a project to estimate modestly how much they
've contributed, you almost always get >100%

------
mixmax
There's a classical study from Harvard business review that basically states
that incentive and reward schemes don't work. The study found that employees
simply focus their effort on the measure of reward instead of trying to do
what's best for the company.

If the incentive is measured in turnover sales people will sell at a loss to
get their bonus, LOC as an incentive for coders will produce long and crappy
code, etc. Whatever the incentive was it turned out that people would game the
system and the end result for the company was that compared to a baseline (no
compensation besides pay) the results were negative.

<http://apj.sagepub.com/cgi/content/abstract/33/2/20> (exec. summary)

A related study (that I can't find the source for right now) found that when
asked employees wanted recognition for their work more than anything else. A
simple thank you or wow that's awesome works much better than a monetary
reward.

So in answer to Joel's question - the fact that he wrote the article and
thereby gave lots and lots of public praise is as good a reward as any.

~~~
Alex3917
Don't read the article, just read the book. It's called Punished by Rewards,
written by Alfie Kohn. Think of it this way: if you're not reading books, you
fail. And if you're reading books but not books like this, then you're reading
the wrong kinds of books and you also fail.

And while you're at it, also read No Contest and The Schools Our Children
Deserve. They are three of the most important non-fiction books written within
the last 30 years.

~~~
dgabriel
Still, I wonder if Alfie Kohn accepts sincere praise as payment for all of his
consulting gigs...

~~~
Alex3917
If you are going to troll at least read the subtitle of the book:

"The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes"

~~~
dgabriel
Sorry if that came across as "trollish." It's just that adequate compensation
_is_ important, meaningful recognition matters, etc.

Being enthusiastic about your job matters, but the big tech companies that
recruit the cream of the crop (Google, Amazon, etc.) pay well above market
rates, and don't seem to be suffering a lack of quality.

~~~
Alex3917
And nowhere does Kohn say that adequate compensation isn't important.

------
m104
What's so wrong with simple profit sharing? The only place I've worked at (or
even heard of, for that matter) that implemented a form of true profit sharing
was Outback Steakhouse. Servers got tips, so are exempt, but hosts, cooks, and
bussing staff got cold hard cash on their next work day that came straight
from the profits of the entire restaurant from their previous work day.
Simple, effective, and gloriously rewarding.

For an IT shop, each worker's salary/wage sets their base pay and is
confidential, while a biweekly or monthly "bonus" check could be the profit
sharing reward. In that environment, everyone knows when business is going
well and everyone knows when it isn't. Profit sharing can (and should) be open
for discussion among all employees.

So, take Joel's example: Noah helps make an additional $1 million in a year
for Fog Creek. What's that going to translate into for each employee's profit
sharing check? I'll assume that Joel's generous, and that the ads are
wonderfully profitable, so let's say an additional $400/mo/employee (average)
while the ads are active. Holy shit, Noah, thanks! So, Noah get's more. Noah
gets recognitions. Noah's coworkers get more. The company makes more. Hell,
even Joel gets to make more. It's win/win/win/win.

And don't get me started on company stock. Stock is fine in many cases, but
that's not what successful organizations make. They make money! Share it with
the employees. They deserve it. 'Cause here's the thing: If your take-home
wage isn't tied to your performance or the performance of the company as a
whole, what exactly is everyone's motivation? Oh, sure, _some_ people are
going to do a great job no matter what, but that's not what really makes a
company great, now is it?

~~~
wizard_2
I would love to hear a reply to this. One of the most successful businesses in
my neighborhood is a cooperatively owned bagel shop. They've got a bunch of
locations now, and they always hustle to make your bagel.

