Hack:
Bonus Fund: Empower employees to fund initiatives with company-matched bonus money

Thanks for the feedback Chris and for building on the hack! The various parameters of this idea can certainly be tweaked based on how well they might take hold in a given corporate environment -- the source of funding is one of those parameters.

Some thoughts off the top of my head on the tradeoffs involved there. If we change the funding from the employee bonus pool to an a per-employee budget, we then have to decide how to allocate that budget. Does everyone get an equal share? If so, is that fair, or not? Is there a risk there of gaming the system where people find ways to launder their budget allocation into an extra bonus for themselves? If everyone is allocated money, does that spread things so thin that it takes 100 people to pool together a meaningful amount to fund "real" work? (Or maybe that is seen as a good thing by some?) There may be solid answers to these questions, and maybe some of these questions become irrelevant if the initiative is successful enough. I'm just throwing them out as food for thought.

One benefit of the bonus fund approach is that there doesn't have to be any new decision-making on how much money each person gets. People's salaries and bonuses are already defined outside of the bonus fund, the only new money is the company match which involves no decision-making -- all projects that receive sufficient pledges are matched. This takes some of the politics and gamesmanship out of the equation.

A fundamental question that your comments prompt me to reflect on is how people perceive their bonuses. Do they see it as a critical part of their compensation which they treat just as they would their base salary, or do they see it as discretionary money where a part of it could be spent on anything they want. I suspect there are a wide range of answers to this question among different people, and among the same people at different stages in their lives/careers. Maybe it would make sense to do a "behavioral economics" type survey of the employee community to get a better feel for that. Even with people who view bonuses the same as ordinary salary though, as I mention in the writeup, employees regularly contribute to political action committees where there are no matching funds, and employees donate to charities with corporate matching funds. So it seems to me that there is at least some willingness on the part of people to contribute their own, hard-earned money in conjunction with their company towards goals that they deem personally worthy.

I like your image of turning every employee into a mini-VC. That triggered another thought -- managers now have yet another incentive to treat their employees well, because they may be talking to future investors in projects that they may want to get funded :-)

Thanks Carl! Let me answer your last question first -- in the "Practical Impact" section of the writeup, I do mention this: "It's entirely possible that some of these ideas will lead to new products and services that will generate additional revenue for the company -- in which case the company could pay back the employee contribution along with a dividend, in recognition of the employee's willingness to invest their own money at the very beginning."

Regarding the framing of proposals, I think that business-focused proposals could benefit very much from answering the questions that you pose. But there will be other proposals that don't fit into that category. The benefit to customers or society as a whole may not be known in advance, and the submitters may not have the ability or interest to quantify the benefit to the company's balance sheet. That's not as important to them, and, more importantly, it's not as important to their target investors. The submitters are reaching out to fellow practitioners in their community of practice whom they can convince with qualitative and quantitative information relevant to them, not to a VP somewhere up in the management chain.

For example, let's take a cloud services company with a Networking community of practice. Currently, the company is using an inexpensive proprietary VPN software package that meets the basic requirements. However, the IT professionals who manage the company's VPN infrastructure find it very cumbersome to work with, since it has poor error reporting and there is no access to source code. Advanced users (some of the most respected engineers in the community of practice) also are very irritated by the product's limitations. Meanwhile, there is an open source VPN package that everyone would much prefer to use, but it lacks the highly complex feature ABC which is required in the company's environment. IT management would have no objections to replacing the proprietary product with the open source product, since the support costs would be roughly equivalent, but they are unwilling to fund the necessary development to implement the ABC feature in the open source product. This kind of scenario can play out for years, all the while acting as a visible symbol for "out of touch" management and a frustrating IT environment.

The Bonus Fund gives the community of practice the tools to break this logjam. They know that all they have to do is collectively come up with 50% of the funding for feature ABC, and they can make it happen. (In fact, the very existence of the Bonus Fund may be enough to satisfy them in some cases. If the root cause of a particular frustration is the feeling of lack of control over one's environment, then regaining that sense of control can diminish or even eliminate the frustration. Without sufficient control over one's environment, all of the frustrations loom large, and the pain of one reinforces the other. With some amount of control, one can prioritize issues, work on the most important ones first, and derive a measure of satisfaction that positively influences everything else).

Let's say that in this case, 50 employees contribute sufficient funds which are then matched by the company to pay a highly specialized developer to implement feature ABC. They then deploy the open source VPN product, which solves all of the previously-encountered problems. The company gains a positive reputation in the open source VPN community (some of whom are potential cloud services customers or even future employees). The Networking community of practice is proud of their accomplishment, and they develop a stronger sense of camaraderie. They share knowledge even more freely, and through collaborating on this project, they end up learning a lot more about VPN technology and about contributing to open source projects, which makes them smarter at doing their jobs. These largely qualitative benefits are more than enough return on investment for those who contributed to the project.

Hopefully this illustrates one type of "non-business" Bonus Fund project that can make a big difference in employee engagement and effectiveness.

Your insights are very helpful Dan! I like the way you frame the meta-level that adjusts the "container" to align with the big-picture goals/principles/values, while still allowing things to "go forward" and not trying to control everything. Your suggestion of ground rules is valuable -- these are the kinds of specific messages that leaders in the community of practice can reinforce, guiding principles that as they lead by example will encourage others to do the same.

Thanks for reminder on kickstarter.com. I had come across it several months ago but hadn't checked it in a while. I agree that its look and feel would be an ideal starting point, possibly even a drop-in fit for this application.

This is a great observation of the idea's potential that I hadn't even considered: "the challenge, it seems to me, is to create something that is truly inclusive, that actively draws out the best in others, that helps people trust in themselves and then invest in their own hot ideas".

Thanks for your support!

That's great to hear that you're feeling encouraged to innovate at JDSU! I know you have a lot of thought-out ideas and it's good to have an environment where you can put them to work. If I may make a suggestion, I've found that this MIX site is full of intriguing stories/hacks and people who comment intelligently on them. Sure, it has its share of back-and-forth rambling too, but the level of thinking I've seen here is higher than I've seen at other sites. You might want to consider posting some of your innovative thoughts and seeing the kind of feedback you get. For us open source folks, it's a great way to build on top of each other's work and stand on each other's shoulders.

Thanks Greg. I like Dan Pink's work on motivation as well. Many folks are focused on external motivation and overlook the power of intrinsic motivation, particularly for knowledge work.