5 ms·

what, do people think about the ethics of a manager using the 'intermittent rewards' part in the form of unpredictable bonuses over and above regular salary (w

by lsc 16y ago

what, do people think about the ethics of a manager using the 'intermittent rewards' part in the form of unpredictable bonuses over and above regular salary (which would be regular) with the intent of harnessing the addictive nature of intermittent rewards, without using the rest of these things (which clearly cross the line into unethical.) I'm considering implementing a bonus plan... and the question is, do I make them predictable, based on measurable stuff that I share? or do I add some randomness? do I assign them based on my own shifting perceptions? (the sort of people I hire are going to be better at manipulating the set rules than manipulating my perceptions... This is not true for all employees.) Furthermore, would it still work if I used a predictable bonus schedule that included some random input... e.g. the chance of getting the bonus is, say, some metric based on increases in revenue or profit multiplied by a random value between 0 an 1 or something?

tednaleid 16y ago
It doesn't need to be that random on your side of things. It just needs to be unexpected/unpredictable by the subject getting the reward, but in some way paired with the performance you want to elicit more of. Think of gambling, the reward is very predictable if you know the seed values and underlying algorithms, but unpredictable from the gamblers perspective. This is a classic Variable Ratio (VR) schedule of reinforcement (http://en.wikipedia.org/wiki/Reinforcement#Schedules_of_reinforcement http://en.wikipedia.org/wiki/Reinforcement#Schedules_of_rein...). To get the highest rates of responding, you don't want to tie it to a known schedule, that would instead be some sort of fixed or variable interval schedule, which isn't anywhere near as reinforcing as a variable ratio one. It should be possible to get multiple bonuses within a short period of time, as long as the desired metrics are being hit. That way, you'll continue to get strong behavior throughout the entire period rather than bursts of behavior as the end of the period nears (rather than the scalloping that you see on the wikipedia graphs).
- lsc 16y ago
  hm. interesting. Now, the first question I need to ask is "is this crossing a line" - is it too manipulative... then, if it's not, I need to come up with a bonus scheme. I was thinking about basing the bonuses on how much revenue has grown past our previous high. (with the number of employees, one guy can really make a big difference, and if we are operating properly, we grow by around 10-15% a month.) hm. It seems I could pay out on random days on a month that beats the previous months receipts? I think I'd want it to be a 'peak month' rather than a 'peak day' to discourage gaming, I mean, I see how you could queue up customers for a few days... doing this over months could be bad, especially if when the months begin changes randomly. But yeah, a formula that people can know, with, perhaps, random numbers that aren't known until the period end sounds like the way to go. I think people would mind the manipulation less if it was clear what I was doing and why.
  - rphlx 16y ago
    If your employees are willing to shift revenue/etc to fuck with the bonus plan, you've already lost.
    - lsc 16y ago
      As a general policy I try to make being straight with me more profitable than not being straight... e.g. if a customer brings to my attention a mistake I made in their favour, I nearly always let them keep it. Yeah, I don't want dishonest employees... but I also don't want my honest employees to feel like they could do better by being dishonest. even if they are honest people who will continue to be honest, it breeds discontent.
loewenskind 16y ago
Personally, I would avoid a bonus system entirely. The latest happiness study I've seen showed that a bonus system is a net loss. The system existing sets expectations, which means you have 3 possibilities: exceed, meet or don't meet expectations. If you meet expectations then nothing changes, the employee got what they expected. If you surpass expectations then the employee gets very happy and works even harder! For about a week. However, if you don't meet expectations then you cause disappointment, resentment, etc. And if the employee is unhappy this can affect other employees (poor attitudes are infectious). Disappointment is tricky and will be made even worse by your proposed semi-random reward schedule [1]. Personally, I prefer the safer route of skipping any tit for tat scenarios (e.g. "if you do X you might get Y at some point in the future"). [1] With the semi-random schedule there is the additional risk that the employee completed something they thought was a big deal, but you didn't or didn't even know about it. Disappointment by not acting on something you weren't aware of.
- doki_pen 16y ago
  I think the bonus system can be very effective at preventing turn-over for the better part of the year. If you just hang on a few more months you get that big bonus!
  - loewenskind 16y ago
    It is good at lock in ("sheesh, I've been here for 8 months, I've only got 4 to go. If I leave I could be leaving $20k on the table"), especially since bonus payouts are often months after hearing the number so you've already began earning the next one before you get your current one paid. The problem is, when you get that "big" bonus and it's not big then you can't help but be disappointed. I recently saw a company lose about 5 key people at one time because of the disappointment caused by this. Before bonus time those people were happy with their job and even their pay. But they all got nice bonus the year before. In my estimation, that's 5 people they lost by a non-existent problem they created themselves.
    - doki_pen 16y ago
JoeAltmaier 16y ago
Bonus systems start out great, get delayed/forgotten/neglected or become haphazard -they take real work to do right! And then people get disillusioned and surly. Annual review is hard enough already - I'd say do that right, pay everybody as well as you can afford, and leave it at that.