I'm not very familiar with the business model though, especially with regards
to businesses that don't sell bagels but make software, or sell services.

~~~
m104
It's not really a new business model or anything, but the simple idea (which
some companies successfully implement) that some portion, say 30%, of the
organization's net profit of each pay period is divided up by the number of
workers (non-management, non-executive employees) and dispersed to those
workers at the next pay period.

Bonuses, retirement plans, health benefits, and all other incentives are still
set at management's discretion, but are funded with the other 70% of the
profit. It's really that simple.

Realize too, that simple profit sharing coexists with the normal grading of
wages based on whatever position/seniority algorithm the organization uses. So
you're guaranteed, as a developer or designer or whatever, to make your normal
wage and be considered for increases. But every pay period would have that
profit sharing bonus that shows you how the business is doing and exactly how
much your organization values your contribution.

Stock-based incentives are supposed to fulfill this role, but they're often
given out after some major event and then only to the most visible members of
the contribution. Arbitrarily, in other words. Holiday bonuses are nice, too,
but they are supposed to be confidential in most organizations (creating
uncomfortable speculation and comparisons) and can lead to unmet expectations.

------
johnrob
I think there are a couple of relevant points that were not mentioned in the
article:

1) The only reason those ads could sell is because of the brand that Fog Creek
had already created. That brand requires an entire company to maintain.

2) The job board produced 1 million in revenue for Fog Creek. Since Fog Creek
had existing revenues, a better way to quantify that is to say that revenue
increased by X percent. So rather than say that an employee brought in an
extra million, it's more accurate to say that he/she made an X percent
increase in revenue.

With this logic, Here's a compensation idea - give the employee the same
percentage increase that the incremental revenue represents. If you increase
company revenue by 10%, you get a 10% raise.

~~~
d0mine
_If you increase company revenue by 10%, you get a 10% raise._ </quote>

You've missed the point.

There are direct _and_ indirect contributions to revenue. Only because his
contribution was direct it doesn't mean one should reward him more than
another programmer that made not so easy to spot contribution.

If one can't measure indirect contributions in dollars then one should not
reward direct contributions in dollars too.

Additionally see intrinsic vs. external motivation in the article.

~~~
johnrob
You make a good point. Everyone contributes to the bottom line. However, in
this case we are dealing someone who goes above and beyond their role to
create value for the company. The intern wasn't brought on to create a new
business model, but he did it anyways. There would have been no penalty had he
never even mentioned the idea. That's why it deserves special compensation.
Both to reward the person, and to ensure that other employees will speak up
when even when they have no obligation to do so.

~~~
rjprins
It still doesn't mean he deserves compensation. He was not extrinsicly
motivated at all, so he although he would probably like the money it's not
what he "deserves". I'd say he deserves recognition for his contribution, and
that was throwing in the idea of ads. It's not a new idea, he just brought it
convincingly with the knowledge that ads at 37signals cost $250. Well, he got
plenty of recognition now.

~~~
johnrob
Wouldn't companies want to reward people for assuming an extra role and
creating value, regardless of whether it is deserved?

The more I think about it, the difficulty of implementing a policy like this
could be the show stopper here.

------
anuraggoel
Reward: Noah Weiss gets to claim this on his LinkedIn profile.
<http://www.linkedin.com/pub/5/987/ba3>

------
jbarciauskas
The one concept I had while reading this was to give a bonus to _everyone_ in
the company. This would reward Noah, and avoid the morale-destroying hazard of
elevating one person's contributions. If the team has "jelled" properly,
benefiting your teammates should mean almost as much to you as benefiting
yourself, and the example set would potentially lead others to be more
forthcoming with their ideas.

~~~
nuclear_eclipse
The company I work for does this sort of practice as well, but in a less
direct manner. When the company does really well, eg, a great sales year of
new products, all employees receive _generous_ contributions to their 401k
based on relative salaries. Probably the best reward I can think of, because
it benefits your _future_ ; a generous contribution now, especially for the
younger employees, can turn into a _huge_ contribution by the time of
retirement.

~~~
Shamiq
Yea, but you also need to discount the value you get in the future. Even so,
it sounds like a great deal.

------
ksvs
His second reward-- more valuable, since he probably will stay at Google-- was
to have this article written about him.

