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Comment by nickb | Hacker News Reader

What a silly rule. This 'equality rule' is why union shops have some of the worst productivity levels in the industry and why union workers have zero incentives to innovate and become more productive. Under this plan, people have no incentives to give more and work harder. Inevitably, the equilibrium for this type of a system is the productivity of the weakest worker.

Sorry but communism just doesn't work.

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As a Fog Creek employee, I can attest that the profit sharing at the end of the year is a pretty big incentive to work harder.

Also see http://www.joelonsoftware.com/articles/fog0000000070.html for a discussion of why Joel doesn't want to have incentive pay.

You've completely misunderstood my point. I'm talking about individual productivity, not a group one.

Software is far more a group activity than building widgets. With an assembly line you can slow others down but it's hard to boost the groups productivity so if you are competent enough to keep your job you are worth X. With software each individual can have a large positive or negative impact on everyone's performance while still being individually productive. Do you write reusable code or break the build?

I don't follow your reasoning here.

I would say software is far more of an individual activity than building widgets. On an assembly line one amazing worker can't boost the overall performance by much, but in software you can.

Boosting the group's activity does not make it a group activity, it shows the power of an individual programmer.

Also, look at the one employee that made Fog Creek over a million dollars from his job board concept. Some individual employees can have spectacular results.

As a software developer it's easy to think a million dollar cash flow is the result of a good idea and some code. But a tester to discovers nasty bug could prevent a million dollar problem from showing up. My point is when a small team that's working together on a measurable task you can reward the team but it's easy to overlook the tester or junior developer that was vital to the teams success.

As to your example the reason it seemed so obvious that one employee had a million dollar idea was how little effort it took to get there. However, his idea would not have made as much money if his boss had not decided to up the cost of advertising. And if the traffic was not there to create the market etc. So while the idea might have generated a million in revenue he was far from the only person involved.

Once a year, my management team sits down, reviews every employee's work, and recalculates every employee's level.

There's your incentive, besides profit sharing[1], to buckle down and work hard. Besides, if Joel & co. have an eye on market wages through use of glassdoor, they're not going to get very far out of line in the course of a single year.

[1] This works at the size Fog Creek is now, but somewhere around 100-120 employees it breaks, because you nobody has a good feel for how individual productivity feeds into company productivity, and it turns into politics.

"""At Fog Creek, we decided that the right thing to do when the labor market tightens is to give raises to everybody at the same level."""

I've always been wondering what would happen (has happened) when the labor market softens?

Theoretically, across the board decreases. Given the profit sharing though, I think by the time he did that, it would be pretty evident that there was a major hardship to be distributed amongst the staff.

If you look at the chart on the second page, it's clearly not "communism". There's a "scope and skill" component to salary level. If I want to make more money there, I increase my skill, and push to get more responsibility. It's just saying that people with the same skill and responsibility get paid the same.

"Under this plan, people have no incentives to give more and work harder."

There are some people ("salesy" types particularly) whose performance is motivated almost exclusively by money, but I find this to be the exception.

As was mentioned in the article, hard work tends to come from high job satisfaction. Compensation is only one component of that, and arguably not the most important, provided it's not unfairly low.

Finally, if you're right and Joel's wrong, how do you explain Fog Creek's success? Do you consider them an outlier? If so, can you give a counter-example of when you've seen this system fail? Fog Creek is strong evidence of the efficacy of this approach, while you seem to be relying on nothing more than your opinion.

Well, unlike a union shop, people can be fired. And we're talking about (50? 100?) people that are chosen very selectively from a nationwide (worldwide?) pool. It's not a 20,000 worker steel plant.

As I understood the article, the fixed levels only apply to base salary. There is still room to reward high productivity through bonuses and equity.

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