Because they may be called to account for their hypocritical behavior, you may find people in authority saying things like these, but you most likely won’t find them written into the Employee Handbook:
“Providing the freedom to fail is an important trait of the company— we couldn’t expect so much of individuals if we also penalized people for errors. Even expensive mistakes, or ones which result in a very public failure, are genuinely looked at as opportunities to learn. We can always repair the mistake or make up for it.”
“But problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers.”
“…for the most part working overtime for extended periods indicates a fundamental failure in planning or communication. If this happens at Valve, it’s a sign that something needs to be reevaluated and corrected. If you’re looking around wondering why people aren’t in “crunch mode,” the answer’s pretty simple. The thing we work hardest at is hiring good people, so we want them to stick around and have a good balance between work and family and the rest of the important stuff in life.”
“Our profitability per employee is higher than that of Google or Amazon or Microsoft, and we believe strongly that the right thing to do in that case is to put a maximum amount of money back into each employee’s pocket. Valve does not win if you’re paid less than the value you create. Over time, compensation gets adjusted to fit an employee’s internal peer-driven valuation.
The title of this post sounds like the stodgy name of some inhumane, BS, corpo process under which “supervisors” evaluate their children, I mean, induhvidual contributors. But wait! It’s the Valve way.
You don’t know who Valve is? Valve is a company that creates massive, multi-player, online games. According to “economist-in-residence“, Yanis Varoufakis, Valve rakes in $1B in revenue even though they have a measly 300 employees. Also, according to Yanis (and their employee handbook), they are totally flat chested. There’s not a single boob, oops, I mean “boss“, in the entire community. D’oh!
The employee handbook spells out the details of the “Stacked Ranking“ process, but in summary, peers rate each other once a year according to these four, equally-weighted metrics:
Skill Level/Technical Ability
Notice that there’s no long list of patriarchical, corpo-BS ditties like these in the four simple Valve metrics:
- Takes initiative and is a self-starter
- Knows how to acquire resources when needed
- Manages time well
- Knows how to prioritize tasks
- Yada, yada, yada
As you might guess, the stack rankings are used for salary adjustment:
…stack ranking is done in order to gain insight into who’s providing the most value at the company and to thereby adjust each person’s compensation to be commensurate with his or her actual value. Valve pays people very well compared to industry norms. Our profitability per employee is higher than that of Google or Amazon or Microsoft, and we believe strongly that the right thing to do in that case is to put a maximum amount of money back into each employee’s pocket. Valve does not win if you’re paid less than the value you create. Over time, compensation gets adjusted to fit an employee’s internal peer-driven valuation. - The Valve Employee Handbook
Whenever I serendipitously discover jewels in the rough like Valve, SAS Institute, HCL Technologies, Semco, Zappos.com, etc, I always ask myself why they’re rare exceptions to the herd of standard, cookie-cutter corpricracies that dominate the business world. The best answer I can conjure up is this Ackoff-ism:
The only thing harder than starting something new is stopping something old. – Russ Ackoff
But it’s prolly something more pragmatic than that. Since corpo profits seem to keep rising, there is no burning need to change anything, let alone blow up the org and re-design it from scratch to be both socially and financially successful. That would be like asking the king to willingly give up the keys to his kingdom.
the company talks about “T” people:
We value “T-shaped” people. That is, people who are both generalists (highly skilled at a broad set of valuable things—the top of the T) and also experts (among the best in their field within a narrow discipline—the vertical leg of the T). We often have to pass on people who are very strong generalists without expertise, or vice versa. An expert who is too narrow has difficulty collaborating. A generalist who doesn’t go deep enough in a single area ends up on the margins, not really contributing as an individual.
That’s too bad for the typical borg. These beasts actively recruit and develop horizontal “hypen” (mgrs, execs) people and vertical “I” (induhvidual contributors) people. Of course, the stewards of these dinosaurs get what they wish for. On top of that, anybody who tries to self-improve towards a “T” person is silently ignored. It would screw up the nice and tidy employee-in-a-box process of emasculation.
I recently listened to a fascinating podcast interview of Valve Inc‘s “economist-in-residence“, Yanis Varoufakis. According to Yanis, the company is still organizationally flat after 17 years of existence.