~~~
OpenMIKE
Nay, according to his linkedIn profile, he's already left google.

~~~
unalone
Nope! Reread that. Now he's an associate project manager.

~~~
palish
You caught OpenMIKE red-handed. Quick, let's all downmod him to -31337!

Edit: in case it wasn't clear, the purpose of this comment was to block the
impending group-downmod of OpenMIKE. He was already at -1 when I posted this.
That already happened once today to a brand-new member of HN (rambo), so I'm
rather passionate about preventing that kind of behavior.

~~~
unalone
Yeah.

Sorry, OpenMIKE. I didn't mean to be calling you out. Just pointing it out.

~~~
palish
Hehe, sorry, to be clear, it was very good that you did. I just meant to
discourage the downvoters, and certainly not to blame anybody.

------
spoondan
There's something I find morally and intellectually dishonest about this
article. Although Joel ultimately decided Noah deserved a bonus in this case,
he never outright rejects the argument that bonuses aren't deserved for such
cases in general. Rather, he argues that a software company is an idea
factory, therefore he was already paying Noah for his ideas.

That is patently absurd. He was most definitely NOT paying Noah to come up
with ideas for new business opportunities. To the extent he was paying Noah
for his ideas, it was with regard to their existing products and the work he
was assigned to. Noah went above and beyond his duties, and fairly
compensating him for that is not the act of benevolence that Joel makes it
sound like.

There's also some shocking cognitive dissonance on display here. On one hand,
Joel repeatedly refers to Noah's contribution as a million-dollar business. On
the other, he wonders what an appropriate bonus would be and even contemplates
giving Noah a video game console worth a few hundred dollars.

The elephant in the room is that Noah deserved a fair portion of the new-found
profit. Now, this compensation may well be unsavory for any number of reasons,
not the least of which are Joel's business concerns. But shouldn't that
argument be made, rather than pretending that an idea literally worth a
million dollars is hard to quantify?

~~~
zmimon
One point you (and a lot of people) are missing: Joel was the one who took the
business risk of posting those ads. It may seem risk free in retrospect, but
they didn't know that in advance. It could have pissed off all his software
customers, cheapened and diminished his brand. It could have had technical
problems and become a nightmare with people wrongly charged or spammed. Just
about anything _could_ have happened. Noah took no risk, he just suggested an
idea. Joel paid him to implement the idea, he didn't go "above and beyond" in
that sense.

So in all this righteous speak of what is a "fair" reward for Noah, keep in
mind that his contribution, vital though it was, is dwarfed by that which Joel
had to make to enable it to be realized.

------
geebee
Noah did a great job here, but I think Joel may be overstating the magnitude
of his contribution.

I could start a blog and add a job postings section. No problem. But I would
not be able to fill it with postings at $350 a pop. Is this because I don't
have Noah's ideas and programming skills, or is it because I don't have a blog
that reaches thousands and thousands of talented developers?

