Community Style Business – Rewarding Performance

Standard

The core problem with any reward system is the question as to how to ensure the reward is representative of the effectiveness. Wether it is a paycheck/compensation, a bonus or results based compensation, companies find ways to reward their employees. These rewards are not an exact science, see Corporate Scarcity – The manager’s mindset, and can contain quite a bit of disparity from effectiveness.

Community Style Business approaches the problem around rewards preferably through the use of non-loss obverse point systems, leveraging lead measure tasks and gates to ensure high quality services are performed. This blog post will cover various theories around CSB reward systems, along with references which I found useful.

Results Based Rewards

The core concept in community style business is that its members are rewarded proportionally to to what they contribute. This creates a problem when trying to define what and how much a contribution is. How do you identify what is or is not valuable?

There are various guidelines, and examples, on how this can be done. None of these guidelines are absolute, as it is up to the community, ultimately, to correct deficiencies when they occur.

Defining a measurement

The first step in creating a value based reward system is to define a way to measure both effort, risk & need/desirability. Typically the points should be based off of effort relative to a baseline which everyone can understand. One example of how to evaluate tasks for points is a practice known as planning poker, which will be discussed later. This point system is re-evaluated as needed every iteration by the community.

Planning Poker

Planning poker is a means by which all members have the ability to vote as to how many points a task is worth. Each time there is a large disparity in the voting the a representative from the high and low point group can voice their arguments to the group.

The site below provides a good overview and guidelines for planning poker.
http://agile.dzone.com/articles/introduction-planning-poker

Setting the bar

If planning happens on a team level or there is a disparity based on the type of knowledge someone has to have, it is often a good idea to set a bar for a baseline for each discipline. This is meant to normalize the disciplines, while still allowing for adjustments based on need/desirability. The one I’d recommend is, what could an average individual skilled in the craft get done in a set duration. This allows for both normalization across disciplines as well as eliminating a notion of inflation causing disparity.

As the organizations cash reserves build it is best practice to get a third, non-invested party to do these evaluations. This is to ensure that there are no biases toward a discipline or career lifecycle. It also helps reduce the potential for political infighting.

Need / Desirability

I’ve stated multiple times this notion of need / desirability, but I want to take a moment to really define what that means.

In a community system, we start off by assuming all normalized efforts are equivalent, no matter what the discipline. This creates a problem right off the bat. Some work requires specialization, is not something people tend to enjoy or require more end entices to get the right level of talent to do the job well. Alternatively, other jobs it’s easy to find people to work on, these are the “sexy” jobs.

The goal here is not to reduce the value of the “sexy” jobs, but to find an equilibrium with those tasks which are less so. An example of this might be someone working the night shift might get more points than someone working a day shift, if the night shift isn’t attracting enough high caliber people.

This isn’t really a new concept for business, as worker salary is a reflection of this calculation. When applied to a CSB it is expected to manifest differently. Since things like schedules and efforts are ultimately influenced by a community of individuals working, more variation is expected to occur over time, as individuals find the niche which best fits their life. Rather than a stick approach, CSB tends to be best with a carrot.

Defining results not method

While lead measures are useful, they shouldn’t be the only mechanism which is used. Often times when looking at an objectives there is the work done which directly contribute and those which correct deficiencies along the way. A good example of this is a software developer & a software tester. In these types of scenarios there are two approaches which can be used: distribution of existing value or value created for the corrective action.

Understanding the impact of imperfection

The example of a software developer is a good example of missed potential. The reason for this is that if the software developer wrote perfect code, the effort needed by the software tester is minimal. Their job is to just verify the expected results. The problem is that perfect code is very hard to write for many various reasons. As the flaws in the software are discovered, the amount of effort given by both the software developer and tester multiply.

Distribution of existing points

The above scenario lays out a real life scenario, of which happens every day. With a distribution of existing points philosophy, the completion of the goal is seen as the value. There for efficiency is rewarded, but higher efforts will not be recognized. Points are distributed after the work is done based on the amount of effort and lead measures completed.

If applied to the scenario above, the more the tester has to work the fewer points the developer receives. The danger here is that points can reduce in value for effort pretty easily, causing the goal to become less compelling. The positive aspect here is that it rewards quality with more points regardless of time spent. This allows an individual to spend more time to produce higher quality upfront and have that behavior re-enforced.

Value created for the corrective actions

This philosophy states that those efforts directly inline with the goal will be rewarded statically. The corrective efforts will be rewarded without the scarcity of the initial goal.

The example above would be handled by the developer getting a static set of points, while the tester would be rewarded more for anything extra beyond the initial verification effort.

This method plays more nicely when looking at objectives which run longer than expected. The problem is that this method increases the value a goal is worth artificially based on how much correction is needed. The positive aspect is that important goals don’t become meaningless. The developer in the example would have to spend longer to fix the issues before his points would be realized, which also balances out the effort to reward ratio for lower quality work.

Dividing up the spoils

As I stated in the overview, the gross profit is first used to pay for all materials and expenses the community is required to pay. Once that is done, any community initiatives are taken out, things such as a rainy day fund or saving for a consultant to normalize efforts across disciplines. After those two are completed, the points from all contributors are added up, and each member’s percentage of points are calculated. The remaining money is distributed accordingly.

Advertisements

Community Style Business – Leadership

Standard

A genuine leader is not a searcher for consensus but a molder of consensus.

