After a massive desktop upgrade project, we had a little "awards ceremony" for all the people involved. The full-time employees got $500 checks. I got two movie tickets, not good for new releases or special engagements. When I think about it, I can still feel the rage.
The money wasn't important, although it would have been nice. What burned me was the message that my contribution would NEVER be valued as equal, no matter what I did. It was an insult, plain and simple. Employers need to remember that their employees, contractors, and interns are human beings, who want to feel like their contribution is properly appreciated. "Properly appreciated" means a lot of different things to different people, but there's some sure-fire ways to screw it up.
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?
If you ask a bunch of people on a project to estimate modestly how much they 've contributed, you almost always get >100%
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.
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.
"The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes"
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.
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?
Perhaps if the IT company was one with hourly billing you could have a more law-firm like "partner" system where some senior people have more say and a share of the profits.
Where I work, 25% of the profit from each of our product lines goes directly to the team that produced that product, and the whole company has bonuses separately based on whether the company is making money or not (making money-> everyone gets a bonus).
I'm not sure whether this is better than profit being shared across the whole company or not, as it has the positive side that people want to work on projects that they personally feel will succeed, yet the negative side that people stuck working on maintaining legacy products or projects they don't believe as much in end up demotivated.
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.
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.
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.
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.
The more I think about it, the difficulty of implementing a policy like this could be the show stopper here.
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.
Sorry, OpenMIKE. I didn't mean to be calling you out. Just pointing it out.
Nobody is perfect.
Nope! Reread that. Now he's an associate proDUCT manager.
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?
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.
The spolsky/fc brand is what made it valuable - and Noah had nothing to do with that.
Isn't one of the HN mantra's that it's execution not idea that's valuable?
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?
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."
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?
Every idea is obvious once it's thought of and implemented.
It probably is.
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...); 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!
Edit: Whoops, just saw johnrob noticed this too.
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.
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?
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).
I just sold a chunk of (common) stock in a privately held (VC-backed) firm. I found a buyer, made sure I followed all of the rules of the employee stock agreement, and made a sale.
It is harder than publicly traded stock, but it still has value.
(sorry for the rant)
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).
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.
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.
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.
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.
Yes they can. Unless you are talking about Western Europe or something.
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.
So, how much do you make? ;~)
Sorry, that was kind of awkwardly phrased. Should have reread before posting.