by lsc 16y ago

tednaleid 16y ago

It doesn't need to be that random on your side of things. It just needs to be unexpected/unpredictable by the subject getting the reward, but in some way paired with the performance you want to elicit more of. Think of gambling, the reward is very predictable if you know the seed values and underlying algorithms, but unpredictable from the gamblers perspective. This is a classic Variable Ratio (VR) schedule of reinforcement (http://en.wikipedia.org/wiki/Reinforcement#Schedules_of_reinforcement http://en.wikipedia.org/wiki/Reinforcement#Schedules_of_rein...). To get the highest rates of responding, you don't want to tie it to a known schedule, that would instead be some sort of fixed or variable interval schedule, which isn't anywhere near as reinforcing as a variable ratio one. It should be possible to get multiple bonuses within a short period of time, as long as the desired metrics are being hit. That way, you'll continue to get strong behavior throughout the entire period rather than bursts of behavior as the end of the period nears (rather than the scalloping that you see on the wikipedia graphs).

lsc 16y ago
hm. interesting. Now, the first question I need to ask is "is this crossing a line" - is it too manipulative... then, if it's not, I need to come up with a bonus scheme. I was thinking about basing the bonuses on how much revenue has grown past our previous high. (with the number of employees, one guy can really make a big difference, and if we are operating properly, we grow by around 10-15% a month.) hm. It seems I could pay out on random days on a month that beats the previous months receipts? I think I'd want it to be a 'peak month' rather than a 'peak day' to discourage gaming, I mean, I see how you could queue up customers for a few days... doing this over months could be bad, especially if when the months begin changes randomly. But yeah, a formula that people can know, with, perhaps, random numbers that aren't known until the period end sounds like the way to go. I think people would mind the manipulation less if it was clear what I was doing and why.
- rphlx 16y ago
  If your employees are willing to shift revenue/etc to fuck with the bonus plan, you've already lost.
  - lsc 16y ago
    As a general policy I try to make being straight with me more profitable than not being straight... e.g. if a customer brings to my attention a mistake I made in their favour, I nearly always let them keep it. Yeah, I don't want dishonest employees... but I also don't want my honest employees to feel like they could do better by being dishonest. even if they are honest people who will continue to be honest, it breeds discontent.

loewenskind 16y ago

Personally, I would avoid a bonus system entirely. The latest happiness study I've seen showed that a bonus system is a net loss. The system existing sets expectations, which means you have 3 possibilities: exceed, meet or don't meet expectations. If you meet expectations then nothing changes, the employee got what they expected. If you surpass expectations then the employee gets very happy and works even harder! For about a week. However, if you don't meet expectations then you cause disappointment, resentment, etc. And if the employee is unhappy this can affect other employees (poor attitudes are infectious). Disappointment is tricky and will be made even worse by your proposed semi-random reward schedule [1]. Personally, I prefer the safer route of skipping any tit for tat scenarios (e.g. "if you do X you might get Y at some point in the future"). [1] With the semi-random schedule there is the additional risk that the employee completed something they thought was a big deal, but you didn't or didn't even know about it. Disappointment by not acting on something you weren't aware of.

doki_pen 16y ago
I think the bonus system can be very effective at preventing turn-over for the better part of the year. If you just hang on a few more months you get that big bonus!
- loewenskind 16y ago
  It is good at lock in ("sheesh, I've been here for 8 months, I've only got 4 to go. If I leave I could be leaving $20k on the table"), especially since bonus payouts are often months after hearing the number so you've already began earning the next one before you get your current one paid. The problem is, when you get that "big" bonus and it's not big then you can't help but be disappointed. I recently saw a company lose about 5 key people at one time because of the disappointment caused by this. Before bonus time those people were happy with their job and even their pay. But they all got nice bonus the year before. In my estimation, that's 5 people they lost by a non-existent problem they created themselves.
  - doki_pen 16y ago

JoeAltmaier 16y ago

Bonus systems start out great, get delayed/forgotten/neglected or become haphazard -they take real work to do right! And then people get disillusioned and surly. Annual review is hard enough already - I'd say do that right, pay everybody as well as you can afford, and leave it at that.