Incentive Pay Considered Harmful

Incentive Pay Considered Harmful

“if everybody thinks they do good work, and the reviews are merely correct (which is not very easy to achieve), thenmost people will be disappointed by their reviews. The cost of this in morale is hard to understate.” – Joel Spolsky

“But if you do have any choice in the matter, I’d recommend that you run fleeing from any kind of performance review, incentive bonus, or stupid corporate employee-of-the-month program.” – Joel Spolsky

These things are just brutal. The answer is always context specific to the nature of the product being shipped, the existing culture, and the inventible issue of disruption. Self disruption is the best. Image for a moment, when Apple blew up their biggest product to date, the iPod, with the iPhone. In the first year, it barely made a dent. How were those people compensated? What incentive got them to take the long view?

I fear Blizzard is on this same track. I know EA was. With a substantial amount of revenue driven by boxed game sales, it’s hugely painful to get the existing organization to shift away from that – because their day to day (expected) pay is driven in substantial part by that revenue. When Blizzard missed shipping a box title, the whole company took a morale hit even though pushing Diablo III out six months was what the “gameplay first” core value dictated.

It’s a bad sign when your first core value, one on which your reputation lies, is in direct opposition to keeping high employee morale. EA used to go through this song and dance during “console transition” years. EA’s strategy to wean themselves of this dependency has been to buy external studios with digital goods expertise (Pogo, Firemynt, Popcap, etc.) That strategy is as foreign to Blizzard as it is integral to EA’s corporate DNA.

Something to think on.

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