everwas

a blog by Ian Kennedy

Tag: incentives

  • Linden Labs bonus scheme

    I went back to my bookmarks to look for a post that has been taken offline. In the interest of preservation, I have copy/pasted the bit below from the Wayback Machine with thankfully saved the entire post which was originally published in 2012.

    This is from a former Linden Labs employee. LL is the company behind Second Life, an early innovator in VR and also, not surprisingly, an innovator in company culture as well.

    What I found most innovative was their method of distributing bonuses. While performance reviews at most companies are a long, drawn out process that takes place over many weeks with the actual bonus awards following a couple month’s later, Linden Labs’ bottoms-up evaluation system allowed for bonus determination to take place quickly in a furious three day evaluation period which, once complete, would let everyone (including managers), get on with their work.

    Since it’s entirely self driven, obviously the emphasis is on self driven performance. Everyone is expected to contribute and there are people watching to ensure you are, as well as people constantly looking for ways to make the employees more successful – there’s been a particular emphasis lately on the new employee experience since they are expanding a fair bit.

    There’s a love machine. Yes, a love machine. What does it do? Well, it’s a way to promote positive feedback and feeling among the people that work at Linden Lab. Basically it’s a web site where you can go and send love to a specific person for a specific thing. “Jakes Sends Love to Billc for helping out with the logging in the new billing system” for example. The system then sends an email to that person saying he’s been sent love, and records it in a big old list that anyone can peruse. Since you have to justify why love was sent you can’t just game the system, nor can you send love to yourself. Every quarter the love is actually tallied up and a dollar value assigned to each love entry (usually 1 or 2 dollars per entry) and the balance is added to your paycheck, and the system reset. I’ve never actually seen anything like it. It’s quite unique.

    The bonus scheme is very forward thinking too. For example, every quarter you are given 2000 points of bonus. 1000 points are just given to you, flat out. Thanks for working here. The other 1000 points you are given, you have to distribute among your co workers, in any way you see fit. You can give them all to one person if you like, or you can hand them out per task (I want to give X bonus points to everyone who worked on adding Voice to Second Life for example), or per group (I want to give X points to everyone who works on the web team) or any combination thereof. Obviously you can’t just work out a scheme where you give it all to your buddy and he you – that’s looked for – but otherwise it’s up to you. The bonus points them selves are valued by making the first grant of 1000 points as a percentage of your salary and the second as a percentage of the amount of money in the bonus pool – usually made up of a percentage of the profit from the last quarter. The interesting point about this is that while each individual usually knows of about 10% of the company what they really did and where he/she thinks the money should go, everyones 10% covers a different part so it tends to balance out.

    Working for Linden Lab on Second Life – Jake Simpson

  • Short Term vs. Long Term Metrics

    Silicon Valley has replaced Wall Street as the preferred destination of fresh graduates. The pursuit of short term wealth on Wall Street in the 80s is replaced with other short term data points which, when pursued with a singular focus, can skew one’s moral compass.

    “If Google’s primary weapons are relevancy and speed, then Uber’s are cost and speed.” What I didn’t say: They are fairly similar in their inability to deal with consumers at a human level. That is the challenge of our times.

    – Om Malik, Technology and the Moral Dimension

    In this data-driven world we must keep in mind what is being measured and remember that organizations instinctively optimize for those metrics. During this Thanksgiving break, think of alternative, long term metrics such as Lifetime Customer Value, Renewal Rates, and Net Promoter Score as important KPIs for your business’ success in the long term.