Open Source vs. Wall Street Bonuses

tcd004 sends in a piece from PBS NewsHour on money and what actually motivates people. "What best motivates the workforce? More money? Fame? New studies reveal that beyond a certain threshold, large financial rewards can actually become a drag on performance in the workplace. Reporter Paul Solman compares million-dollar Wall Street bonuses to the rewards earned by the labor force behind the open source community."

Comments

Real world already knows this

[ender06]

Who would've imagined that knowing you'd get a huge bonus anyway would make you work less/not as hard? The rest of us in the real world already know this.

Re:Real world already knows this

[Jurily]

Motivating developers: "We'll ship this time."

Re:Real world already knows this

[Bert64]

However, bonus schemes in many cases are inherently flawed and encourage people to cut corners or do their job in a known inefficient way in order to maximize the bonus.

Look at traffic wardens who are supposed to be enforcing parking regulations, but are rewarded based on the number of tickets issued. So now it becomes in their interest to maximize the amount of regulation breaking so they can hand out tickets.
Some police forces are rewarded based on number of arrests, so its in their interest to make no effort to prevent crime, wait for crimes to be committed and then arrest all the petty criminals who are a much easier target than serious or organized criminals.

Re:Real world already knows this

[roman_mir]

Well, I did the sacrilegious thing, I read TFA :( Sorry.

So that's not what the thesis is. The thesis is that by offering to receive a very large reward as opposed to offering to receive a small reward without paying attention to the time, the people were driven to enter this mode of behavior, where they stopped thinking creatively and tried to solve the problem by brute force, without any regard the real question at hand. People who were offered large reward if they solved the problem quicker, actually did worse (took more time and did not come up with the optimal solution) on average than those, who were offered a small reward and where time did not matter (they saved about a third of time it looks like and came up with the optimal solution that corresponded to the actual requirements correctly.)

So what TFA is saying is that offering a lot of money quickly prevents people from actually doing a good job quickly and that they take on average more time then to do a worse job. It's like TFA is saying that people enter some sort of a panic mode and cannot think straight because of the money involved.

Re:Real world already knows this

[OeLeWaPpErKe]

The problem is that wall-street lets people decide for themselves how much they want to earn.

A bit like all public sector people. The only ones really good at it though are these bastards.

And at least in the case of wall street, before the "too big to fail" nonsense and they became de-facto public sector banks, they had a bit of a case that they were actually useful.

Re:Real world already knows this

[Rhaban]

As a developer, I see everyday that when someone is asked to do something with a tight deadline, it usually takes more time than if there's no deadline or a large one.

When someone thinks there's no time to perform a task, they try to cut on "useless" parts like planning, modeling... and they try to begin "productive" work right away.

The result is often that a lot of work has to be redone, and the global task ends up taking more time.

Re:Real world already knows this

[Anonymous Coward]

http://en.wikipedia.org/wiki/Perverse_incentive

Re:Real world already knows this

[JaredOfEuropa]

I can understand the "panic mode" thinking when being offered a reward to solve a puzzle in 5 minutes. But does that really affect your work when you are being offered a large bonus at the end of the year? The bonus probably influences your decisions, as the article shows with the example of Wall Street bonuses, but it does so for very different reasons.

All of that is already well known though. Money is a good incentive when there is a direct and immediate relation between your paycheck and your output: if you get paid $1 per Widget X made, you are well motivated to work a little faster, take shorter breaks, and make a couple extra widgets at the end of the workday. But when there is no direct relation between pay and performance, money turns into what is known as a "hygiene factor": the reward needs to be adequate up to a certain point or it will work as a demotivator, but anything past that point will work as motivator only very briefly.

Re:Real world already knows this

[Anonymous Coward]

Real answer? SEX!

Re:Real world already knows this

[buchner.johannes]

That's why you only get 5 mod points at a time on /.. To avoid the panic mode of too much reward.

Re:Real world already knows this

[Z00L00K]

Motivation is fed by a combination of pressure, reward and recognition.

A bonus shall only be provided if the result has exceeded expectations and the company as a whole has had a positive revenue. Any other reason for a bonus is insufficient.

But in order to ship something in time you must also make sure that there are sufficient time available to complete the task. However the startup process for a project may sometimes eat up more than half of the available time that a project is expected to be completed in. That is one of the reasons why the end date of a project often is passed - the start date that was initially planned was delayed due to some red tape or absent accountant.

Re:Real world already knows this

[MrNaz]

So do away with salary bonuses and just have a set of rooms on the top floor populated with "relaxation service providers". Good code shipped gets you one visit voucher. Good code shipped on time gets you two.

Don't dismiss the idea; it's not like Wall Street isn't already staffed by prostitutes.

Re:Real world already knows this

[SerpentMage]

I find your comment very interesting because it speaks quite a bit of truth.

First saying that bonuses gets you the melt down is saying that if I put chocolate in the sun it will melt. Gee duh yeah, and wall streets are stuffed with people who only see short term profits. The idea of wall street is short term quick money! You only need to look at Easy Money with Eddie Murphy to understand that.

Regarding open source, well the mystic of open source is failing. Recently on Slashdot they talked about the open sourcers getting old and not attracting new talent. Well duh yeah! I talked a few friends and asked where are the youngsters going? The conclusion, "first find youngsters going into IT period..." And if you have found some then yeah most likely they are going to develop for the iphone.

The world has changed and quite frankly us IT people are not as important or vital as we used to be... We have shifted from competitive advantage, to cost center... Not good...

Re:Real world already knows this

[roman_mir]

Oh Your God, I can sell Moderation Points for Money? Where where, how to who?

Mod Points, Mod Points, Fresh out of the /. bakery! Get them here, get them now! Now with only 4 easy payments of 19.99!!!!

Seriously though, I think the time pressure is worse than the money pressure. Also take into account that money pressure is relative: if you are making $100/hour, then $120 is not such an outrageous amount for you to panic, but if you are offered $1000/hour after only making $100/hour, that's a different story.

Re:Real world already knows this

[Trepidity]

That seems vaguely reasonable to me, based on my experience getting people to do things. Some of the best stuff I've gotten from other people has been stuff that I've gotten on a totally "I'll do it when I get to it" basis. You get a lot of un-accounted-for work in those cases, because people aren't "really" working for you, but are thinking about your problem in the shower, or procrastinating from their "real" work by reading Google Scholar entries related to your problem, etc. Eventually, you might get back something pretty good. (Not always, of course; so you could also say it has a higher variance.)

Re:Real world already knows this

[davmoo]

Another good example is the bonuses for keeping labor costs down at many stores and restaurants. If the manager keeps labor costs under a certain figure, he gets a bonus, even if the business ends up understaffed. This is why most businesses, especially chain restaurants, seem to be perpetually understaffed.

Re:Real world already knows this

[Anonymous Coward]

Following on from what you said and without reading TA. You have to ask the question if Brute forcing or creative thinking is applicable to the problem in hand. Banking is a conservative industry where innovation tends to move more slowly the amount of due dilligence means that you are almost brute forcing the problem anyway. Banking involves a lot of less than exciting reptative work, which must be done properly. Hence this is probably highly suited to the bonus culture. Software development on the otherhand is by nature highly creative. So to a cetain extent he is comparing apples with oranges

Re:Real world already knows this

[Trivial Solutions]

Many things you get wrong the first try and right the second. Just call a failed attempt "planning".

Re:Real world already knows this

[h00manist]

Reward people with more time. Most people spend inordinate amounts of time solving simple, repetitive tasks. Paying bills, cleaning house, washing clothes, buying supplies, transportation, finding entertainment, fixing things, answering phones. Paying a specialized 'time savers crew' might be much cheaper than a team of programmers doing all this stuff individually, plus frequently they are all awfully messy with it. Get a coding party or campout where people can spend time at to get away and get work done.

Re:Real world already knows this

[Hognoxious]

That works until it gets so bad that people stop going there. No matter how low your labor costs are, you won't make a profit with zero customers.

(Exceptions: SCO, the music/movie industry.)

Re:Real world already knows this

[nadaou]

well what do you expect them to do? the mayor's got the chief's ass in a sling over this damn it!
(well seriously, the mayor [aka the voters] loves those inflated arrest stats)

Re:Real world already knows this

[Anonymous Coward]

"The idea of wall street is short term quick money! You only need to look at Easy Money with Eddie Murphy to understand that."

That's absolutely true, in fact Eddie Murphy movies make up 90% of the training required to work on Wall Street. Not a lot of people know this, but the economic crash was actually caused by following advice from Beverley Hills Cop 3.

Re:Real world already knows this

[Hylandr]

If I had had mod points I would have modded this flamebait.

Cost center ? How the hell do you figure? Mystic of open source failing? Chocolate? Reality check on Isle 5 please!

The fact that you see us as redundant means we are doing our job. Servers don't maintain or install themselves. New data projects don't complete themselves.

If you think your going to get any real work completed with an iphone you probably have a very easy job, the kind robots will be doing soon.

- Dan.

Re:Real world already knows this

[Anonymous Coward]

It's not the money that is the problem. It's the timeline.
One of my favorite sayings is "it takes 9 months to make a baby".
Which means....you can "throw more (wo)manpower at the problem" about 4 months into it, when you are already "behind schedule", and all it is going to do is raise payroll, cause internal personnel clashes, and make your "original developer" leave.

You can offer larger bonuses or engage in all kinds of expensive medical shenanigans, but if you want a healthy happy baby, the most OPTIMAL and efficient way is simply to give the developer the 9 months required to complete the project without all the distractions.

You are dealing with PEOPLE, not machines. If you want creativity, efficiency, and accuracy, you have to provide the right people, the right motivation, in the right environment. For most software development situations, that's a core team of 4-8 developers, with however many support people they need. Everyone else has to understand they are there to SUPPORT those 4-8 and those 4-8 have the PROJECT with WELL-DEFINED minimum REQUIREMENTS as their primary mission. Easy button.

Re:Real world already knows this

[shallot]

This looks like a good opportunity to recommend The Mythical Man-Month . It talks about software written forty years ago, but its lessons are still plenty applicable today :)

Re:Real world already knows this

[Anonymous Coward]

Reality check indeed. IT is an expense and doesn't bring in any revenue. That's exactly how upper management sees IT. Also, it's "aisle", not "isle".

