3 ms·

Isn't this basically a reinvention of stock options?

by aqme28 4y ago

rhyperior 4y ago
I'd more say it's a form of profit sharing, as are options and equity, but in a reliably valuable cash form as opposed to potentially valuable equity. If the bonus dollars are evenly distributed as proposed then it won't encourage competitive in-fighting that plagues some incentive systems.
- mhuffman 4y ago
  >If the bonus dollars are evenly distributed as proposed then it won't encourage competitive in-fighting that plagues some incentive systems. I am not sure about that. I think the in-fighting would then come from people upset that other people that "did not contribute nearly as much as I did got the same bonus". People will always find a way to no be happy about something.
  - rhyperior 4y ago
    Some people will, sure, but some systems encourage it more than others IMO. If a company designs their bonus system to encourage individualism and thus explicit competition for scarce dollars, then it creates a game that people think they have to win at the expense of their peers. In these cases, they have a bonus pool (the "budget"), differentiated pay philosophy (pay for performance), and rarely have an objective criteria for assigning rewards (manager decides and makes a case). In that situation you get a lot more in-fighting because it's the way the game is designed. If you remove the competitive angle by assigning rewards equally (say, at a certain level of seniority you get a fixed bonus %; or, the company assigns a 20% bonus to everyone to share in the profits), then you are no longer giving people a game to win against their peers.
  - _carbyau_ 4y ago
    If a janitor gets the same "company bonus" as the rockstar dev - that is ok. The rockstar dev should have a salary/wage to match. And both are vital parts of a company. You can't have a bunch of co-located people without someone taking care of sanitation. Of course, you may choose a 100% "remote work" company to avoid that issue but in this instance each employee is their own janitor anyway. There is a flipside benefit too: the lesser paid people - other devs? You? Me? - will be happy to see the rockstar dev get such a wage/salary because they know they are worth it and it adds to their own company bonus. And when people are not such a rockstar after all, they will see scrutiny on all sides.
mhuffman 4y ago
I think they meant that the money would be paid out yearly from profits. Not trickled out to you in "virtual dollars" that may never be worth anything unless your company goes public or gets acquired.
- jbay808 4y ago
  Private companies can still pay dividends if they want to!
dilyevsky 4y ago
Not contingent on your cap table structure

Isn't this basically a reinvention of stock options?

by aqme28 4y ago

Isn't this basically a reinvention of stock options?

I'd more say it's a form of profit sharing, as are options and equity, but in a reliably valuable cash form as opposed to potentially valuable equity. If the bonus dollars are evenly distributed as proposed then it won't encourage competitive in-fighting that plagues some incentive systems.

mhuffman 4y ago
>If the bonus dollars are evenly distributed as proposed then it won't encourage competitive in-fighting that plagues some incentive systems. I am not sure about that. I think the in-fighting would then come from people upset that other people that "did not contribute nearly as much as I did got the same bonus". People will always find a way to no be happy about something.
- rhyperior 4y ago
  Some people will, sure, but some systems encourage it more than others IMO. If a company designs their bonus system to encourage individualism and thus explicit competition for scarce dollars, then it creates a game that people think they have to win at the expense of their peers. In these cases, they have a bonus pool (the "budget"), differentiated pay philosophy (pay for performance), and rarely have an objective criteria for assigning rewards (manager decides and makes a case). In that situation you get a lot more in-fighting because it's the way the game is designed. If you remove the competitive angle by assigning rewards equally (say, at a certain level of seniority you get a fixed bonus %; or, the company assigns a 20% bonus to everyone to share in the profits), then you are no longer giving people a game to win against their peers.
- _carbyau_ 4y ago
  If a janitor gets the same "company bonus" as the rockstar dev - that is ok. The rockstar dev should have a salary/wage to match. And both are vital parts of a company. You can't have a bunch of co-located people without someone taking care of sanitation. Of course, you may choose a 100% "remote work" company to avoid that issue but in this instance each employee is their own janitor anyway. There is a flipside benefit too: the lesser paid people - other devs? You? Me? - will be happy to see the rockstar dev get such a wage/salary because they know they are worth it and it adds to their own company bonus. And when people are not such a rockstar after all, they will see scrutiny on all sides.

mhuffman 4y ago

I think they meant that the money would be paid out yearly from profits. Not trickled out to you in "virtual dollars" that may never be worth anything unless your company goes public or gets acquired.

jbay808 4y ago
Private companies can still pay dividends if they want to!

dilyevsky 4y ago

Not contingent on your cap table structure