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Productivity based compensation for thought-workers isn't a panacea. Expenses based on time, income habituation, success or blame attribution, and differences o

Productivity based compensation for thought-workers isn't a panacea. Expenses based on time, income habituation, success or blame attribution, and differences of opinion on what is productive can actually make it a pretty horrible experience -- even for people who are well above the average. Time-based compensation and productivity-based firing can be a pretty good system for a lot of people in a lot of situations. I was hiring for some other jobs recently, and I was surprised at how the group I was hiring from thought about their compensation. It wasn't "I deserve $X", "Chris makes $Y", or even "I think I can get them to pay $Z." They'd come to me and say "I need a job that pays $A/month because [$A ~= monthly expenses + a little extra niceties + a safety cushion in case something bad happens]". It was refreshing.

Poiesis 17y ago
I started responding to disagree with you, but now I'm not sure what you're saying so I'll just chime in with my views. :) I actually think production based pay is refreshing. I've personally worked under this system (OK, so technically my wife did). It is really egalitarian. Unfortunately it is also very uneven, as production capabilities vary considerably and at times disappear complete (i.e, you're sick). Also, as you pointed out for software development it's pretty hard to find decent metrics that don't deteriorate when you optimize solely for them. In her field (medical transcription), it was more clear-cut with a payment per line and penalties for mistakes. From the lazy, employee-based-safe perspective I can certainly agree that time-based compensation is attractive, but my sense of self worth would prefer being paid on performance. I'd certainly prefer to hire based on it. Really the current system is probably roughly as good as you're going to get right now. There are all manner of intangible pluses and minuses to a particular person and a lot of places take this into account for compensation. It makes the process less transparent but it at least allows flexibility. Just one example--I like to think that I'm helping out less experienced developers when I'm explaining some concept of business process or something. But I'm certainly not adding code then. And what of managers? Good managers are certainly valuable but their personal contribution is even less measurable than that of a developer.
- Psyonic 17y ago
  That's one big problem I see with performance based pay, even if an accurate personal metric were available. Time spent helping/mentoring others would have a negative impact on a senior programmers bottom line, even though a company generally wants to encourage this.
  - ggruschow 17y ago
    You can't be accurate when you need to hit multiple different targets with one shot. It's exceptionally difficult to get people to agree on what's valuable, and how valuable it is.. and the problem gets worse with scale.
- ggruschow 17y ago
  I've done performance based pay for programmers both at the individual and group level. It adds a lot of non-obvious problems. I don't believe it improves happiness, retention, or productivity in the long run†. Most companies theoretically already do performance based pay, but just at two levels: Level 1 pay: $salary Level 2 pay: $severance There's usually a lot of room for improvement. If they can't get it right for 2 levels, they shouldn't look to fix it by adding more. If you've got a big productivity range and a small pay range, you don't have to address it by expanding the pay range. You can focus the productivity range instead, and get lots of side benefits. Let the people who aren't performing well find another job. Remember there's more to comp than just wages and bonuses too. Sometimes other things can address perceived needs. ___ † I'm assuming most good employees will be around 2 years or more. If you don't expect that, that changes everything.

Poiesis 17y ago

I started responding to disagree with you, but now I'm not sure what you're saying so I'll just chime in with my views. :) I actually think production based pay is refreshing. I've personally worked under this system (OK, so technically my wife did). It is really egalitarian. Unfortunately it is also very uneven, as production capabilities vary considerably and at times disappear complete (i.e, you're sick). Also, as you pointed out for software development it's pretty hard to find decent metrics that don't deteriorate when you optimize solely for them. In her field (medical transcription), it was more clear-cut with a payment per line and penalties for mistakes. From the lazy, employee-based-safe perspective I can certainly agree that time-based compensation is attractive, but my sense of self worth would prefer being paid on performance. I'd certainly prefer to hire based on it. Really the current system is probably roughly as good as you're going to get right now. There are all manner of intangible pluses and minuses to a particular person and a lot of places take this into account for compensation. It makes the process less transparent but it at least allows flexibility. Just one example--I like to think that I'm helping out less experienced developers when I'm explaining some concept of business process or something. But I'm certainly not adding code then. And what of managers? Good managers are certainly valuable but their personal contribution is even less measurable than that of a developer.

Psyonic 17y ago
That's one big problem I see with performance based pay, even if an accurate personal metric were available. Time spent helping/mentoring others would have a negative impact on a senior programmers bottom line, even though a company generally wants to encourage this.
- ggruschow 17y ago
  You can't be accurate when you need to hit multiple different targets with one shot. It's exceptionally difficult to get people to agree on what's valuable, and how valuable it is.. and the problem gets worse with scale.
ggruschow 17y ago
I've done performance based pay for programmers both at the individual and group level. It adds a lot of non-obvious problems. I don't believe it improves happiness, retention, or productivity in the long run†. Most companies theoretically already do performance based pay, but just at two levels: Level 1 pay: $salary Level 2 pay: $severance There's usually a lot of room for improvement. If they can't get it right for 2 levels, they shouldn't look to fix it by adding more. If you've got a big productivity range and a small pay range, you don't have to address it by expanding the pay range. You can focus the productivity range instead, and get lots of side benefits. Let the people who aren't performing well find another job. Remember there's more to comp than just wages and bonuses too. Sometimes other things can address perceived needs. ___ † I'm assuming most good employees will be around 2 years or more. If you don't expect that, that changes everything.