Re:Real world already knows this

[Anonymous Coward]

Correct. I've seen that too.

Re:Real world already knows this

[Wallace487]

Yes, your management probably considers IT to be a cost center. As you stated, servers don't maintain or install themselves, but the need for physical support of this equipment has decreased over time. If you've seen your management reduce the number of people working in IT over time instead of keeping them on board to work on more "competitive advantage" activities, they are reducing the impact of a cost center.

You have a point on the new data projects, but when was the last time you had a significant number of new hires working on a data project? If the project is a true competitive advantage, they will throw additional resources on it. If they're having you "make do" with what you have, you're a cost center.

Re:Real world already knows this

[vertinox]

But does that really affect your work when you are being offered a large bonus at the end of the year?

Wall Street bonuses are based on quarterly earnings, not yearly performance.

If you do crappy 3 of the 4 quarters, the shareholders won't wait for the 4th.

Secondly, I have never worked for a company who did year end bonuses... It was always quarterly or trimester. I suppose the turn over rate was bad enough as well as the threat of downsizing/layoffs, that it was assumed you might not be there in a year so they needed a more short term carrot and stick for the people in the industry.

Re:Real world already knows this

[b4dc0d3r]

If you give people a monetary reward, their focus shifts so that the outcome is money and the solution is a byproduct. This short-circuits mental processing because the output is supposed to be a solution, and the money a byproduct dependent on the solution. Essentially what you said about panic mode only more of an explanation - a theory if you will.

The experiment is slightly disingenuous because it uses time as a limiting factor. So the outcome is not just a solution, it's a timely solution. The only reason of course that "timely" is part of the criteria is because the money depends on timeliness. So you have 3 variables - time, solution quality, and money. Up front, the optimization for money has to be done by sacrificing time. So you now have a specific pressure on one variable which is irrelevant to the scope of the study.

But that of course is the underlying discovery of the study, in which the disingenuousness of the design is irrelevant and often illuminating. In a real workplace you have things like quarterly filings and other deadlines, making time an inherent part of the process. Time gets forgotten in many of these calculations. "You're under your quota" is a time-driven incentive, "monthly figures" or "quarterly reports" are time-driven, "client delivery date" or "product launch date" are time driven.

We want results, in a given time, and you get more money if you get results faster.

Now, if you give someone no deadline and no incentive, you'll get a solution when someone gets around to it. If you give someone an 8 hour day and salary, you'll get it when they get bored. Give them a reasonable deadline and it will be done on or near the deadline. Give someone an unreasonable deadline and it will be done either immediately or way behind schedule.

With open source, the outcome is code, a working product, not money. The problem with this of course is that the people on wall street probably have poor self-motivation skills, and are masters of delayed gratification in order to maximize the material gains. Most starving artists have an internal motivation to get whatever is in their heads out on paper or canvas or whatever else, while the empty materialistic wall street types don't have that motivation. The question I'm wondering is, can they obtain internal motivation? Would they be able to re-focus so that their financial derivative's performance and client happiness is the promary goal? I'm proposing no, that no one would find intrinsic motivation moving piles of money around and skimming off the top. It's a difficult lifestyle, and if you saw the "letter from wall street" that's passing around you'd agree. This letter claims that they will take our jobs because they have the tenacity to work 14 hour days, and when their jobs go away they sill simply shift into our careers. Tenacity will not help if you're administering a server - you can't stare the box into working, or read for 14 hours a day and learn. If you try to do it by brute force, you're going to waste valuable uptime.

Go ahead and continue to take us down, but you're only going to hurt yourselves. What's going to happen when we can't find jobs on the Street anymore? Guess what: We're going to take yours. We get up at 5am & work till 10pm or later. We're used to not getting up to pee when we have a position.We aren't dinosaurs. We are smarter and more vicious than that, and we are going to survive.

http://www.huffingtonpost.com/2010/04/30/wall-street-reportedly-ci_n_559032.html

Yep, you can math your way out of anything just by being in the office. Actually, they would not be able to take my job, nor most people's. But they think they can.

My biggest concern is the bonus culture. If you earn $9m bonus this year, but they guy who sits next you you and picks his nose half the day earned $10m bonus, you're probably going to ask why yo

Re:Real world already knows this

[ceoyoyo]

"Look at traffic wardens who are supposed to be enforcing parking regulations, but are rewarded based on the number of tickets issued. So now it becomes in their interest to maximize the amount of regulation breaking so they can hand out tickets."

Okay... how does a meter maid maximize the amount of illegal parking? Pull down the signs? Here there's a law that says if the sign isn't legible the ticket is invalid. And if the maid ever got caught....

Re:Real world already knows this

[Anonymous Coward]

Get the fuck outta here!?

Re:Real world already knows this

[mdda]

I know this is untrue, having worked in Wall Street firms.

The bulge bracket firms normally pay a bonus in Feb, based on last year's "production" (but with fiddle-factors based on ill-defined factors such as 'contribution'). It leads to a lot of in-fighting towards the end of the year, and lots of job changes 'once the check has cleared'.

The last couple of years, a large percentage of the bonuses have been paid in (restricted) stock, to keep people where they are. That stock might respond to short-term figures, but that's a feature of the stock market, not the people holding the stock (who would normally prefer to have received cash they can spend).

I now work in a commission-only environment (despite not being a salesperson) since I prefer the clarity of being paid using a plain numerical formula related to the prior month's profits. Some months I might earn exactly zero, but I have to say that I'm a little proud of that, since it keeps the politics to a minimum.

Re:Real world already knows this

[Anonymous Coward]

Actually, for some industries a factored in bonus makes a lot of sense - retail "Christmas bonuses" for instance allow the company to pay their employees extra at a time of higher revenue, easing cash flow issues during the year. Similar seasonal surge industries would also have a natural bonus regime. I honestly don't know the ebb and flow of Wall Street's revenues enough (I expect April is different than other months, but not sure which direction) to guess how natural it is for that field.

Beyond this natural cash flow issue, there is also the employee's need for further income at certain times of the year (Christmas season in the US, probably Lunar New Year in China) which can make it perfectly rational to defer some payment to a bonus.

Re:Real world already knows this

[Anonymous Coward]

The fact that you see us as redundant means we are doing our job. Servers don't maintain or install themselves.

I think you just proved their point that management sees IT as a cost center. It is kind of a double-edged sword. As long as things keep running management considers you to be disposable. If you create problems on the network - which I have seen - in order to show your usefulness, then they see you as a liability.

The only way for a network administrator to be seen as more vital to an organization is to have both a high-level manager who understands what they do to keep things running, and working for a company that has growth. I worked in a medium-sized business where there were 2 of us who handled the entire network. Management wouldn't put money into upgrading the aging infrastructure (not surprising) so we worked with what we had. The organization started having financial problems so one of the first people they wanted to get rid of was my supervisor. That left me to maintain our entire network by myself. I didn't stick around long. Now they have a programmer who devotes 50% of his time to network administration, which is basically keeping the helpdesk running. They haven't touched servers in months and it wouldn't surprise me if their backups aren't working. Their bad.

Re:Real world already knows this

[innocent_white_lamb]

Okay... how does a meter maid maximize the amount of illegal parking?
 
By being unreasonable.
 
This meter expired 3 seconds before you drove away. Yes, I know you were starting your car at that time. Here's your ticket.
 
You must be parked within 12 inches of this line. Your car is at 12.3 inches. Here's your ticket.

Re:Real world already knows this

[happy_mart]

As a developer, I see everyday that when someone is asked to do something with a tight deadline, it usually takes more time than if there's no deadline or a large one.

When someone thinks there's no time to perform a task, they try to cut on "useless" parts like planning, modeling... and they try to begin "productive" work right away.

The result is often that a lot of work has to be redone, and the global task ends up taking more time.

My experience is quite the opposite : if you do not give a deadline, the work takes much more time, people are goofing off (especially me), knowing that anyways, they will have enough time. A deadline forces you to focus right now, not to experiment on new ways of doing things. I often ask for deadlines in my job, it makes me much more efficient. That said, if the deadline is not realistic, it does not hep either to motivate people and furthermore, it is often necessary to try new approaches, just not all the time. As often, it is a question of finding a good balance.

Re:Real world already knows this

[Anonymous Coward]

Sex is like software - it's better when it's free!

Perhaps access to an intra-office dating site would be a better reward?

Re:Real world already knows this

[oiron]

The iPhone was released in 2007. I think it's a little premature to make any call on what an entire generation of devs is going to do based on one device released just about one-bachelor's-degree back...

Re:Real world already knows this

[Rhaban]

Agreed, deadlines are needed. But unrealistic ones are counter productive.

Re:Real world already knows this

[darthdavid]

But what if Hylander's grocery store is on an archipelago?

Re:Real world already knows this

[dadisman]

My workplace has this atmosphere, and in fact is featured in Daniel Pink's book (the source in TFA from PBS) -- read Chapter 6 in Drive. Meddius is a company where you come in on your own schedule or even not at all, all meetings are optional, and really your results are all that matters. My colleagues are responsible adults and are treated as such. The freedom is a considerable benefit for me and my family, on top of decent compensation. Best Buy initiated this Results Only Work Environment (ROWE) idea, but ROWE seems to be spreading. Lots of entrepreneurs were swapping stories about ROWE at this year's SXSW, and if your workplace is considering the concept, it's something to get behind. it seems like we're always entertaining resumes if you're interested at meddius dot com.

Re:Real world already knows this

[jadavis]

Money is a good incentive when there is a direct and immediate relation between your paycheck and your output

I think this misses the point. Money (and other incentives) work well to encourage inputs. For those tasks where there is a direct connection between inputs and outputs, money can improve outputs (like with your widget example). However, if the connection between inputs and outputs is looser, such as a task that requires creativity rather than brute force, incentives generally don't work as well.

Re:Real world already knows this

[mcbiondi]

It depends how you look at it. IT brings in plenty of revenue, its management's job recognizing it as that and making sure everyone understands the value added. I also disagree with the Parent poster - lots of folks are still going into IT - what's harder to find are the more traditional jobs - many are being replaced by trading engines, etc.

