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> Their theory, in a nutshell, was that there was an inherent conflict in business between owners (shareholders) and managers, and that this conflict had to be
by kqr 5y ago
> Their theory, in a nutshell, was that there was an inherent conflict in business between owners (shareholders) and managers, and that this conflict had to be resolved in favor of the owners, who after all owned the business; and the best way to do that was to find a way to align those interests by linking managerial compensation to owner success.
And all along the real solution is so obvious: make the employees and customers owners.
The co-op ownership model aligns all interests in ways that actually make sense.
- 3qz 5y agoBeing an employee and an owner doesn’t align incentives since I have no meaningful influence over the stock price. I don’t care at all about the success of the projects I work on as long as I keep getting paid
- kqr 5y agoThe world does not, contrary to popular opinion, revolve around stock prices. Ownership is about having equal influence in strategic decisions. "I don't care about the success as long as I get paid" is typically something you hear from people who have never tried a truly democratic workplace before. It's a transformative experience.
- 3qz 5y agoDoes it matter? Jobs worth caring about are extremely rare so I don’t actually care about what the company does. I would vote to sell the company and cash out if I worked somewhere democratic.
- antifa 5y ago> Jobs worth caring about are extremely rare Yes, co-ops are rare.
- 3qz 5y agoThere is no ownership structure in the world that could ever make me care about boring software
- downsidesabound 5y agoMaybe if it’s yours, it’s not boring. Like kids :P
- djokkataja 5y agoEven if all you care about is whether you keep getting paid, being one of the owners of a business (even if it's one of many) suggests to me that you would have much more influence about whether you keep getting paid than you would in any business where you are not an owner.
- rrrrrrrrrrrryan 5y agoI don't know if they need to be full-blown co-ops with voting power, etc. There are many other ways to ensure financial incentives are aligned. RSUs, ESPPs, and other forms of stock options are widely used in our industry to attract talent and align incentives. I once worked at a software startup without these (but generous cash comp), and it was awful. Whenever the sales team closed a huge deal by promising some vaporware features, the engineers were outright angry because it just meant extra work to build the overpromised stuff. If the engineers had equity, we would've been high-fiving the sales team for pushing those gargantuan deals past the finish line. Then there's also simple profit-sharing. When I worked at a small mortgage company, each employee got a certain number of dollars for every loan that the company closed, based on how many years they'd been with the company. When things got stressful and busy it definitely eased the blow, and it helped tremendously with retention too.
- kqr 5y ago> If the engineers had equity, we would've been high-fiving the sales team for pushing those gargantuan deals past the finish line. That's a great example of why simple profit sharing or equity compensation is not enough: it corrupts even engineers to economic myopia! What about the existing customers that need their stability problems fixed? No time for that! Gotta hajj together new features for the next big contract! You should never cheer sales making up vapourware. Any scheme that does has misaligned incentives. This has been shown before though I don't have a source at hand: focusing on stock market value leads to short-termism which leads to lower stock market value in the long run.