Human Trials ep. 1 — How to fairly split up pile of cash in your team.
Working as a product manager at Netvor puts you sometimes into really interesting situations. Just recently, we finished a major, 3 months long project. The project was handed over all nice and tidy although the deadline was really tight. I am really grateful for that. I had amazing team which worked hard as hell in order to meet that deadline because the project was really key for the company. Being aware of the importance of the project, we decided to offer more motivation than we usually do — we came up with success fee for the whole team if the deadline is met.
One would say that this happens in a lot of companies but don’t get me wrong. We tried to do a little experiment (I know, it sounds like we have nothing better to do). The trick is that the team is supposed to decide on its own how the pool will be distributed among the team members. I, as a product manager allocated for this project, was asked to figure out the way we will do that. Trying to avoid any bias, I came up with mathematical formula that would decide one’s share on the pool on the basis of his decision about the group in contrast with the group itself. More precisely, each member of a team had to decide an adequate share of each team member (including himself). Those data were then processed in a way that one’s decision about himself can affect how big portion of the pot will be given to him. If his decision about his payoff was deviating from the decision about that player’s share by the rest of the group, he would be either “taxed” or “subsidised” accordingly. The amount of deviation played important role as well. The more you deviate, the greater the effect of tax or subsidy would be hence, those who underestimate their performance within the group will be granted sufficient compensation if their performance was greater and vice versa. The ultimate goal of the formula is to get group’s expectations in line with expectations of an individual, sufficiently evaluate individual performance and, at the same time, draw feedback for both managers and individual participants — all this quantified by a “simple” formula. Interestingly enough, this approach has actually consolidated our thoughts about the performance of every individual team member. We have kind of agreed that performance of some team members was slightly lower than of the others but no one was really surprised with the result so it matched everyone expectations — that is a good thing I guess.
Of course this approach does not provide fully relevant outcome but, on the other hand, it provides interesting insights that can be used as an indicator of individual performance in both, long and short term outlook. It can reveal problematic team members as well as failure in communication within the team. It can help to show which people work well together and it can provide ex-post information about resource allocation estimate that has been created prior to the project kick-off. What I perceive as valuable conclusion is that unorthodox approach that might look like crazy experiment at first can turn out to be pretty valuable tool that can serve more than one purpose. In other word, stay open minded and resourceful.
By the way, if you are interested in the exact formula we use to divide success fee pool, do not hesitate and drop me a message at email@example.com. I will gladly share it with you.