Re:Real world already knows this

[ceoyoyo]

That's not maximizing the amount of law breaking, that's enforcing the law, as written. What you're objecting to is failing to NOT enforce the law. I agree the spirit of the law should be considered, but let's call a spade a spade: the meter maid is not "maximiz[ing] the amount of regulation breaking."

Re:Real world already knows this

[toddestan]

And that doesn't bother the management at all. They got their bonus, that's all that matters. They'll just move onto the next company and start the process over again.

Re:Real world already knows this

[Bert64]

Well they could act as a deterrent, but it's more in their interest to hide and allow someone to park illegally, wait for them to leave the vehicle and then ticket them.

When must the sign be legible? They have been known to put plastic bags over the signs etc, and remove them later...

Also they could use discretion more, many parking meters only take coins and people don't always have a huge stack of coins with them... I've seen people get ticketed in the couple of minutes it took them to get change.

And i hate prepay parking, the ones where you pay on exit are much fairer - you don't end up spending much more than you needed to because there was a shorter then expected line in the bank, or having to go back to the car and refill the meter (thus losing your place) because the line was longer than expected.

Re:Real world already knows this

[Bert64]

The meter maid should be there as a deterrent as much as anything else, they should be encouraging people not to break the law, rather than waiting for them to do it and then pouncing.... But everyone following the law is not in their interest at all.

Re:Real world already knows this

[ceoyoyo]

The city I moved from last year upgraded all their meters to electronic ones. When you arrive you punch the spot number into a machine that takes coins or credit. You can also add money from your phone, so you don't need to return to fill up the meter. Enforcement is by a Google Streets-style car that drives around and records license plate numbers. There's no discretion. If your car is there when they go past and you haven't paid, you get a ticket.

I've never heard of a meter maid covering up a parking signs. I'm not American though. Perhaps you have more corruption than we do.

Money is a by-product

[Anonymous Coward]

Personally, it's appreciation. If no one appreciates what I do, it's just pointless. Money is a by-product such that I can pay the rent.

Re:Money is a by-product

[OeLeWaPpErKe]

You should read the article (unorthodox, I know). It involved a puzzle lasting about 15 minutes in the worst case.

I think that money can motive even a drugged-up hippie for 15 minutes. And yes, intrest, cameras and stimulating conversation would probably motivate better and perhaps a bit longer. I doubt it would work for any realistic job-like length of time though (say, a month).

Add to that the simple fact that using money is not to motivate people that are currently doing the job, that, as the article says, does not work. It motivates other people to vie for the job (especially true for wall-street ceo jobs before Obambi made it an absolute certainty that politicians get the job). The competition and the threat of getting fired (and actually firing incompetent people) ensure the job is carried out by capable people.

But imho, the article is right, giving a raise to an individual will not increase motivation. Except perhaps when it's a raise like in "a christmas carol".

Of course, if too many ceo's think like this jobhopping is going to become a national passtime (although if my colleagues are any indication jobhopping is THE way to get payraises already).

Re:Money is a by-product

[Culture20]

I think that money can motive even a drugged-up hippie for 15 minutes.

Money's the way the man controls you. Open your mind to the cosmic crystal colors and realize we're not bound by pieces of paper or metal. We should work on the puzzle together; that way everyone wins.

Re:Money is a by-product

[drsquare]

The competition and the threat of getting fired (and actually firing incompetent people) ensure the job is carried out by capable people.

How do you explain the global financial crisis then? All those bankers were being paid megabucks to ensure they were the best.

people who do less useful work earn more

[azgard]

In fact, people who do less useful work in society do earn more money. The reasons are twofold:

1. If someone is doing it for the money, he is spending his time in finding ways how to make money as opposed to spending time to improve his skill in the particular area. Thus all other being equal he will get more money.

2. You don't have to pay people who have intrinsic motivation to do something as much as you need to pay people for whom the money are the motivation. Sadly, that's economics 101.

Usually, the "intrinsic motivation" (other reason than money) to do something corresponds with what is useful for society, too.

(Note for moderators: I don't know if I am actually being sarcastic or not. It's sort of like Parkinson's law.)

Re:people who do less useful work earn more

[LKM]

Similarly, in my experience, the people who end up in the highest-paying jobs are usually not the most productive or useful workers at a company, but simply the most sociopathic ones. Instead of helping others and improving the system, they optimized for their own success.

Re:people who do less useful work earn more

[DrHex]

So what Open Corporate Culture would promote and reward good behaviour in a realistic way?

Re:people who do less useful work earn more

[Hognoxious]

In fact, people who do less useful work in society do earn more money.

Some people who earn a lot don't do anything useful (though what's useful is somewhat subjective anyway).

However generalizing that to a universal law is a bit of a stretch.

You don't have to pay people who have intrinsic motivation to do something as much as you need to pay people for whom the money are the motivation.

You appear to assume a person can only be motivated by one thing at a time. I'd say, at the risk of getting too technical, that's it's a load of bollocks.

Re:people who do less useful work earn more

[azgard]

However generalizing that to a universal law is a bit of a stretch.

I don't think it's general law, just like Parkinson's law probably isn't. I am just (half-jokingly) giving arguments why it could be true, while I don't see good arguments for the opposite situation (except maybe the generally inborn human need for justice - see ultimatum game for instance).

You appear to assume a person can only be motivated by one thing at a time. I'd say, at the risk of getting too technical, that's it's a load of bollocks.

Well, at the end of the day, you have to compare the two things and determine which one is more important, or what their conversion ratio is. For example, you have to determine whether you want interesting but low paying job or less interesting but high paying job. The point is, the other party can take advantage of this in their offer. (And there are examples from Slashdot too - see e.g. game developers vs. business application developers.)

Re:people who do less useful work earn more

[Pastis]

I don't like generalizations...

You could also say that a person who isn't good at her work is maybe not a food salesman neither and end up being not useful and earn less.

> 1. If someone is doing it for the money, he is
> spending his time in finding ways how to make
> money as opposed to spending time to improve his
> skill in the particular area. Thus all other
> being equal he will get more money.

I would invest in a salesman whose job would be to find me the most rewarding job (skills and money) while I could focus on getting better skills. Having a monetary objective doesn't mean you can't be smart nor like what you do.

> 2. You don't have to pay people who have
> intrinsic motivation to do something as much as
> you need to pay people for whom the money are
> the motivation. Sadly, that's economics 101.

And maybe the person is using is current skills to build a capital so that he can then make a career move in a way that will be more beneficial to the society altogether, maybe working for free later on. Don't forget the full picture.

And you also forgot the type of jobs whose salary is kind of related to the performance (I am not going to talk about traders here, but for example, waiters).

Re:people who do less useful work earn more

[einar2]

In fact, --- this is just your opinion. There is a lot of work outside of your personal experience which might appear less useful to you because you have not thought about it yet. This is ok. Nobody knows about everything. The limitation of your viewpoint does not set a standard and should not let you judge other people's work.

There are several jobs I would consider useful for society where it would be difficult to come up with "intrinsic motivation" (my opinion). For myself, I conclude that equaling the glamor of a job with its usefulness is highly flawed.

Re:people who do less useful work earn more

[sznupi]

Highest paying jobs might also simply make them like that.

People are instinctively hoarders, getting & keeping what's valuable. It just so happens, as TFA claims, too many people convinced themselves that large sums of money are the most desirable loot.

And when you have so much of precious, perhaps many more people are starting to look suspicious; a threshold for "enemy" becomes that much lower.

Re:people who do less useful work earn more

[h00manist]

So what Open Corporate Culture would promote and reward good behaviour in a realistic way?

It's called Basic Human Dignity. That's what people want. For everyone.

Re:people who do less useful work earn more

[Anonymous Coward]

When the difference in payscale is close to 5,000% between the richest and the median, I think justifing that payscale as far as useful contribution really needs to be examined.

Re:people who do less useful work earn more

[rtb61]

It is called small business, where management directly interacts with customers and management carries the full consequences for bad business decisions. Not that this stops sociopaths from being destructive in this business area as well, they simply can't do as much damage. Major restrictions in the allowed size of corporations is required to limit the harm caused by limited liabilities (share holders not liable for the debts of the companies they have part ownership of).

For corporations, there is a validated and accurate test for detecting sociopaths (those with a genetic absence of conscience and empathy) so simple testing and exclusion is sufficient to resolve that problem. Whilst narcissists can also be damaging they generally lack the abilities to succeed outside of mass media, other than as puppets of the sociopaths who do the plotting and scheming whilst the narcissist presents the public face (think the Cheney Bush partnership).

The rewards offered need to match the psychology of the desired work force, while still providing for an acceptable life style. Where the government provides a significant portion of important elements of a liveable society this free business from those costs ie. universal health care, free public education, welfare support for unemployment or injury, low cost quality housing, readily accessible low cost public transport. Full provision of these public services de-stresses a society as such, there is less pressure to earn more by what ever means possible, just in case you need it, this provides a more stable and honest work force.

Greed can never be sated, in point of fact, greed is not so much driven by what they get but in what they can deny you, exclusivity, the rest of society starving and desperate whilst they wallow in excess (more than they can consume in a thousand life times).

Re:people who do less useful work earn more

[wigaloo]

(Note for moderators: I don't know if I am actually being sarcastic or not. It's sort of like Parkinson's law.)

Had to look that one up.

Parkinson's Law is the adage first articulated by Cyril Northcote Parkinson as the first sentence of a humorous essay published in The Economist in 1955: Work expands so as to fill the time available for its completion. [Emphasis mine]

Sorry, what does that have to do with anything?

Re:people who do less useful work earn more

[azgard]

Yes, for example, cleaning toilets is definitely useful, but I doubt there is anyone who has intrinsic motivation to do it. And it's, I gather, quite low paying job. So why do people do it at all?

Which brings me to the 3rd reason why the correlation above is true: People who have control over other people can have _them_ do the useful work, so they don't have to work themselves.

Those all negative responses amuse me, because I think you just don't want to face the fact it's not fair (and I agree it isn't). But I don't see any way how, in a reasonably free society, this could made fair.

