Great Idea. I've been working on a remuneration related system myself. Thanks for the link relating to pay scale. It may well help me to justify my own financial model.
I just came across a cool video about what motivates us by Pan Pink which I think lends credence to this idea. http://vimeo.com/15488784
Reminds me of Gifford Pinchot's exhortations for intrapreneurship and might be a tool to overcome Clayton Christensen's innovator's dilemma. But I'm going to get in the spirit at the MIX by offering a contrarian view. I am jaded by my experience with bloated, calcified corporations that resort to innovation by acquisition. I believe innovation has to happen in smaller, nimbler companies. I'm testing my belief at JDSU. It's barely over the 5,000-employee line. I'm encouraged thus far. They have an energetic process for encouraging innovation. Feels like Bill & Dave's old company.
Kartik
I think this is an excellent idea. It reminds me a bit of http://www.kickstarter.com, which if you haven't already seen would be worth a look. The idea of "voting" for projects to go forward with money from your own pocket overcomes many of the problems with other incentivized collaboration/innovation schemes. What I like about it in particular is that it closely resembles the natural process of friends going into business for themselves, compelled by a great idea -- so great they are willing to share in the expenses to get it going.
I think you also rightly point out that money changes relationships and perspectives and there is always a possibility that people will try to game the system or -- in this case -- game each other; again, very much like friends going into business for the first time. I think we'd have to expect, as we do in so many entrepreneurial contexts, that there will be some problems and also some successes, and we can't control it all -- we just go forward. I would add that it might be good to be thinking about the culture that you would want to create as a container for this effort. That container on one level could be very simple: a few well chosen ground rules. One might specify, for example, that participation is voluntary; that pressure for others to contribute to a specific project is totally uncool. On another level, that culture could be more definitively explored by a representative board that reviews and fosters the process, watches for problems and encourages the best from the total community, both in terms of outcomes and trust-based collaboration. This would create a "meta-level" to the project that could help adjust the "container" at any point, essentially continuing to build the plane while you fly it.
This is precisely the sort of idea that should be tried out and if it does not immediately succeed, stay with it to learn, revise and renew until it delivers on its fabulous potentials. New processes of this kind take some time and patience, I believe. They may release flood-gates, but its possible people could be a little tentative. So encouragement, small meetings to share a few ideas, the creation of web tools together, informal starts, and so on, can help create the right kind of community "field" that balances the notion of 'hot ideas' with an invitation that welcomes voices and ideas that have not yet been heard. It's easy to make the assumption that everyone automatically has the confidence to join in such innovative work to share what might be, and there can be judgments that those who do not deserve to be pushed aside. But there are many reasons why people may hesitate and so along with everything else, the challenge, it seems to me, is to create something that is truly inclusive, that actively draws out the best in others, that helps people trust in themselves and then invest in their own hot ideas. I think your approach, with the right kind of tone, could do this extremely well, and would be an incredible contribution to any company as a seedbed for both ideas and the development of people.
Best to you and good luck!
Thanks for reminder on kickstarter.com. I had come across it several months ago but hadn't checked it in a while. I agree that its look and feel would be an ideal starting point, possibly even a drop-in fit for this application.
This is a great observation of the idea's potential that I hadn't even considered: "the challenge, it seems to me, is to create something that is truly inclusive, that actively draws out the best in others, that helps people trust in themselves and then invest in their own hot ideas".
Thanks for your support!
Very creative idea, Kartik. Certainly when people are betting with their own money, they're going to work hard to understand the payoff. And if you have a great idea, you're going to put a lot of passion into developing your network of supporters!
When looking for business proposals, I would also have people describe the payoff or benefit of the idea. At an early stage it's too much to ask for an ROI, but you want to dig into:
* How does this benefit the company?
* How does this give value to society?
* Why would customers love this idea?
You want to have people working to develop their BUSINESS understanding, not just jumping on ideas because they're techically neat.
Another challenge I'll give you: How can you give some kind of benefit back to the investors if the idea works out? It's one thing to ask people to invest their hard-earned money for the general benefit of the larger corporation, but it would be much more motivating if there was some kind of stronger recognition or even monetary payback.
Cool idea!
Regarding the framing of proposals, I think that business-focused proposals could benefit very much from answering the questions that you pose. But there will be other proposals that don't fit into that category. The benefit to customers or society as a whole may not be known in advance, and the submitters may not have the ability or interest to quantify the benefit to the company's balance sheet. That's not as important to them, and, more importantly, it's not as important to their target investors. The submitters are reaching out to fellow practitioners in their community of practice whom they can convince with qualitative and quantitative information relevant to them, not to a VP somewhere up in the management chain.