~~~
ConradHex
If I'm understanding the article, the point is that Noah said, essentially,
"here's one way you can convert all those eyeballs into cash", and then
actually went and did it. That's pretty significant.

~~~
geebee
I agree. Monetizing something that is already there can be extremely
insightful. And writing any good production oriented code takes talent.

So this really comes down to how remarkable an insight you feel the "one way
to convert eyeballs into cash" truly is. It sounds like Noah noticed that
37Signals was leveraging its popularity with developers to run a profitable
job site, realized that JOS could do the same, and convinced the boss to do
it.

So yes, it is significant. It's really a matter of _how_ significant it is...
sounds like I'm saying it's significant, and you're saying it's very, very
significant.

Reminds me of a time where Ebert thought a movie was the best of the year, and
Siskel just thought it was a damn good movie. Those arguments are kind of
strange, because there's very little to really disagree about. You have one
person saying "how could you not see how awesome this is", and the other
saying "well yeah, it's definitely really good."

------
swilliams
Bonuses/rewards are so hard to do "fairly" it seems like someone will always
feel shafted (deserved or not).

One place I worked at handed out bonuses on a curve. Come bonus time the curve
was thrown off because every manager was "grading" at the same time, and the
bonuses that people were expecting (and could watch on the intranet) changed
rapidly, usually for the worse. There was a pretty huge uproar over the
process, but the system is still in place today. It was so messed up that
people were complaining about getting _free money_.

In the past Joel had mentioned a profit sharing scheme for every employee,
which seems like a good idea, but still has downsides for the big-idea guys,
like Noah in the article.

Has anyone worked for a company that had a really good bonus plan?

------
johns
While this article and discussion is about bonuses, it should really be about
what produced the value of the job board. It wasn't the software he built, it
was Joel's large following and years of brand building. The idea to capitalize
on it was good, but not all that valuable on its own.

~~~
aston
Yeah. Considering it's mostly Joel's writing that has pulled people towards
the forums (and thus the job board), one could make an argument that the $1
million should mostly be Joel's anyway.

~~~
jimbokun
"one could make an argument that the $1 million should mostly be Joel's
anyway."

It probably is.

------
prakash
Interesting backstory: Back in 2002/03 myself and a couple of other regular
visitors to JoS forums used to post jobs due to the fact that there were many
interesting people that we would have liked to work with.

Joel sent out an email mentioning that posting jobs reduces the signal-to-
noise on the forums -- he was right.

So, Simon Lucy (<http://www.linkedin.com/in/simonlucy>), another regular
visitor to JoS sets up ijustheard.com for the forum visitors to post jobs.
Here's the archive.org page for it
([http://web.archive.org/web/20030219230747/http://www.ijusthe...](http://web.archive.org/web/20030219230747/http://www.ijustheard.org/));
I think Simon shut it down in 2005 since it never did end up getting any
traction, and interestingly Fog Creek makes a million $ out of it -- good for
FC!

~~~
tptacek
I don't think you were implying anything, but for what it's worth, Fog Creek
is probably right; job ad posts always annoy me on forums.

------
timcederman
The one thing not mentioned is that the million dollars didn't come just from
the product. It came from the brand recognition Fog Creek has and the fact
that it had the community. What were the things that attracted the community
and enticed people to post the ads in the first place? That had the most
value.

Edit: Whoops, just saw johnrob noticed this too.

------
Tichy
I almost expected the conclusion that for his own good they decided to not
reward him, because it would have completely destroyed his motivation ;-)

------
euroclydon
I had a job with a small start-up. They advertised "performance based bonuses"
when I was hired, so I figured I would make up for a not-so-hot salary with
the bonus. We had a good first year. The owner even sent out an email thanking
the four non-founders for our effort, and stating how many million dollars
they made.

A few weeks went by after the email (Christmas was fast approaching), and I
still hadn't received a performance review. Two days before Christmas, the
owner walks into my office and mumbles something about a little extra in the
check. Well, I got $400. I considered it a slap in the face, and found a new
job.

A couple months later, right before I quit, the gave me a review, and a 4%
raise, but it was too late.

------
jeeringmole
Read Robert D. Austin's book Measuring and Managing Performance in
Organizations (<http://www.dorsethouse.com/books/mmpo.html>) for an absolutely
devastating analysis of this problem.