Re:people who do less useful work earn more

[azgard]

What I am saying, just like Parkinson's law, is something that's not clear whether or not should you take seriously or not. My arguments, like arguments of Mr. Parkinson, are valid, however the conclusion is so absurd that it is very hard to accept.

Re:people who do less useful work earn more

[wigaloo]

OK, thanks.

Re:people who do less useful work earn more

[Hognoxious]

Major restrictions in the allowed size of corporations is required to limit the harm caused by limited liabilities (share holders not liable for the debts of the companies they have part ownership of).

I got an Alan Smith - no, sorry, Adam - on line 2. Something about economies of scale.

And you do know that limited liability companies are not necessarily large, don't you? I don't see how a hundred small or ten medium sized businesses going under is much different to one large one failing.

Re:people who do less useful work earn more

[Hognoxious]

Parkinson's Law is the adage first articulated by Cyril Northcote Parkinson as the first sentence of a humorous essay published in The Economist in 1955: Work expands so as to fill the time available for its completion.

Sorry, what does that have to do with anything?

Corprashun$ r €€€vu£!! I hates rich pipple's, it's not fair!!!!!!oneeleeven!!! Die, banker'$$$$, die!!!eleventyexclamationonemark!

That's what. Claptrap like that always gets modded up - it goes down a treat with the peanut gallery.

Re:people who do less useful work earn more

[Anonymous Coward]

This, and most similar points of view, seem to betray an underlying assumption that your boss isn't really "working" or isn't as valuable as you are (or is not doing "useful work", to quote you).

Everything else appears, to me, to be an "explanation" of this apparent "anomaly".

I think it arises from a refusal to even consider that your boss is doing something worthwhile. Possibly this arises from remnants of Marxist theory and possibly it arises from envy. It certainly has very little logical basis when you consider that every company in the world is about 50% management.

Re:people who do less useful work earn more

[Skowronek]

50% management? This would imply that, on average, every manager has almost 2 underlings (for a large company it tends to 2 - proof for the reader). The conclusion of this, from Dirichlet's principle, is that if there is a manager who manages 2 or more underlings, there is at least one manager that manages no more than 1 person. And that's terrifying.

Re:people who do less useful work earn more

[mvdwege]

People are instinctively hoarders

[citation needed]

Seriously. On the face of it the very fact that humans formed societies should at least raise the suspicion that this is not universally true.

Mart

Re:people who do less useful work earn more

[sznupi]

Uhm, the very fact that those societies (building on smaller blocks - remember, we can't really track more than few dozens individuals) survived means people are hoarders... (among other things)

Oh, and the money in present age has a nice property of the possibility of being, instinctively (not technically of course...so?), "all mine".

Re:people who do less useful work earn more

[Anonymous Coward]

Did you get to the part about government regulation of business?

Re:people who do less useful work earn more

[mvdwege]

No, sorry. You don't get to assert a thing without showing a chain of reasoning. If people are hoarders instinctively, then there is no incentive to give up things to the collective, which is a major impediment to forming a society. On the face of it, your statement contradicts the fact that homo sapiens is, provably, a social animal.

So, care to try again, and this time with a little bit more than just simply reasserting the same opinion again?

Mart

Re:people who do less useful work earn more

[Anonymous Coward]

There is another thing working here.

Lets say you earn 10000 a year. A 3k bonus is HUGE. You probably would be VERY motivated by that. Where as if you make 10 million a year a 3k bonus is like 'what the hell'.

I am currently in that position somewhat. I have made all my 'big purchases' for life. House car etc... I make 'decent' money (about 80k a year). Yet I have no real big bills. It takes a MUCH larger bonus check to motivate me these days. Where as before I had paid those things off it was a smaller amount I was motivated by.

SOOOO my point? What is a lot of money to one person is 'pocket change' to another. It will take quite a bit more of money to motivate someone who doesnt have to worry about 'can I make the next car payment'.

Re:people who do less useful work earn more

[Alex Belits]

I have no motivation to clean toilets.

However I have plenty of desire, and ability, to develop cheap and flexible robots that would be able to easily replace all toilet cleaners in the world. The problem is, people in power are satisfied with toilets being cleaned by desperate poor people, and have other aspirations. So instead of paying me for robots (or just providing me along with would-be toilet cleaners, with free decent living conditions -- I am not that picky), government spends money on weapons, and my electronics/programming work has to be limited to entertainment industry, or I would not be able to pay for my food and shelter.

The problem is not with me, toilets or people's motivation, it's with society that is controlled by those who want to hurt and humiliate the poor under the guise of motivation.

Re:people who do less useful work earn more

[azgard]

Actually, I would love if my manager would do something worthwhile 100% of his time. He would certainly be capable of that. But he has to deal with constant s**t that someone even higher decided.

So yes, I believe he is less useful than he could be, but I don't fault him. I fault the top-down hierarchical system of direction, where the people need to fight constant battles against each other (everybody fears of those above, below and to the side of them). I would say having 50% management has little logical basis.

Anyway, my point was more general than managers vs. other employees. Look for example how teachers or scientists are paid relative to people who do finance or sell insurance.

P.S. Envy is not a bad thing. Look up Ultimatum game. The very mechanism that drives "irrational" behavior of actual humans could be described as envy.

Re:people who do less useful work earn more

[sznupi]

It simply boggles the mind that you can dispute something so self-evident (and your simplistic views of societies; do you really think that hoarding instinct in individuals, a usefull survival trait all-around, would be the single determining factor in dynamics of those societies?...). Heck, look around you. It's hard to find a house in which large portion of stuff wouldn't be unnecessary at given point in time (too often eventually thrown away); proportion being the larger the more "poor" people are of course (so is it so inconcievable to simply wonder whether or not money might supplant part of that instinct?)

Start from here and if you still don't want to be convinced - fine, have at it your way; it's such a non-issue...

Re:people who do less useful work earn more

[rtb61]

Economies of scale are largely a lie beyond a nominal size, what you mean to say is establishing a monopoly and specifically an uncompetitive monopoly, especially keeping in mind the period of history that Adam Smith originates from as well as the limits of understanding of modern business techniques and the impact of computerisation something of course far beyond 16th century business thinking, well before phone lines, so more accurately that would be archaic backward thinking boob on line two, too which the appropriate answer is hang up perhaps they wont call back.

As too the nonsense about one or a hundred companies going broke, buffoon, separate management at each company, as such one bunch of thieves can only impact one company at a time with limited risk upon the rest of the economy, that is the whole bloody point. Also smaller companies have significantly less influence upon government as well as the regulatory environment.

Re:people who do less useful work earn more

[kz45]

"However I have plenty of desire, and ability, to develop cheap and flexible robots that would be able to easily replace all toilet cleaners in the world."

Most people that clean toilets don't just clean toilets. It's just part of their cleaning duties. The rest of the duties (cleaning the office, taking out the garbage, etc.) would probably be too difficult for a robot with our current technology.

"government spends money on weapons, and my electronics/programming work has to be limited to entertainment industry, or I would not be able to pay for my food and shelter."

Because the government spends it's money on weapons (which isn't the only thing the military spends its money on)..you are forced to program for the entertainment industry? wow, I don't think I've seen a post this delusional on Slashdot in awhile.

"The problem is not with me, toilets or people's motivation, it's with society that is controlled by those who want to hurt and humiliate the poor under the guise of motivation."

Ever hear of unions? Many unions have prevented companies from automating many jobs. Many people don't have the skills to get a better job. By keeping these positions around (and not using robots), we giving more people an opportunity to make a living.

The problem here is your entitlement. If you really want robots to start cleaning our toilets, create a company and start selling them (or give them away). You do have the freedom to do this in the US.

Re:people who do less useful work earn more

[ajlisows]

I work for a smaller manufacturing company that employs maybe 350 people. I can say without a doubt that the President of the company (I'm assuming the highest paid person) earns his keep. A customer is really pissed off and wants to talk to the man in charge? No problem. He gets transferred right to the big boss. I've been in the room when he had to take a call like that and I can tell you that I was amazed at how quickly he was able to turn the Customer's mood from exceedingly belligerent to reasonably satisfied. I'm pretty sure I couldn't have done it and if I had to deal with that sort of thing on a regular basis, I would be looking for a different job. Our President does a lot of other important things throughout the day, but his willingness to be the one to take the abuse and sometimes turn it to our advantage is something that has really impressed me.

Re:people who do less useful work earn more

[mvdwege]

And yet you again do nothing but reassert the same point. Just like that badly-sourced Wikipedia article.

Again, the fact is that humans form societies, and societies only function if individuals are willing to give up some of their hoarding behaviour. This is self-evident: if everyone only hoarded, there would be no cooperation possible. Since a look at history shows us that cooperation exists, it follows that humans are not just hoarders instinctively.

Mart

Re:people who do less useful work earn more

[sznupi]

...

You're curious. I take it you also think that humans are not instinctively sexual creatures? After all, if one could say that we are driven by sexual urges...then no stable societies could develop! There would be way too much indiscriminate fucking all around, not to mention totally destabilising cheating, jealousy and murders inspired by them; no happy female to be found due to constant rapes; not to mention loss of "productivity".

Anyway, at this point I don't expect you're doing anything more than trolling - I have a hard time imagining somebody who is at the same time rather non-illiterate and thinking in so absolute terms, so demanding of perceiving factors influencing life as either completelly overshadowing others...or insignificant.

Re:people who do less useful work earn more

[yuhong]

Economies of scale are largely a lie beyond a nominal size

Agreed, but this don't mean that fixed limits of size of corporations are a good idea. Agreed with you on monopolies, though. If they turned to be harmful in someway, they can and should be broken up.

Re:people who do less useful work earn more

[shutdown -p now]

This, and most similar points of view, seem to betray an underlying assumption that your boss isn't really "working" or isn't as valuable as you are (or is not doing "useful work", to quote you).

No, it betrays the assumption that, whatever useful work my boss is doing, it's hardly as much more useful than mine as the difference in our incomes.

Re:people who do less useful work earn more

[Alex Belits]

Most people that clean toilets don't just clean toilets. It's just part of their cleaning duties. The rest of the duties (cleaning the office, taking out the garbage, etc.) would probably be too difficult for a robot with our current technology.