Martin Luther King Jr.

When looking at a CSB, it is important to grasp the concept of not only what leadership is, but why it occurs. Leadership comes in various aspects in a business. These include: product / organizational vision, practice area, cultural, team and quality. Depending on the organizational model, these leadership roles can be distributed countless ways.

Currently, organizational leadership is put on a pedestal. Leaders are those with both the information and the power, with long term success relying on a few chosen to make the right decisions. These individuals get rewarded for their efforts, which tend to be well beyond those typically performed by contributors.

The problem here, ultimately, is that people come with different talents, strengths and weaknesses. We all approach problems differently, and leverage different types of crutches to minimize our weaknesses. Given this, we create positions with fairly ridged ideas around roles and responsibilities, rather than creating a system which leverages people’s unique strengths, while not forcing them into make or break situations around their weaknesses.

The cultural change which needs to be made here is that CSB is run more like an organic ecosystem rather than a rigid structure. In essence, each skill set and partition in a CSB is responsible to self organize and adapt to their own unique environment independently. Through communication and sharing of success and failures, these independent pieces enable each other in the larger organization to improve independently, without changes being forced on the teams. This viewpoint changes what type of leadership is needed.

Leadership is a means to an end, and is not the sole objective for any one member. There is no ordained leadership position which is a given. Those who choose to lead can provide leadership across the board, or in a specific area they’re adept at. These leaders then help improve their part of the organizational ecosystem through influencing consensus, both on their team and by working with others.

An example on how this can apply is by taking a look at a hamburger restaurant, specifically the cooks team & their schedule. Staffing a restaurant cooks team includes ensuring enough members are on hand at any given point in time to fulfill the orders received in a timely manner. In this case providing leadership might be as easy as creating a draft board for hours having to be worked, and challenging working with others to make sure all the shifts are covered. Since everyone has a personal stake in the success of the business, it is everyone’s responsibility to make sure the area is staffed. It is the leaders job to help the members achieve the schedule creation.

Rewarding leadership

So what is the reward for providing leadership? Why would anyone do it? This is the question I struggled with. In the ideal world the leaders would lead because that’s what they enjoy doing. In the real world leadership can be time consuming, and offers challenges of its own. So how do we reward leaders for their efforts?

In the above example the leader might get first draft choice, where the compensation is a better schedule. Alternatively the leader could be compensated based on the schedules timely completion, and more points are rewarded for each active participant who contributes to helping create the schedule.

The best initial solution available is to reward through lead measures (or tasks which when occurred lead to effective results. This makes it possible to ensure rewards can be obtained, but still ensure that those who gain more efficiency in these tasks to be compensated accordingly, sticking with the montra, you get out only what’s perporsional to what is put in.

A new type of leadership

The team or CSB will there for tend to have more micro focused areas of leadership. Rather than having formal structures which have specific roles and responsibilities, leadership is a set of goals, which the community identifies as being valueble. The team can then either elect their leaders, or approach it via lasefair, where people can pick up what they choose. In both cases those who want to lead can pick and choose what goals best match their unique talents and skillsets. Since there’s no strict position which is gained or lost, people are allowed to find those aspects and ways they can best lead, without taking on too much, or being put in a position where loss obversion can effect decision making and direction.

With this approach determoning leadership, or baring poor leaders, has to be left up to the community members. In this way the leader is a servent of the community, only serving as such if the community approves.

This differs from hierarchical leadership where a single decision can span across various loosely related groups, and peer leadership where through organic independent adoption change is brought about.

Book Review – Speed Of Trust

Standard

Overview

I started reading this book during a time I was managing a team of around 12 software engineers. I was instantly sold on the concept as it touched on how trust affects the relationships inside and outside of work and business.

The main points I took were:
1. Trust can be measured and quantified.
2. The lower the trust level between individuals the longer it takes for things to get done.
3. Processes are a result of trying to fix failures in trust relationships, and result in less opportunity for future creative solutions which solve the same problem space more efficiently. (This does not mean get rid of all process)
4. Trust must be given to be received.
5. Provide smart trust, not blind trust.
6. I definitely always want to work for an organization where there is a basis in trusting each other.

Personal experiences after reading

With any good educational book I believe the only practical evaluation can only be given after seeing how it changes you and your perception.

The fascinating thing to me was after I read the book I started seeing the workplace around me in a whole new light. Some of the frustration with team members started showing areas where the contributor class had lost trust in the management and executive classes. This trust had eroded years before I had ever gotten there, and the contributors had developed habits around the interpretation of what the executives and management said.

There were trust barriers between our internal organizations as well which were causing tasks to take far longer than they needed to. It ultimately came down to people in different departments didn’t work directly together, even if they were working on the same feature.

Finally there seemed to be a disconnect between the interpretation of what the executive class was saying and what the contributors were hearing. I remember having a passionate debate with my team about whether the corporate values were a sales tool or if we were supposed to embody them. The team vehemently believed they were nothing but part of the sales pitch, where the executives expected we were living by them.

Since then I’ve tried to include the principles of smart trust, as well as giving trust before I expect it. I also have been heavily influenced by this book when developing my theories around Community Style Business.

Conclusion

This book is a great read, although they do re-iterate the same points over and over again. I would recommend this as a must read book for anyone considering going into people management ,project management or taking part in a Community Style Business.

Speed of Trust on Amazon