------
npk
I've asked this question months ago, but I never received a satisfactory
answer:

What is the value of stock in a private company? Do you receive dividends on
the stock? You can't sell the stock to other people? The only time it's of
value is in a liquidity event. Suppose Fog Creek's not planning one in the
future, what does this stock do?

~~~
vitaminj
Stock is obviously part-ownership of a company. When a company makes a profit,
it has basically two options - 1) re-invest some or all of the profit back
into the company, or 2) divvy it up amongst the owners (ie. stockholders),
which is more or less a dividend.

My old man runs a small business with about five stockholders. It's a mature
business and he has no real plans for expanding, so every year he divides the
company profits up between the shareholders.

You could sell your stocks to other people, but this would depend on the rules
governing the buying / selling of shares as set out by the company when you
acquired the stocks. Often this is just by agreement because there isn't a
very liquid market for shares in private companies (for obvious reasons like
lack of transparency and difficulties in valuation).

If I were to buy shares in a company, my valuation would depend on the
company's earnings and the opportunity cost of putting my money in a "risk-
free" investment (like treasury bonds)... which would dictate the base price-
earnings ratio for which I would be indifferent to investing in the company or
bonds. Of course, the company's potential for growth would affect the
valuation (ie. higher P/E for growing companies).

------
tedroden
This is a great article and Joel is a smart guy, but how many times has he
written this article? I guess it's new because he put a new anecdote about an
actual person, but he's been harping about this for years on his blog. He
makes a good point but I wish he'd put new stuff in his Inc column.

(sorry for the rant)

------
simplegeek
I'm not sure if it really was an "idea" in true sense of the word. Real
contribution of Noah was to make Joel aware of his inability to spot a small
but profitable segment (no disrespect intended). If you happen to be a part of
company that's on the verge of becoming a "real" company then you're bound to
spot such segments ignored by high-ups given you're aware of industry trends
and keeping your ear, eyes and brain open. I guess people at FogCreek must
have applauded Joel for his contribution in that he listened (thought,
reflected and then executed) to what an intern had to say in the first place.

------
RK
I feel like I'm in a slightly similar situation at the moment.

I very recently told the founders of the startup I work at about a business
idea I had that relies on our core technology. Our company really needs a new
market, and this one looks like it could be huge. After explaining more of the
details to them, they got very excited. We are currently investigating the
feasibility of using our product for this application, etc., but if it works,
it might "save the company".

Assuming it works out business and tech-wise, I have no idea how this might
affect me (besides still having a job to go to).

------
azgolfer
Would they have eventually thought of this anyway? Then the extra value is
that he thought of it sooner. Also - he could have tried to negotiate, maybe
go through a third party (I talked to a guy at company X who has says he has a
great idea for our site) to get compensated. If you give up your idea without
any agreement, you are losing any leverage you might have.

------
critic
To reward or not to reward is a tough dilemma. That's why I would just give
him a certificate "A donation has been made in your name to the Human Fund".
This way, there is no jealousy from the coworkers. One's contributions are
appreciated (or seem to be), and you save your money for things that matter.

------
known
Why not ask 'em? Say something along the lines of "You're really helping the
company with your work. We really like it. Is there anything we can do for
you?"

source: <http://ask.slashdot.org/article.pl?sid=00/12/28/1929229>

------
schoudha
Joel, why didn't you beat Google's offer? Seems like it's worth it based on
your article.

~~~
almost
I doubt it was the money that really mattered in that decision. Fog Creek
sounds like a great place to work but there are jobs at Google that involve
working on some very interesting stuff.

------
known
Joel should have constituted "Noah Prize" and distributed 10,000/N shares
among his N employees.

------
known
I am with Noah Weiss. Be opportunistic rather than ambitious in the current
economy.

------
benreesman
the reward given for such a contribution is proportional to the decision-
maker's desire that such contributions will be made in the future. in 2009, we
are all motivated primarily by money.

------
time_management
I have a similar story. I was hired as an intern at a company that did
marketing research (among other things) and, using genetic algorithms on a
complex survey-design problem, managed to slash field costs by about $250k per
month.

I had a middle manager who resented that I was getting time to work on the
cool projects in a language he didn't understand (Java; I wasn't a real
programmer yet). So he yanked me out of R&D and put me closer to the day-to-
day grunt work.