The whole point is to develop new technology. It's not even difficult -- just all efforts are directed toward entertainment instead of automating work that people don't like.

Because the government spends it's money on weapons (which isn't the only thing the military spends its money on)..you are forced to program for the entertainment industry? wow, I don't think I've seen a post this delusional on Slashdot in awhile.

If government paid me instead, I would work on robots and produce useful results. Certainly with more misery avoided per dollar than spending it all on things that blow other things up.

Ever hear of unions? Many unions have prevented companies from automating many jobs. Many people don't have the skills to get a better job. By keeping these positions around (and not using robots), we giving more people an opportunity to make a living.

No union would keep anyone from automating anything if people who will be out of the job would still have guaranteed living condition and food. There is enough resources to provide for everyone, including myself, and I would be still productive just because I am an engineer and therefore want to do engineering. Former janitors won't do any work? Who cares -- work is being done anyway, and people are just living modest lives.

But nooooo, American society can't have that -- people MUST FEEL PAIN if they don't work, even if their work can be easily made unnecessary. This study just demonstrates how fundamentally wrong the core of this ideology is.

The problem here is your entitlement.

Why? Because I won't be in danger? This is what you all are afraid -- that a person who produces something new will just live modest life, not fear for his future and produce more than he can ever consume?

If you really want robots to start cleaning our toilets, create a company and start selling them (or give them away). You do have the freedom to do this in the US.

First and foremost, technology startups have an extremely high failure rates -- most of them disappear before anyone can expect any outcome of initial R&D, so it's not just because of incompetence. I would have better chance to survive by gambling.

Second, building robots that replace people doing menial jobs is not profitable -- it's helpful for the whole society, and only if society makes commitment to use freed resources to provide decent living conditions to all its members -- working and non-working alike. While it's perfectly rational, as everyone is happier in the end, (I guess, except for sadists who want to see suffering around them), and total productivity is up, Hell would freeze over before Americans, or US government, will support such an act.

My current theory is that US culture and ideology grew out of the idea that causing others' suffering is more enjoyable than anything else -- basically it was hijacked by sociopaths, and healthy people are indoctrinated with this view even though they do not genuinely enjoy power and causing pain to others. After all, it's easy to tell someone who lacks power that such power is desirable -- he has no means to verify it, and ends up lusting after something he can't enjoy.

This explains plenty in your history -- from persistent support for slavery to pointless use of excessive bombing in WWII to unusually high popularity of S&M in porn, to tolerance of advertisements that are designed to foster feelings of inadequacy.

Re:people who do less useful work earn more

[sjames]

They are unlikely to all fail at the same time. With one large business, all it takes is one corporate raider/CEO/sociopath to set it on a course directly into the rocks.

Next up, 100 small businesses means 100 competitors making sure the invisible hand actually works.

Note that not only was Smith in favor of keeping businesses small, all of his economic theories are absolutely dependent on it.

Re:people who do less useful work earn more

[Hognoxious]

Economies of scale are largely a lie beyond a nominal size [four lines of shite snipped]

Talking about nominal sizes, what kind of a sentence is that monstrosity?

Re:people who do less useful work earn more

[Hognoxious]

Are they? Tell that to fishermen round the Gulf of Mexico. Industry wide downturns do happen, and for all kinds of reasons.

Also a larger unit may be seen as a better credit risk and have better access to finance. It's also more likely to be diversified, and able to switch resources around if one sector's hit worse than another.

Re:people who do less useful work earn more

[sjames]

If there ARE no larger units due to economic policy, then there are no 'better credit risks' available. Meanwhile, the banks have to lend to someone or they're out of business.

Yes, there are industry wide downturns, especially when a disaster (natural or manmade) happens. However, I disagree that small business is less likely to diversify. I have seen plenty of small businesses that do 2 or three different things. sometimes in odd combinations.

It's also not that unusual for a sole proprietorship to 'diversify' by the owner getting a part time job.

Re:people who do less useful work earn more

[Hognoxious]

It's also not that unusual for a sole proprietorship to 'diversify' by the owner getting a part time job.

If my business was doing as well as that I'd be looking for a full time one.

Apples and Oranges

[sco08y]

How are the things executives do and the things open source developers do even remotely comparable?

This whole thing is just a bunch of wankers saying how awful business people are because they get paid well.

You know, fine, it's a standard trope at PBS. But at the same time, these wankers are saying I'm perfectly happy being underpaid. Well, fuck you very much, no I'm not, and you don't need to be pontificating on how much I should be paid. I think I can represent myself to potential clients just fine without your help, ta much.

Re:Apples and Oranges

[Anonymous Coward]

(Just responding so my moderation in this article gets nullified.) I accidentally modded you flamebait when I was going for interesting, because your comment got me thinking about how big a role the type of job you have plays in this...

Re:Apples and Oranges

[vertinox]

This whole thing is just a bunch of wankers saying how awful business people are because they get paid well.

I don't see them saying this, but more of the point of obvious commonsense about business practices whether its for business people or average workers.

If you pay people large bonuses for accomplishing said task in x amount of time, some people will game the system.

Whether you tell a janitor to clean 100 toliets in an hour versus a ceo to come up with 100 ways to save the company money in an hour, some corners are going to be cut because they sure as hell don't want to miss that bonus.

The fact of the matter is, the bonus system on wall street is horrible way to get talent and it seems some companies and shareholders are grasping that idea. Goldman Sachs may never be the same for example after it gave bonuses to its top brass at the same time screwing its investors.

Its most likely going to be a litmus test in a few years just as much as earnings per share as in "Does this company give unqualified bonuses?" as could be a sign of potential failure in the future.

I think I'm getting it.

[AnonymousClown]

CELESTE LYN PAUL, Open-Sourcer: You're working with people that you like. You're doing things that you love to do. And it's just very fulfilling. So, money isn't the only reason why somebody might want to contribute to it.

So, open-sourcers, you guys do it for the same reason folks play in local music bands, sing at church or play on local amateur sports teams: pretty much never get paid except maybe for (on very rare) expenses and you do it for fun and the community of doing things with like minded people?

Re:I think I'm getting it.

[Runaway1956]

Yeah, sort of.

Like, I got certified as an EMT way, way back in 1980. I've never been paid a dime for performance of duties related to being an EMT. Not a cent. But, damn, it feels good to actually save someone's life. Sometimes, you even hear a word of thanks. That's cool too.

In the world of open source, I don't really contribute much, and I certainly make no money for what I do contribute. But, again, it's a good feeling just to assist somewhere, and to hope that your input might help to create a better product.

On the job? Yeah - I ask for raises now and then. I need more money. But, the money isn't the REASON I go to work. I like solving problems, I enjoy doing things. My biggest frustration on the job is not lack of money, but the shortsighted pennypinching fools who can't understand that sometimes spending x dollars will actually save x times y dollars over the next few months, or years, or decades.

Of course, the very same pennypinching fools decide whether I get my raise or not. That's not a pretty picture either.

Re:I think I'm getting it.

[Anonymous Coward]

Almost all work can can be added to your list as long as it's social work. Many of the people outside the cities dying of old age right now can tell you about wage work. How despised it is and how much they enjoyed working socially on the farm or in the community. (see Misfits film (Marilyn Monroe), David Lynch Interview Project and so on) I know for sure I'd be happy to swich at least 50% of my desk bound dayjob for manual or caring labour in the community.

Unfortunately or current system does not take advantage of that fact.

John Lewis

[Kupfernigk]

One of the most successful supermarket and department store businesses in the UK is John Lewis - which is a mutual, a partnership of its employees. Which is very much like Open Source projects.

Daniel Pink's TED talk

[Kifoth]

http://www.ted.com/talks/dan_pink_on_motivation.html

If you haven't already seen it.

Re:Daniel Pink's TED talk

[ZERO1ZERO]

very good..

For some reason I've been linked to that site a lot recently, and every video there I've seen is pretty decent, insightful, and fascinating.

Re:Daniel Pink's TED talk

[IICV]

That's because you never get linked to the bad, shallow and boring videos, obviously.

Re:Daniel Pink's TED talk

[frank_adrian314159]

[A TED presentation] is pretty decent, insightful, and fascinating.

I'd argue with insightful - the people giving the presentation may be so, but the viewers are not more so. In addition, the presentations are narrow, and shallow. Also, look up the etymology of fascination.

Forcing a complex issue into an arbitrary twenty minute time-slot is the presentation equivalent of Twitter. And, just like Twitter (and Slashdot summaries), the information gives the appearance of understanding - not actual understanding or insight. Perfect for the ADHD generation. TED - just say "No."

Re:Daniel Pink's TED talk

[linhares]

they implemented a landmark policy of "no dancing cats", and the internet was never the same again

"beyond a certain threshold" ...

[fantomas]

I suppose the cleverness would be in working out what that threshold is. Probably higher the older you get.

  When I was younger as long as I had enough money to buy food, pay rent, and give me a few quid for beer, a night out and occasional clothes/toys I was happy. No work just meant sleeping at a friend's house and living off rice and beans until more work came in. I could take on a minimum wage job if I needed a bit of cash. Putting aside money for pensions, saving for a mortgage or feeding and clothing kids just didn't come into it. As you get older these things appear on the horizon so the earning threshold goes up....

Greed definitely comes into it and working out what we "need" but we are constrained by the economic environment we live in. Definitely once this is satisfied though intrinsic motivation is likely to provide the best results. If people don't have a pride in what they are doing they are going to mess up whatever the salary.

Re:"beyond a certain threshold" ...

[sznupi]

It seems the solution is simply to not abandon the lighter lifestyle. Oh, and that means no official kids, too.

The candle experiment seems bogus

[trifish]

The supporting scientific evidence that they provided (the psychological experiment) seems to me to be bogus (and its results misinterpreted).

The people who were offered money for solving the task may have been influenced in a way that made them subconsciously believe it was a difficult (perhaps even impossible) task to solve. Subconsciously, they may have been kind of PARALYZED by this very thought. Why would a psychologist offer dollars to me if this was easily solvable?

