Alan: Thanks for the links and taking the time to reply - really good stuff
there.
One word of warning - something I could do for the FAIL feature at #growthtown
- if you're growing quickly and you tie incentives to profit.
A number of years ago, I created a scheme in my first business that paid
individuals based on a share of profit. The problem is, for small or fast
growing companies, profit is often non-existent or nil for a while. As the CEO,
I found my decisions to hire new developers to build out products, engage in
marketing and sales activities, and other cost-before-income activities
questioned by team members, as my decisions to invest retained earnings caused
the profit pool to empty. Also, because people are an ongoing expense rather
than a capital cost, making the profit calc based on EBITDA or something else
which tries to find headline/gross rather than net profit is fraught.
So, unless the time horizon for profit is something like Joel experiences when
they push a product - i.e., income is quick enough coming after work is 'done'
- and you are able to separate from an accounting/calculation point of view
investment in the next product development from the pay off from the previous
product development work you want to allocate the bonus from, then you're going
to be screwed. Also remember that these schemes need to be easy to understand,
easy to follow/track/measure and easy to determine or else you'll end up with a
non-motivator ("I don't understand it: I'll just do my thing and it will work
out somehow") or a demotivator ("I don't trust all this trickiness - I reckon
I'm getting screwed somehow").
I believe profit sharing can be great: just make sure the business is actually
in a profitable growth mode first, or you'll end up in a world of pain (like I
did)
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of mmp1
Sent: Friday, 3 April 2009 12:35 AM
To: Silicon Beach Australia
Subject: [SiliconBeach] Re: Recommended reading - management books?
The lack of exposure to big corp could actually be a good thing. Big
Corps don't do that much. In fact they are famous for management
systems that keep things the same (including innovation) - again not
all , but many. Remember people work in big co. for
mainly...stability.
I have found that you can get a lot more reward from smaller
companies. You also get tested more as a person - you are often
responsible not just to your customers, but to your peers. This can
have up and down sides. depends on who you are as a person.
books - peopleware
If you are interested in how to manage a small TECH company, guys like
Joel Spolsky are a good read. He looks in particular at smaller
companies and how the mind of a developer works. Check out the
archives, there are some real jems in them.
The writings on Program Manager, Management and CEO topics are good
reads.
http://joelonsoftware.com
(as a side note - lately he has been talking about how they do
compensation at his company including a new article in INC mag this
month. I can't remember if it was a recent blog article on
stackoverflow - i think stackoverflow blog (#43 I think) - he oulined
why and how they do it. They pay base salary (see one of the links
below) but pay BIG bonuses at the end of the year. BIG. The base
salary isn't that bad either. But the bonus is the deal. The bonus
scheme is directly linked to profit , not individual performance
reviews. (base pay is individual based). So if the company can ship
the product early by 3 months - thats about 400-600K in profit that
could have been split by 10 odd developers. Thats some cash. Also,
if they slip - thats less still. Why the big size of the bonus - no
share scheme - his logic into that is also interesting. Just
something to consider as an alternative to share schemes especially
given say the way the australian maket works and the australian way of
thinking. It has me thinking. especially given the dynamic of small
groups and in particular startups. its that common goal that you are
trying to create in shares. (and if you make a profit)
http://www.inc.com/magazine/20090101/how-hard-could-it-be-thanks-or-no-thanks.html
http://www.inc.com/magazine/20081001/how-hard-could-it-be-sins-of-commissions.html
http://www.inc.com/magazine/20090401/how-hard-could-it-be-employees-negotiate-pay-raises.html
Again, do i agree with everything. no. but there is enough good
stuff, especially around tech employees that is well worth a look.
Alan.
--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Silicon Beach
Australia mailing list.
No lurkers! It is expected that you introduce yourself:
http://groups.google.com/group/silicon-beach-australia/browse_thread/thread/99938a0fbc691eeb
To post to this group, send email to
[email protected]
To unsubscribe from this group, send email to
[email protected]
For more options, visit this group at
http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
-~----------~----~----~----~------~----~------~--~---