Three months later I was looking for jobs elsewhere, and a month after that I
was fired for interviewing. I got two weeks' severance... and they're still
making $250k+ from my work.

~~~
jhickner
A lot of entrepreneurs have stories like this. If the experience motivates you
to stop working for someone else then it's all worth it.

------
darkhorse
guy adds $1 million to bottom line.

guy gets stock options, but only if he agrees to work there full-time?!?

does anyone else see the ridiculousness in joel's proposal? no wonder the dude
walked - that is a horrible deal. anyone in that position could now assume
that any future huge contributions to the company would be rewarded in an
equally miserly way. joel should have given him the shares outright -
otherwise they're not a reward.

and joel should be freakin embarrassed to even be telling this story - what a
crook.

~~~
IsaacSchlueter
That actually sounds like a really fair deal. Part of the reward is the
knowledge that Fog Creek really wants him to stay.

Every performance-based reward I've gotten from Yahoo has been in the form of
a retention bonus. "You did really great on that project. Here's a pile of
stocks/cash that you'll get in 12/18/24 months if you're still around."

A retention bonus provides a fair monetary award, while at the same time
building the intrinsic motivation that comes from knowing your employer likes
what you're doing. Rather than eroding the intrinsic motivation, a delayed
extrinsic motivator can actually _increase_ it.

~~~
kscaldef
Yahoo got too dependent on their "super-secret" retention bonuses. The first
couple times they did it, it made you feel special. But, eventually it became
clear that it was just a way to avoid giving raises and promotions. Maybe you
haven't hit that point, but trust me, lots of us got demotivated by it.

~~~
IsaacSchlueter
You're claiming that "secret" retention bonuses are a way to avoid "giving"
promotions and raises? Wow, there's a lot wrong with both parts of that
statement.

Almost every company encourages their employees to never disclose their pay to
their coworkers. It promotes an information imbalance where the employer wins.
Unless you sign something saying that you won't disclose it (which would
probably be contestable anyhow), or you're sharing it with someone who doesn't
want to know (which would just be rude and potentially disruptive), they can't
fire you for telling people what you make.

Don't do it, plain and simple. If you didn't agree to keep it a secret, then
it's not a secret. With all of my raises and bonuses-that-not-everyone-gets, I
was discrete, just as my bosses asked of me. I _only_ share my compensation
information with anyone and everyone who wants to know. It's time we changed
this stupid "secret salary" custom.

Also, promotions and raises aren't given, they're taken. You're a grownup, why
should your employer care more about your career than you do? Want a
promotion? Take more responsibility. Be more essential. Be a leader. Want a
raise? Get a better offer, and ask your employer to match it. Write essays,
share code, increase your skillset, help your juniors, always be finding ways
to make the product better, ways to make the team's processes more efficient.

If you just want to do your job and stay warm, that's fine, but don't expect
to get special treatment. A yearly 2-7% cost-of-living pay increase is
probably about right.

It sounds harsh, I know, and I'm sure this might not have been your angle at
all. I just get annoyed hearing about employees who dutifully do no more than
they're told, and wait and hope for review time as if it's christmas, and then
get upset when they're treated like cogs in a machine, when they've been
acting _exactly_ like cogs in a machine.

~~~
anewaccountname
>they can't fire you for telling people what you make.

Yes they can. Unless you are talking about Western Europe or something.

~~~
IsaacSchlueter
I'm talking about the US.

To be clear, in California at least, you can be fired or quit for any or no
reason whatsoever. So, yes, to correct what I said, an employer _could_ fire
you for sharing your salary, or for the car you drive, or for the color of
your hair, or just because they don't like you for no specific reason. (But
not for your gender, race, disabilities, or religion. Doesn't that seem odd?)

However, very few employers _will_ fire you for this. And, if they're that
serious about keeping their employees in a disadvantageous position, maybe you
ought to find a more respectful employer.