For example, let's take a cloud services company with a Networking community of practice. Currently, the company is using an inexpensive proprietary VPN software package that meets the basic requirements. However, the IT professionals who manage the company's VPN infrastructure find it very cumbersome to work with, since it has poor error reporting and there is no access to source code. Advanced users (some of the most respected engineers in the community of practice) also are very irritated by the product's limitations. Meanwhile, there is an open source VPN package that everyone would much prefer to use, but it lacks the highly complex feature ABC which is required in the company's environment. IT management would have no objections to replacing the proprietary product with the open source product, since the support costs would be roughly equivalent, but they are unwilling to fund the necessary development to implement the ABC feature in the open source product. This kind of scenario can play out for years, all the while acting as a visible symbol for "out of touch" management and a frustrating IT environment.
The Bonus Fund gives the community of practice the tools to break this logjam. They know that all they have to do is collectively come up with 50% of the funding for feature ABC, and they can make it happen. (In fact, the very existence of the Bonus Fund may be enough to satisfy them in some cases. If the root cause of a particular frustration is the feeling of lack of control over one's environment, then regaining that sense of control can diminish or even eliminate the frustration. Without sufficient control over one's environment, all of the frustrations loom large, and the pain of one reinforces the other. With some amount of control, one can prioritize issues, work on the most important ones first, and derive a measure of satisfaction that positively influences everything else).
Let's say that in this case, 50 employees contribute sufficient funds which are then matched by the company to pay a highly specialized developer to implement feature ABC. They then deploy the open source VPN product, which solves all of the previously-encountered problems. The company gains a positive reputation in the open source VPN community (some of whom are potential cloud services customers or even future employees). The Networking community of practice is proud of their accomplishment, and they develop a stronger sense of camaraderie. They share knowledge even more freely, and through collaborating on this project, they end up learning a lot more about VPN technology and about contributing to open source projects, which makes them smarter at doing their jobs. These largely qualitative benefits are more than enough return on investment for those who contributed to the project.
Hopefully this illustrates one type of "non-business" Bonus Fund project that can make a big difference in employee engagement and effectiveness.
Hi Kartik! Glad to see a member of the open source community contributing a hack!
I think this is a compelling idea, and love the idea of management giving employees tools to put some of their own "skin in the game" on projects that are important to them. The reality is that people are so much more passionate about implementing their own ideas than implementing the ideas of others, that this kind of program might work.
I do wonder whether forcing people into a tough decision of "I take the money to help a work project I believe in" vs "I take the bonus and feed and clothe my children better" might be difficult for those with many responsibilities beyond work.
So a thought on a hack to your hack... Perhaps rather than being a part of their bonus pool, it is a fund that gives everyone in the company "budget." So rather than just managers and execs having budget, all regular folks in the org have some small amount of money to play with as well that they can use for projects they believe in.
While this takes some of the personal accountability angle out that gives your idea its power, perhaps there are other ways to replace with a carrot instead of a stick. Perhaps those who invest their "budget" in a project that creates a revenue opportunity or meets other success criteria are eligible for a big bonus. So those who invest in the best ideas still win financially.
In this scenario, those who do a good job selling their project stand a good chance of getting it funded, and every employee becomes a mini-VC:)
Some thoughts off the top of my head on the tradeoffs involved there. If we change the funding from the employee bonus pool to an a per-employee budget, we then have to decide how to allocate that budget. Does everyone get an equal share? If so, is that fair, or not? Is there a risk there of gaming the system where people find ways to launder their budget allocation into an extra bonus for themselves? If everyone is allocated money, does that spread things so thin that it takes 100 people to pool together a meaningful amount to fund "real" work? (Or maybe that is seen as a good thing by some?) There may be solid answers to these questions, and maybe some of these questions become irrelevant if the initiative is successful enough. I'm just throwing them out as food for thought.
One benefit of the bonus fund approach is that there doesn't have to be any new decision-making on how much money each person gets. People's salaries and bonuses are already defined outside of the bonus fund, the only new money is the company match which involves no decision-making -- all projects that receive sufficient pledges are matched. This takes some of the politics and gamesmanship out of the equation.
A fundamental question that your comments prompt me to reflect on is how people perceive their bonuses. Do they see it as a critical part of their compensation which they treat just as they would their base salary, or do they see it as discretionary money where a part of it could be spent on anything they want. I suspect there are a wide range of answers to this question among different people, and among the same people at different stages in their lives/careers. Maybe it would make sense to do a "behavioral economics" type survey of the employee community to get a better feel for that. Even with people who view bonuses the same as ordinary salary though, as I mention in the writeup, employees regularly contribute to political action committees where there are no matching funds, and employees donate to charities with corporate matching funds. So it seems to me that there is at least some willingness on the part of people to contribute their own, hard-earned money in conjunction with their company towards goals that they deem personally worthy.
I like your image of turning every employee into a mini-VC. That triggered another thought -- managers now have yet another incentive to treat their employees well, because they may be talking to future investors in projects that they may want to get funded :-)
Orin Davis
February 19, 2011 at 5:04pmAn absolutely fabulous idea and a great way of promoting engagement!