Structuring Pay for a Team LO15426

Benjamin B. Compton (bcompton@enol.com)
Sun, 19 Oct 1997 13:44:58 -0600

Replying to LO15407 --

Dennis doesn't like "ranking" the people within a team. If says it creates
a "win-lose" situation. That is what I thought. . .

And then, to my dismay, I discovered that Microsoft ranks their employees.
It goes 1, 2, 3, 4, 5, etc. The higher on the list the more rewards you
get, escpecially stock options.

When I first heard Microsoft did this -- and a friend of mine there sent
me an E-Mail with a message from his management saying they were going to
do it -- I was skeptical. I thought such an approach could create
resentment and conflict within the organization. But all the evidence I
have about Microsoft says that's not true, for if any company works well
together, as an organization, they do.

They do a couple of things I think help create more of a win-win solution,
but I don't think that they're necessarily seeking a win-win solution.

First, they expect people to move around on the list. If you're in the top
3rd for too long, you'll burn out and begin to lose value.

Second, if you're in the bottom 3rd for too long you'll essentially be
invited to find another job.

The result is a group of people that work phenomenally well together, but
who also fiercely compete with one another (and, of course, because of the
structure, they chase away the "dead meat" before it spoils the whole
organization). This must be one of the contributing factors of Micorsoft's
success.

It's at least an interesting approach.

[Host Note: I enountered another famous and successful high tech company
in which employees who were bottom third two times were manditory
terminations. My client (in the company) and I both felt this was
draconian and would terminate valuable employees. ...Rick]

-- 
Benjamin B. Compton
bcompton@enol.com

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>