Reward Structures

Have you noticed how reward structures can hinder or help adoption of agile methods like XP?

I've noticed:

• Promotions based on solo work discourages pair programming.
• Being rewarded for "throwing code over the wall to QA 'on time' at the end of the project" with no penalty for number of bugs found... discourages taking the time to learn XP's quality practices.
• "Turf wars" and other Dinosaur Brain divisiveness prevents QA, Customers, and Developers from getting on the same Whole Team.

Have you ever worked to change the reward structures to be more compatible with humanistic/agile/XP methods?

By the way, a recent issue of "Inc." magazine had a article where a Sale manager said, based on his experiences, that he'll never recommend using commissions to reward salesmen, because it damages the company that does it.

KeithRay?

Reward structures and performance metrics have really interesting, and often counter-productive effects.

Sounds like indications of a culture that isn't likely to embrace XP? ("Dinosaur Brain divisiveness"? -- Sounds like you are talking about a competitive culture. This is admittedly not one of my favorite cultures but a savvy PM can get a project result in this culture too -- but from what I understand of it, it would require an interesting implementation of XP tactics if XP were going to succeed.

My experience with this is that reward structures tend to be a real reflection of the culture -- I've seen temporary successes happen with changes in reward structure but in every case (Diana may have experiences counter to mine) the organizational antibodies came in and over-rode the 'new' structure. In the January Harvard Business Review (all about motivation) there was a wonderful piece about the longer term effects of performance metrics and tying results to those metrics. The company, indeed, got what they were rewarding but it did not translate into what they wanted or needed. It fragmented the organization and served the customers very poorly. The most important things are often the most difficult to measure -- like 'fun'.

AmySchwab?

There is research out there to show that rewards can damage collaboration see "Punished By Rewards" by Alfie Kohn. This is the subject of a workshop at the Agile Development conference to be presented by John Nolan and myself.

RachelDavies?

I've always had a reward structure here that was based on the concept "share the risk share the reward" while still acknowledging that "socialism doesn't work... Some people do provide more value than others". At first, I could only come up with a "how much money did we make due to your billable hours" measures, with a few other criteria to make sure it wasn't abused. Worked fine while everyone was billable most of the time. When it wasn't, it had people lobbying for billable time against each other e.g. "I think I should be on this project (instead of Joe) because...".

Finally, I came up with a formula for individual value to the company that could be identified, peer-reviewed, and steps taken to move the number up. That number was used to figure out shares in the pool of money. It wasn't perfect, but it completely got rid of all of the bad behavior (fighting against each other) and produced good behavior, i.e. I got help figuring out how to divvy up resources for the best of our company, the client, and the individuals.

The switch was painful for a couple of guys who had previously gotten the highest bonuses. But, they were already great people with a real team attitude. People of lesser character would have walked (and I would have let them).

It's great when you have a reward structure that is consistent with your values. Now, if I could only figure out a way to produce enough revenue in this market to actually share some decent rewards!

I assume you meant the article at http://www.inc.com/magazine/20030501/25416.html.

That sounds great. I haven't found those salespeople in the 3rd group yet. I'd like to. Where do I start?

KenAuer?

One of the ideas I discuss in The Blind Men and the Elephant is the necessity of being a "bad soldier." This stems from an observation, which has been reinforced a thousand times in my consulting practice. Nothing innovative happens unless someone gets a bug under their saddle and decides to make it happen. This might be 95% foolhardiness at first, but the enthusiasm tends to either be catching or not. If it is catching, anything is possible. No one ever rewards the foolhardy for taking this first step, certainly not in the moment they take it.

There's no way to motivate this "juicy" intrusion except from the inside out. External motivators take on the effect of a bribe. Do you ever feel the need to pass your dentist a quick fiver to ensure that they are well-motivated to do their job? Of course not. You expect them to find their own motivation for doing their best work, just like any professional. As fallout from the "father knows best" mentality, championed by the father of scientific management, we persist in dangling carrots and threatening sticks, even though they are at best poor substitutes for someone getting a bug under their saddle and foolhardily setting out to do what they believe to be right.

The challenge is for the community to do bad soldiering, to do what they feel is right in spite of the external motivators gnawing away at their best purpose for being involved. These are mere distractions for those well-focused upon their real purpose for engaging, and insurmountable roadblocks for those playing the master/slave reward game. Just because it doesn't motivate you is no reason to lose your motivation. It becomes, rather, the motive to look for better motivation somewhere else (like in-here, rather than out-there.)

DavidSchmaltz?

http://www.fastcompany.com/online/28/ge.html

SteveHayes?

It won't be "catching" if the reward structure is against it. The non-foolhardy won't buck the system.

When I talked to Kent Beck once, he said something like he felt a little bit responsible for unleashing XP into the world, for the (foolhardy) people who adopted or tried to adopt XP in hostile environments and ended up suffering because of it

Perhaps, but then it's not for the non-foolhardy to buck the system (at least at first.) Once the foolhardy show that the system can be bucked, however, the settlers move in. Settling new territory is first about blazing the trail. This is foolhardy work, done for its own reward. Later, the settlers move in, feeling as though they are taming the wilderness, but the wilderness was already subdued from its most primitive state by the mountain men, who moved on to the next wilderness. The truely foolhardy are hardy, they don't take their suffering as a statement about their own capabilities. They are fools for their mission. Kent's feelings seem overly responsible to me. If they had not set off into XP, they would have found some other outlet for their creativee urges.

DavidSchmaltz?

Those feelings certainly are overly responsible. Everyone chooses to get up every day, come to work, not respond when they get yelled at, etc. The people who choose to test first, refactor, build automatically, make visible estimates, etc. are all choosing to do that. A more recent (I was going to say "mature" but how would I know) reflection on the situation is that I feel sad when I hear stories about people doing a better job and getting yelled at as a consequence.

KentBeck?

On one particular assignment, I was charged with improving software quality and instilling XP values and practices on a team within a large, plan-driven organization. After struggling for a number of weeks, I discovered that the developers were paid a very large quarterly bonus based on only two criteria: team utilization and adherence to CMM requirements. People were being rewarded for working long hours and filling out [many] forms, but neither software quality nor project success played any part in compensation. We pushed to change the reward structure with no success. We should have pushed harder.

In the end, we only made real progress with a few individuals who possessed a real passion for their craft. The rest of the team continued on largely as it always had, only slightly better for the experience. The reward structure surely wasn't the only reason we didn't achieve more, but I'm confident that it was a key factor. We really would have benefited from a thorough Readiness Assessment.

KenScottHlebek

Recently I came across Ricardo Semler's books- Maverick and The Seven-Day Weekend. Many of the ideas/theories that they tried out at Semco are explained in those books. Regarding the pay- the employees have 11 different schemes to choose from, one being self-set pay. Check out the interview with Ricardo Semler at HR.com:

http://www.hr.com/HRcom/index.cfm/WeeklyMag/C012EDF5-FEE4-47E6-8058D1051998DA08?ost=wmFeature)

I have a feeling that many of us will appreciate the people friendly approach, to many of the workplace issues, implemented at Semco.

RajeshBabu