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

[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

[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

[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

[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

[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

[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 :)

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

[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

[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

[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

[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.

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.

Daniel Pink's TED talk

[Kifoth]

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

If you haven't already seen it.

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

[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: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.

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: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.

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.