Egalitarian Compensation

AntiPattern Name: Egalitarian Compensation

Problem: Providing appropriate motivation for success.

Context: A community of developers meeting tight schedules in a high-payoff market.

Forces: Disparate rewards motivate those who receive them, but may frustrate their peers. You want to encourage team cohesion, build team identity, and in general encourage team behavior.

Supposed Solution: The entire team (social unit) should receive comparable rewards, to avoid de-motivating individuals who might assess their value by their salary relative to their peers.

Resulting Context: An organization where people feel accepted as peers because, financially, they are peers. However, leaders will still emerge, and there will still be an inequitable distribution of work; that distribution of work is no longer commensurate with compensation.

People figure this out, and lose one of their motivations to excel. This pattern has the opposite effect of encouraging behavior where people over-extend themselves.

Design Rationale: Note that this differs from CompensateSuccess? [http://www.bell-labs.com/cgi-user/OrgPatterns/OrgPatterns?CompensateSuccess] in only one detail: that outstanding contributors don't receive exceptional rewards. High rewards to some individuals may still de-motivate their peers, but rewarding on a team basis helps remove the "personal" aspect of this problem, and helps establish the mechanism as a motivator, in addition to being just a post-mortem soother.

An unpleasant sibling is BellCurveCompensation. -- BetsyHanesPerry

(*sigh*) I've seen this point of view in several places. Speaking as someone who lived it (Once Upon A Time), it's not as simply wrong as that.

First, I don't know how to impose EgalitarianCompensation on an existing organization. It's too likely to produce chaos, by taking rewards away from some.

However, if a new, all-volunteer organization (a start-up company or project) decides to make EgalitarianCompensation part of its culture, something interesting happens. Yes, some people "coast," because their paycheck doesn't reflect their efforts (and no one pretends it does, the way they do with BellCurveCompensation). Some people do emerge as different types of leaders, because of their technical or communications or facilitation or leadership skills. Those people (if the organization works right) are rewarded by being treated as leaders... which is an incredibly motivating force.

I've seen it happen. It's not perfect, but it can produce some incredible energy.

Once upon a time, there was a shining city called Camelot. So the stories say. We're now told it never happened, and it wasn't a good thing anyway, or important, but I still remember....

-- PaulChisholm

Perhaps there is an underlying AntiPattern in thinking that any one compensation plan is suitable to all situations, and for now and for the ongoing future. People are looking for a SilverBullet, when insted they should be looking for a system to choose which weapon/tool to apply? -- EricScheid

Yes. My management training spent a lot of time explaining that the applicability of all theories and models was contingent on the circumstances. Or put it another way, they taught us stuff and then showed us why it wouldn't work! (all of the time, anyway).

This is one of the reasons I find things like JimCoplien's organisational patterns frustrating. They don't talk enough about the context of the pattern that is needed for the resolution of the pattern to be valid.

I've seen EgalitarianCompensation imposed on an organization. A couple of things happen. First, some people live with it, partly because their managers are clever enough to find other (non-monetary) ways to reward them. Second, you find that the people who have been on the bottom rung are getting the big raises, and the people who have been historically well-rated get negative salary vectors (one must lower those employees' salary ratio to mean). In a free market economy, the excellent people leave to greener pastures, unless there are overriding factors like GoldenHandcuffs.

I would guess that, in the long term, this doesn't converge even on mediocrity. It's more like GamblersRuin.

-- JimCoplien

Deming would have said (strongly) that this was not an Antipattern.

What's a better alternative?

Team-assigned compensation (grades) worked well in a different context; teaching (http://virtualschool.edu/98c). A major team project counted for about 30% of the semester grade. The team project was chosen by the students, the main requirement being that each team had to find a specific customer (in govt, academia or industry) and to deliver to their satisfaction by semester-end. And I reserved the right to approve the project proposal in advance.

Their customer assigned the grade to the team, and the team distributed that grade to each team-member anonymously, in proportion to their contribution to the project's success. I provided a web page that collected the contribution numbers along with comments from each member about the nature of each members' contribution.

Most students seemed to like this system having been burned by tail-gaters in other courses. A (very) few continued tailgating and got (very) burned in the end. In one extreme case out of hundreds, a tailgater flunked the course due to this system and contested the case formally. All I had to do was to provide her teammates comments about her contribution. The case was thrown out.

Not sure this would be a good idea re: monetary compensation. Never gave it any thought. -- BradCox

This is how the US Army conducts the Ranger training. Squads of 10-13 "rate" everyone on the team in numerical order from best to worst. The lowest 2-3 people get "peered out". This occurs in each of 4 training phases, which take place in Florida, Georgia, and Utah. It can be circumvented in at least 2 ways. The first is if part of the team is already a cohort, for (a real) example, 10 cadidiots from West Point in a team. The second is by the team agreeing to a circular rating, where everyone in the team cooperates to ensure that all ratings total identically. I know this because my ranger buddy (class 14/89) was peered out on the first scenario, then taught the second to us in the class he joined later! So overall, peer rating is a good idea, but not a silver bullet.

I did an armchair CompensationGameTheoryAnalysis of the Ranger Course example that someone might find interesting. -- BillCaputo

The discussion on this page assumes that people are motivated and driven by compensation. For example, the problem statement reads "Providing appropriate motivation for success", implicitly assuming that compensation drives motivation. While this may be true for some, in a healthy individual "motivation" results from internal sources (such as passion, talent, creativity, and so on). Compensation - specifically monetary compensation - is better viewed as an enabler, rather than a motivator. When a healthy participant is receiving enough monetary compensation to enable the lifestyle choices of that participant, the monetary compensation received by others becomes unimportant. EgalitarianCompensation may, in some forms, recognize the reality that "contributions" to a team span a diverse range of behaviors and timeframes. The alternatives to EgalitarianCompensation generally emphasize one or a few of those behaviors at the expense of the others, distorting the behavior and overall health of the team as a whole.

Herzberg called these enabling factors "hygiene factors". The idea that motivation depends on the relative fairness of compensation vs. effort in vs. outcome gets called "equity theory". There's also Expectancy Theory. All of these have some explanatory power, in my opinion. See http://hosting.menanet.net/~khair1/khair1/Theory%20of%20Motivation.htm for a writeup, and MotivationInTheRealWorld (although I've not read that)

See CompensationGame, CompensationGameTheoryAnalysis

CategoryAntiPattern