On the other hand, the other group, which was offered no money, must have been more RELAXED, less paralyzed and more positive-thinking. Simply put, the people in this group believed it was possible to solve the task.

Hence, in this particular context, the conclusion that money decreases motivation might be incorrect. And the biggest mistake was to generalize that conclusion and apply to any business.

Re:The candle experiment seems bogus

[martin-boundary]

You're not making sense. If people are paralyzed as you suggest from being offered money for this experiment, then they'll also be paralyzed for anything that they're being offered money to do as well. I suppose such people exist, who are suspicious as soon as they are being offered money, but it's far from clear that this would be a general trend.

In general, the mere offer of money doesn't paralyze people. It usually makes them greedy for more.

Re:The candle experiment seems bogus

[timmarhy]

I to think the experiment is horribly flawed but not for that reason. offering more money doesn't decrease motivation at all, offering more money with NO RISK OF FAILURE is a demotivator.

TFA just wants to push buttons and pander to popular opinion, but the reality is that it's more complex then "omgz wall st guys are lazy". i'd be shocked if anyone on wall st worked less then 14 hrs a day.

Re:The candle experiment seems bogus

[grumbel]

On top of that clever problem solving is only a small part of real world work. With most normal tasks you know the solution already very well right from the start, it just takes time and effort to implement it. I bet money would have had quite a positive impact when the task would have been to dig a hole and you get money for how deep it was. And back to the clever problem solving: More money might not make the people already on the job solve problems faster, but what about getting the clever people to do the job in the first place? If you pay noticeably less then the competition, then there might be no reason for the clever people to come to you.

And twisting it all back to Open Source, the issue here isn't how large the pay is, but that there is zero pay and that makes quite a huge difference when it comes to all the boring and tedious tasks, as those hardly ever get done properly (user interface stuff, etc.).

Re:The candle experiment seems bogus

[Anonymous Coward]

Actually, it's you who's not making any sense. Read the OP again. You're talking nonsense.

Re:The candle experiment seems bogus

[atomic777]

Both parent and grandparent have failed to understand the significance of the experiment. The task was specifically chosen as a right-brain type of activity. With a large monetary award, left-brain thinking creeps into the process and reduces performance.

With a smaller reward and less pressure, right-brained activity can flourish and the solution found much faster. If the task had been, say, hammer these 20 nails into this wall, I would expect a correlation between total time to complete the task, and compensation (that is, unless you had right-brained MacGyver create a nailgun out of a paperclip and an elastic...)

The results of the experiment are not very interesting or controversial in themselves; the important part is whether you believe that right-brained activity is so important to functioning of the 21st century economy.

Re:The candle experiment seems bogus

[levicivita]

First sensible comment all day. Let's also remember the source: PBS. Remember how they make their money? No performance driven financial incentives for them.... Let's also not forget the openly alluded to whiff of Marxism. Enough said.

There definitely is something to the thesis that people can underperform under pressure. However form there to generalize to: 'all performance compensation is worthless' is like saying 'because I got shortchanged today at the grocer's, we should ban all cash transactions as being inherently unfair, and we should all have to use credit cards'.

Furthermore, abolishing sales commissions is a guaranteed way to triple sales for essentially any company (and that no one has thought of it before in the history of business) because it removes the pressure to perform and releases the creative side of the brain?? That is a patently ridiculous statement for anyone who has managed even a small group of people. It can be true in some circumstances, but it is hardly a Law of Nature. And referencing the overused metaphore of the two brain hemispheres only lends the argument a pretentious air of faux science, but does little to strengthen the argument.

All in this article is absolutely shameful with its breathless over-enthusiasm to overreach to implausible and poorly argued conclusions.

Re:The candle experiment seems bogus

[Hognoxious]

Subconsciously, they may have been kind of PARALYZED by this very thought. Why would a psychologist offer dollars to me if this was easily solvable?
On the other hand, the other group, which was offered no money, must have been more RELAXED

I think there's some logic in what you say. No doubt the woo-woo types who like to sing kumbayaa while looking at motivational posters will disagree, but I think there is such a thing as trying too hard and caring too much. You lose your cool. You lose your perspective. You lose your rationality.

It happens with sportsmen who perform brilliantly in regular games but have a brainfart (often trying to do everything single handed) when it comes to the big one.

Re:The candle experiment seems bogus

[TubeSteak]

The supporting scientific evidence that they provided (the psychological experiment) seems to me to be bogus (and its results misinterpreted).

The people who were offered money for solving the task may have been influenced in a way that made them subconsciously believe it was a difficult (perhaps even impossible) task to solve. Subconsciously, they may have been kind of PARALYZED by this very thought. Why would a psychologist offer dollars to me if this was easily solvable?

You're missing the point: Money + time pressure effectively neutralizes the ability of people to be creative and recontextualize the box as a support for the candle instead of a container for the tacks.

What TFA neglects to mention is that when the same problem is presented with the tacks in a pile next to their box, almost everyone solves the problem right away, money or not.

Psychology is fun because simple experiments can illuminate some very fundamental mental processes.

Re:The candle experiment seems bogus

[Anonymous Coward]

You're missing the point of the OP. Read it again. Pay attention to the last sentence about incorrect generalizing and applying this experiment's results to business in general.

Re:The candle experiment seems bogus

[Anonymous Coward]

Hear hear!

The reason people make more money in a business is because the decisions they make have a more broad impact on the business. An engineer gets paid more because his tasks are generally more difficult than a toilet cleaner's. People perceive the difficulty of a task based on how much money they are offered to complete it. A man who makes $20,000/yr will have an easier job than a man who makes $50,000/yr.

The fundamental mistake in the analysis of the experimental results lies in the psychologist not accounting for this. People will offer more money for the completion of a difficult job than an easy job. In fact, this is why contractors get paid more for large scale commercial projects versus small-scale residential projects. A team of 5 can whack together a 2500 sq. ft. house in about a month, but it might take a much larger team and a lot more technical staff to do the same with the commercial project.

If this weren't true, then anyone and their mother would find it reasonable to apply for executive jobs because the size of the reward is not intrinsic to the job itself. To put it another way, the psychologist got around the above by pretending that the toilet cleaner and the executive have an equal impact on the corporation, which is flat out untrue. The toilet cleaner's job is to install tacks. The executive's job is to design the candle holder. The people in the experiment perceived their job to be closer to the toilet cleaner's when offered less money, and were therefore less intimidated by the task. When offered more money, they perceived their job to be closer to the executive's, and were more intimidated by the task.

Re:The candle experiment seems bogus

[TubeSteak]

You're missing the point of the OP. Read it again. Pay attention to the last sentence about incorrect generalizing and applying this experiment's results to business in general.

The point still stands.
Heck, it's actually worse in a business environment because all those sub-optimal decisions are compounded into a corporate culture that actively resists the type of creative thinking which results from a mind free of monetary bonuses & time restrictions.

Hence, in this particular context, the conclusion that money decreases motivation might be incorrect. And the biggest mistake was to generalize that conclusion and apply to any business.

As for the OPs conclusion, he misread TFA, which makes his words meaningless.
No one is talking about "money decreases motivation"
TFA is asserting that money is a poor motivator when it comes to certain types of thinking,
which leads to the obvious idea that maybe other motivators will lead to better outcomes.

Re:The candle experiment seems bogus

[cifey]

When offered more money, they perceived their job to be closer to the executive's, and were more intimidated by the task

Thus the architects devised a 100 line stack trace to light a candle.

Re:The candle experiment seems bogus

[Tom]

The supporting scientific evidence that they provided (the psychological experiment) seems to me to be bogus (and its results misinterpreted).

That's why scientific papers are peer-reviewed, and not slashdot-reviewed.

This experiment has been repeated, by many different experimentors in many different variations. The candle experiment is simply the most famous and easiest-to-explain one. But guess what? It has dozens of confirmations and - to the best of my knowledge - not one experiment that came to a different conclusion.

So, with all due respect, armchair psychology does not invalidate actual research done by actual scientists in actual labs.

Re:The candle experiment seems bogus

[khallow]

The point still stands. Heck, it's actually worse in a business environment because all those sub-optimal decisions are compounded into a corporate culture that actively resists the type of creative thinking which results from a mind free of monetary bonuses & time restrictions.

I disagree for a simple, fundamental reason. A lot of work isn't creative or meant to be.

Re:The candle experiment seems bogus

[Anonymous Coward]

I disagree for a simple, fundamental reason. A lot of work isn't creative or meant to be.

They aren't talking about creative work.
They're talking about creative decision making.

More research needed

[rastos1]

New studies reveal that beyond a certain threshold, large financial rewards can actually become a drag on performance in the workplace.

I'm willing to offer myself as a test subject to verify this hypothesis.

Re:More research needed

[janwedekind]

Go back to work!

Re:More research needed

[Anonymous Coward]

Dear Mr Rastos,

Thank you for you appliction. You have been selected to take part in our subminimum wage, 80 hour week control group.

We look forward to profiting from^H^H^H^H^H^H^H^H^H^H^H^H^H seeing you soon.

Millionaire Next Door

[AnonymousClown]

The author of that book mentioned on the 60 minutes segment about his book that folks who just want the money to buy expensive shit will probably never become a millionaire. Many of the folks in the book were frugal and weren't into the luxury goods and saved money and if they had a business, plowed the money back into the business - their motivation wasn't really to get rich - getting rich was a side effect of their lifestyle.

The book, IIRC, wasn't that direct in its description of the motivations of those folks.

Linus is a millionaire because of his reputation from starting Linux. If he didn't create Linux, he'd probably be some cubicle worker in Finland.

Open Source Recognition Hall

[h00manist]

I always thought setting up clear recognition of who has most contributed to open source would be great. Setting criteria would be important. Lines of code, time of involvement, hours of labor, number of users or longevity of code...

Re:Open Source Recognition Hall

[grumbel]

That might give a little bit extra motivation, but at the end of the day, all the recognition in the world doesn't bring you food on the table. The by far biggest problem with Open Source I have seen over the years is simply that a lot of the contributors disappear after a while, not because they don't like doing what they do, but simply because they don't have the time for it any more, as their real job keeps them busy enough.

Re:Open Source Recognition Hall

[natsacks]

While certainly that kind of statistics would be interesting, what would detract people from gaming the system? Easy enough to start to skew your contribution to get more prominent place in the grand contributor list.

Bonus receiver's viewpoint

[einar2]

It might be off topic but as most of you have not read the article, here we go anyway:

I do work for a huge international bank and I do receive typically boni in the range of 4-6 monthly salaries.
As a lot of you seem to have strange prejudices about people receiving a bonus at a bank, let me rectify your picture. I am not an investment banker. I hardly ever wear tie nor suit. As a senior IT architect, my job is to look into the long term maintainability of large scale software systems. As a consequence, short term profitability is not part of my job description.

Funny enough, I do not feel motivated by receiving a bonus. Believe it or not but in the last years, I never cut corners to achieve my objectives. I kind of reach my goals anyway. At the bank I work, you do not receive a bonus for being extraordinarily good. You are entitled for a bonus if you did your job. And if I would fail reaching my targets, I could live without receiving a bonus. It feels more like extra money
However, the idea that as an employee of a company I also participate in the profit of the company I think very good. Personally, I think must people criticizing such a system are just envious. Yet, I do agree that banks handing out boni in years where they do not make profit strike me as strange.
Yeah, I took the money in 2009 anyway. Tell me that you would not have taken it...

Re:Bonus receiver's viewpoint

[timmarhy]

I agree 100% with you. the haters are just jealous, end of story.

I work at a company with a market cap of 1B+, and we also receive bonuses, and i also agree it doesn't make you cut any corners. TFA completely fails to realise is a lot of these bonuses are tied to KPI's that you don't have direct control over anyway - they aren't like a sales quota.

Re:Bonus receiver's viewpoint

[sedmonds]

At the bank I work, you do not receive a bonus for being extraordinarily good. You are entitled for a bonus if you did your job.

That is not a bonus. That is base compensation - even if the amount of the bonus isn't a fixed dollar figure. A bonus is something you are NOT entitled to.

Re:Bonus receiver's viewpoint

[Gorobei]

Most people just don't understand why Wall St pays bonuses. Even at the lowest level (secretary, bonus=2 months pay,) or median (as you say, 5-6 months pay,) the deal is simple and brutal: we don't have time to manage you, so just get your work done; do it, and you get paid above-market; slack off, and you will starve.

Re:Bonus receiver's viewpoint

[Skapare]

I would have taken the money.

A bonus is just a part of a more complex compensation structure. And in many cases, it makes the executive management feel better about it more so than the employees who receive it. Maybe most cases. Maybe all cases.

So when the economy goes down and every business in a particular industry loses money, shouldn't you consider the business that lost the least as a "success" and compensate its management accordingly? I see no problem with bonuses in a down economy. They kept the company from tanking in a bad situation. What bonuses did Lehman Brothers give out after they went belly up? Sure, business does have the objective to make profit. But when that objective cannot be met at certain times, the clear objective is to SURVIVE. If you contribute to the company's survival, you should be compensated.

Bonuses are also a nice way to be sure someone doesn't change jobs in the middle of a crucial project. Been there, done that.

Re:Bonus receiver's viewpoint

[Skapare]

Having been on the receiving end of bonuses, I'd say that is not true. My bonuses were IT projects completion bonuses. If it was done on time, and worked, I got my bonus. If it were to have been late, I would have gotten a pro-rated bonus. If it didn't work, I would have gotten squat. If left in the middle of the project, I would have gotten squat. Instead, I delivered the projects, working, and on time. I got my bonus and took a vacation.

BTW, in two of the projects, the terms, including deadline and bonus amount, were negotiated ahead of time.

Re:Bonus receiver's viewpoint

[Anonymous Coward]

So you would of done just as well at your job without your bonus? Should I email your boss this fact?

Re:Bonus receiver's viewpoint

[Alex Belits]

But when that objective cannot be met at certain times, the clear objective is to SURVIVE.

Why?

If people in control of the business can easily move elsewhere, they are not interested in survival of that business. The situation would be different if there was a real possibility that after the failure of the business former employees would kill their former management that orchestrated this failure, however that would be something from a CIVILIZED society, not sociopath's paradise that is modern US.

Re:Bonus receiver's viewpoint

[Anonymous Coward]

You are entitled for a bonus if you did your job.

I think that it's on this point that a lot of people will disagree with you. Bonuses are usually regarded as extra pay for doing an exceptionally good job [1], not some kind of expected pay that you get for just plainly doing your job.

To put it another way, it seems that most people believe a bonus should be a reward for doing a good job, instead of the lack a bonus being the deterrent for doing a bad job.

And if I would fail reaching my targets, I could live without receiving a bonus

I suppose this also gives us a glimpse into the culture you're in. It seems like reaching your targets should be just a normal part of the job, not worthy of additional pay. But exceeding your targets might be a good reason for a bonus...

One point about Wall Street bonuses

[Registered Coward v2]

They ensure a readily available supply of people willing to enter the field for relatively less pay than other fields. This ensures they have a large talent pool that they can pick from; those that decide it's not for tehm (100+ Hour weeks) or can't cut it leave. It's the promise of a payoff that keeps the talent flowing; just like in sports or drug dealing. After all, why would you sell drugs when you can make more at McDonalds? (see Freakenomics for an interesting article on just that) Rewards have more to them than just motivating a specific individual.

Hold bonuses in escrow for two years

[SgtChaireBourne]

"However, bonus schemes in many cases are inherently flawed and encourage people to cut corners or do their job in a known inefficient way in order to maximize the bonus."

One way around that would be to hold the bonuses in escrow for two years, to be release only on the condition that the company performs at least satisfactorily during that time. The money could be invested in two twelve-month certificates or funds and repossessed at the end of either one.

What to do with the repossessed bonuses is another question because if done wrong it provides further incentive to sabotage or under perform. Tricks like donating the bonus to charity won't work because they would only end up at a charity presided over by the loser or a family member or, worse, end up channeled into a PAC like the Gates' Foundation.

Re:Hold bonuses in escrow for two years

[Gorobei]

One way around that would be to hold the bonuses in escrow for two years, to be release only on the condition that the company performs at least satisfactorily during that time. The money could be invested in two twelve-month certificates or funds and repossessed at the end of either one.

Which is exactly what most Wall St firms do: you get paid in company stock, and that stock slowly vests to you over a multi-year period. Firm does well, and you do well, and vice versa. You quit, and you lose the unvested stock.

Re:Hold bonuses in escrow for two years

[Anonymous Coward]

Citation needed. The Wall Street bonus plans I've looked at in depth (via a couple of job applications) were predominantly cash.

Re:Hold bonuses in escrow for two years

[Gorobei]

At the junior levels, yes, cash. It changes as you move up.

Re:Hold bonuses in escrow for two years

[lawpoop]

The problem with these schemes is that managers can manipulate events to keep them off the books until bonuses are dispersed... in a way that could seem reasonable.

Fresh out of college, I had a friend who quit a job as an accountant at the local instance of a fortune 500 company because of exactly these kinds of shenanigans. The managers and accountants were all "in" on it, but not explicitly. They would just talk about when the proper time was to put things on the books. It happened to work out to maximize bonuses, shaft certain people, and displace blame. My friend thought it was unethical. Oh, to be young and idealistic again!

Re:Hold bonuses in escrow for two years

[mcbiondi]

I suppose you haven't heard about claw-backs. This is already common practice in many industries. What to do with the repossessed bonus? That's easy, its just unexpected income.

# Kumbayaa, my Lord, Kumbayaa ...

[Hognoxious]

Why? Are you saying that at 4,999 it's OK?

Let's say the high paid person is the founder. If he'd not set up the business, the pay differential would be mathematically undefined. I guess that's better in your eyes, because if everyone has nothing then it's fair.

And again, who defines "useful contribution"? If you want an illustration of how subjective that is, take the question of whether a sports star is worth what he's paid. Ask it to a) a fan of that player/his team, b) a fan of another sport, and c) a non-sporty nerd; see the different answers you get.

Re:# Kumbayaa, my Lord, Kumbayaa ...

[Anonymous Coward]

You can take a look at rates of productivity for most workers, and that while they have increased dramatically, pay has remained stagnant.

You do not see a corresponding increase in productivity in CEOs and pay is off the scale.

How terrible that anyone dare question if more money is getting better results.

Re:# Kumbayaa, my Lord, Kumbayaa ...

[Anonymous Coward]

You do not see a corresponding increase in productivity in CEOs and pay is off the scale.

Not right now, but pre-crash share prices & profits were very high. Or how else would you measure CEOs' performance?

Re:# Kumbayaa, my Lord, Kumbayaa ...

[Anonymous Coward]

P/E ratio.

OSS is self serving too

[MacDork]

So what TFA is saying is that offering a lot of money quickly prevents people from actually doing a good job quickly and that they take on average more time then to do a worse job. It's like TFA is saying that people enter some sort of a panic mode and cannot think straight because of the money involved.

Yeah, I saw this before /. posted it. In the video they're interview some alleged OSS people and they talk about 'being part of something' or some other bologna like that. For me, OSS is not about being part of anything. It's about getting other people who find my work useful to provide me with testing and bug fixes which I will find useful. It's also great advertising for people who might want to hire me. It's symbiotic and just as self serving as any monetary reward. I'm stunned that not one of the people in the video made that point. No one sells OSS to management with that touchy feely "part of something" crap.

Re:OSS is self serving too

[Weezul]

Also, freeware developers develop software suitable for people like themselves. That's great if you need the linux kernel, ssh, or even rsync. If you need some polished final product you better pay them. Are all the distributions people usually use put together by companies?

14hrs at the office != 14 hrs of work

[SmallFurryCreature]

It is amazing, the entire economy is down the drain and people are still defending the system. Every single bank bonus being paid now comes straight out of welfare for bank and still people defend it.

Truly capitalists are the black knight.

Foundations of Meritocracy

[SavvyPlayer]

So left-right (analytical thinking, creativity) balance is cited as increasingly crucial to success in the marketplace, and has been shown to deteriorate when influenced by the promise of monetary gain. Interesting -- if one thought for one moment that given a random sample of the population, the mere promise of financial reward could somehow enhance those qualities. But in science it is often necessary to demonstrate a principle, however obvious, before moving on to more interesting experiments. Any meritocracy should provide numerous tools useful in identifying those few individuals naturally exceptional in this area (absent any incentive), and whose attention top employers will naturally compete for (often financially). For the talented, financial reward is not a stimulant, but potentially a retainer and definitely an enabler -- it ensures these individuals' needs are met outside the workplace, so they are better able to focus on the higher level problems at hand. It would seem the question here becomes: how do organizations identify, attract and foster this talent amongst the general workforce, knowing financial reward is not the answer? It would seem we should continue to focus on predisposition, identifying those individuals demonstrating a high degree of interest in an array of left-right subject areas, and an ability to attack problems in novel ways.

Re:Foundations of Meritocracy

[Weezul]

In fact, financial rewards works great for finding and retaining high level talent. It's bonuses that induce people to optimize their bonus over the final product.

That said, there are companies that give the executives stock options that din't vest until after they retire, meaning the executives must optimize the company for long term profitability. You could offer programmers the same similar deal where their bonuses are tied to the ongoing profitability of the intellectual property they created while employed, but no-longer actively develop, i.e. you get a salary for the work but keep a stake in the product itself. I'd imagine that'll gain you immaculate and well-documented code base.

when you're younger you undercharge

[fantomas]

Probably also when you're younger you undercharge, life is about making sure you've got enough to get through the day or the month at the most. As time goes on you realise you might have to put some money aside for when you're retired, to cover medical emergencies, save a bit for times of unemployment etc. Then you realise minimum wage might get you by in the short term but you need to put some more on top of your rates to cover the long term costs.

Re:when you're younger you undercharge

[sznupi]

I'm not talking about minimum wage, I'm talking about not exhausting yourself. Things you mention don't suffice alone as a reason why you would have to do it - you can set aside some funds even when the pay isn't "great"; they won't dissapear (if set aside in a way that will be ahead of inflation at the least). "Accidentally" your health will be probably better, long term, too...

Generally I think it has more to do with wastefulness and weird priorities than some real need; for example what's the point in waiting for fully comfortable savings on retirement fund (vs. setting yourself up in a way so you will want to do lower intensity work much longer; and enjoying the meantime) when you'll be totally exploited by then?

All about ego

[Anonymous Coward]

Nothing drives people like ego. Money and sex will only do so much.

Is money a means or an end?

[Dinosaur Neil]

Some years ago, I had a discussion with a co-worker about the purpose of businesses. She saw it as simply, "businesses are there to make money." I took a little different stance. I suggested that maybe businesses were there to allow people to do meaningful work, and making money was just part of how that was done. And that's what our discussion boiled down to - is the money a means or an end? Is the money how you accomplish things? Or is money what you accomplish? In the end we didn't resolve anything; she was baffled by my views and I was frustrated at my inability to convey something which seemed pretty obvious to me. This article seems to dance around my argument, suggesting that the open source community have their day jobs (means) to have enough money to do what they really want to do (ends).

Another way to put this... About a decade ago, I rebuilt the deck on my house. Around the same time, upper management had decided to outsource our datacenter (ostensibly based on an internal study that concluded no such thing, but there were some honkin' big bonuses/promotions awarded to those who figured out a way to sack nearly 80 people). When it came time to decide what to do when the axe fell, I realized that my then 14 year career in IT had not generated even a fraction of the satisfaction that I'd gotten from the two months I spent after work rebuilding the deck. Long story short, I found a low-pressure 2nd shift job and went back to school. Now I have a BS and MS under my belt and work that involves building prototype instrumentation systems for wind tunnel testing. Even without adjusting for inflation, I'm earning less money than I was in IT, but no amount of money could convince me to go back. I can't really say whether my work has improved in quality since the switch; I think it has, but the work itself is pretty apples and oranges.

“This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn’t the small green pieces of paper that were unhappy.” - Douglas Adams

It's the KICK, stupid!

[FreakAlienJobEater]

Bonuses are to KEEP employees, especially developers, not to motivate them.
See for example Activision vs Infinity Ward, where the plan was to pay less bonus so employees would feel like leaving for the new formed company.
Interesting I was reading "Drive" from Daniel Pink, which talks exactly about it. One of the examples was the SOMA experiment where people would eventually actually work LESS after receiving a "bonus".
http://www.laymanpsych.com/2009/06/money-as-a-counter-productive-motivating-factor/

In Clinton's equivalent words, "It's the KICK, stupid!".

Control group

[SgtChaireBourne]

I'm willing to offer myself as a test subject to verify this hypothesis.

Cool. We'll write you down as being in the control group. ;)

Motivation

[DaMattster]

While interesting, the article fails to account of the social pressures of living in a capitalist society. In the US in particular, social status and money are so hopelessly intertwined that the intertia for change would be positively glacial. Society continuously reinforces grabbing as much as possible and as often as possible. The article also fails to account for graft and criminality. Looks at the AIG, Goldman Sachs, and Bernie Ebbers of the world. Unfortunately, money is the motivator.

Stock price is unrelated to company performance

[SgtChaireBourne]

No, that is incorrect. Stock value has relatively little correlation with how a company is actually performing. Paying executives in stock, vested or not, is still giving a bonus without regard to company improvement. The only difference is will that stock pay a little or a lot, but again, to drive the point home, does not have anything to do with performance, only speculation on the stock price itself. What we need is a 180-degree turn and find a way to tie bonuses to performance.

Re:Stock price is unrelated to company performance

[yuhong]

Yea, I know: http://blogs.hbr.org/hbr/how-to-fix-executive-pay/2009/07/scrap-stock-based-compensation.html

We're mis-understanding Wall Street's motivation

[PPH]

While the article (the candle experiment) is interesting, it may have limited applicability to what is going on on Wall Street.

There are several ideas going around about how our recent economic/investment collapse is some sort of failure of supposedly brilliant and highly paid people to manage various financial instruments properly. There are several incorrect assumptions here that may lead us to false conclusions:

The first is that this collapse was shared across the entire investment community. As investigations into the behavior of Goldman-Sachs and some interesting investigative journalism are just beginning to reveal, there were in fact some big winners in the recent fiasco. It may be years before we identify all of them (some may never be named). But the collapse may just be one end of a financial transaction that played out as intended. Some people were left holding worthless paper and others made off with billions. The brokers responsible didn't screw up. They performed their parts as required by their clients and from these clients' point of view, all went well.

The second false assumption is that high pay (in the form of big bonuses) is paid to attract the best and brightest. In many cases, high pay is offered in the financial industry just to keep employees' hands out of the till, so to speak. And to buy the loyalty of the brokers to select clients. The financial products in question were engineered by a small group of clients. These clients needed brokers to structure the deals in certain ways, but they also needed the details of these deals to be kept proprietary. Its a lot like why hit men for the mob make good money. Anyone can pull a trigger. But the mob bosses need the gunmen to keep their mouths shut about who paid for the job. And they need to make sure that these guys aren't going to turn around and offer their services to just anyone.

Efficient market theory suggests that price disparities will be evened out assuming that everyone has access to the same information and the ability to take either side of a transaction. So, for large profits to be made, it is necessary to restrict the availability of pricing information and to only allow selected clients to take the winning sides of these transactions. Since the brokers stand to lose income by not expanding the markets for these more profitable instruments, they must be compensated. This is why they make the big bucks.

Turn off your computer.

[Anonymous Coward]

The amount of resources needed to make a modern processor is comparable with that of a small country. Count the state-of-the-art processor vendors: it's been shrinking from 1980s, when a relatively small company could afford to develop one, until even big companies could not, and had to team up or abandon development.

Small businesses have no chance to own and maintain a fab, let alone experiment with it. Congratulations, you just killed R&D.

Note that strict ideology-dictated limits on economics activity typically kill innovation. Real economy is just too complex to ideological schemes like yours, and needs freedom -- including freedom to grow. BTW, this is precisely how the Soviets lost the hi-tech race: they presumed to know what worked and what didn't, based on their political economy theories.

So if you have, move along.

[Anonymous Coward]

This article is for people who have not gone to Econ 1101.

the topic is stolen from Dan Ping/TED show

[anton_kg]

The idea stolen from Dan Pink: http://www.theadclass.com/education/dan-pink-creativity-motivation-ted-better-life everything, including candle problem.

not news, but new to some

[Tom]

This is, to paraphrase a several year old speech, one of the simultaneously most verified and most ignored insights of social science. It's been known literally for a few decades, and there are at least 80 studies all coming to the same result.

At the same time, the business world is busy completely ignoring what comes as close to fact as anything in social science ever will.

The "why" is easy, of course. Those who could change the system are those profiting most from it. The bonus of a regular employee is a few thousand bucks, maybe. The bonus of a CEO is quite regularily in the millions.

And all the evidence in the world points to these millions having a negative impact on his performance. So if you were in his position, and knew about this research, you'd change the system and eliminate the bonus payments. Right? Right? You'd go for the factors that are shown to actually improve performance, such as meaning and empowerment. Right? What are those few millions you earn compared to the real value generators?

Punished By Rewards

[Anonymous Coward]

RTFM: "Punished By Rewards" http://www.alfiekohn.org/books/pbr.htm
This pattern of human behavior is outlined extensively in that book with many examples ranging over many different situations. It also explains better ways to motivate people. Highly recommended.

binary economy

[minstrelmike]

The article showed that rich people don't care about long-term consequences. That is probably a fact. I don't believe the experiment cited actually demonstrated what they said it did though but that is irrelevant and posted about already.

During a recession, rich people lose far more money than poor people. Economists think that matters but it doesn't. Bill Gates could lose 95% of his $50 billion and not change a single thing about his daily life. A pensioner can lose $95/month and have to begin making choices about whether to buy food or medicine. Those choices change his life. In addition, they are multiplied by however many thousands of pensioners are affected and their lack of spending means others lose jobs, too.

We need to theory of economics/politics that identifies where losses force a lifestyle change, essentially, where continuousness suddenly collapses into a binary choice (such as when you finally open the box hiding Schrodinger's cat).