The thought early on at Valve was that the maximum limit to flatness would be around 50-60 people. Above that, in order to keep the wheels from falling off, some form of hierarchy would be required for concerted coordination. However, currently at 300+ employees, Valve has managed to blow through that artificial barrier and remain flat. Mind you, this is not a company solely made up of like-thinking engineers. There are also artists, animators, writers, and accountants running around like a herd of cats inefficiently doing the shit that brings in $1B in revenue each year.
According to Yanis, in order to maintain their egalitarian culture, Valve can’t afford to grow too quickly. That’s because they have to deprogram people who are hired in from hierarchical borgs as former bosses who expect others to work for them, and as former workers who expect to be “directed” by a boss. If Valve didn’t do this, their culture would get eaten alive by the pervasive and mighty command-and-control mindset. The spontaneity, creativity, and togetherness that power their revenue machine would be lost forever.
Nevertheless, Valve is pragmatic with respect to hierarchy:
“Valve is not averse to all organizational structure—it crops up in many forms all the time, temporarily. But problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers.” – The Valve employee handbook
Whether Valve knows it or not, their success is due to their respect of some of Gall’s system laws:
- Systems develop goals of their own as soon as they come into existence – and intra-system goals come first.
- Loose systems last longer and work better. Efficient systems are dangerous to themselves and others.
American business is completely fucked up because it is all about competition. Our world was built for the good from cooperation. – Alan Kay
From the moment we stepped foot into the classroom and received our first gold star, we’ve been brainwashed with the BS idea that separation from, and competition with, other individuals is good and noble. In school, collaboration on assignments and tests is akin to “cheating“. In business, subjective reward systems pit team mates against each other for money and stature.
At least in school, everyone knows what the score is. There is no group purpose, vision, or mission; it’s all about individual achievement relative to other individuals. In business, so-called leaders constantly cry out for team work and collaboration while keeping idiotic policies/processes/procedures/structures in place that guarantee a friction-based separation of concerns between individuals and groups within the org. The reason this counterproductive “behavior” will continue unabated ad infinitum is because all the players involved in the game simply take it for granted. To “us” (yes, that includes you and me), it’s simply the way it’s always been and it’s simply the way it always should be. This thinking malady is so acute that not many people even try to search for alternatives. Those poor souls that do, are often ostracized into silence.
On the left-hand side of the diagram below, we have a static system design structure where four “workers” and their manager have their hearts set on producing a world class product. On the right, we have an alternate system design where only one worker has his/her heart set on creating a world class product. The other team members are too busy posing, competing, and jockeying for positional stature in the mind of the manager for their next upward career move. It’s not shown on the diagram, but that manager is also jousting with his peers to advance his/her career.
In orgs where the policies/procedures/incentives/rewards promote individual performance over (and at the expense of) team performance, you’ll most likely find the design structure on the right in operation. Which archetype does your system design map onto?
The top-down organizational chart became the blueprint for the mechanistic organizational model, lining people up like billiard balls to ostensibly create a predictable chain of reactions. – Tom Coens & Mary Jenkins
Having recently finished the above two heretical books on the undiscussable joke that is “the Annual Performance Review“, I coincidentally stumbled upon this recent FastCompany.com article: “Why Year-End Reviews Are A Big Fat Waste Of Time”.
Alas, even though author Denis Wilson plants some decent advice for managers in the blarticle, it still reeks of a slight “tweak” to the notoriously bad, but eerily unopposed, APR practice.
After posting the link to the blarticle on Twitter, I had this interesting exchange with Adam Yuret:
Upon reflection on why such a horrendously demeaning practice like the APR still exists in the 21st century, BD00 has come to the conclusion that the guild of management collectively thinks:
- The APR actually “works” or,
- They know it doesn’t work but they have no motivation to attempt such a big and scary change to the org, or
- They know it doesn’t work but they have no motivation to explore alternatives for achieving what the APR is actually supposed to do.
Behold the un-credentialed and un-esteemed BD00′s taxonomy of software-intensive system complexity:
How many “M”s does the system you’re working on have? If the answer is three, should it really be two? If the answer is two, should it really be one? How do you know what number of “M”s your system design should have? When tacking on another “M” to your system design because you “have to“, what newly emergent property is the largest complexity magnifier?
Now, replace the inorganic legend at the top of the page with the following organic one and contemplate how the complexity and “success” curves are affected:
I don’t know where I read it, but I remember someone giving great advice about using “I-Speak” to present your case on a sensitive issue. Don’t go blasting away and saying stuff like “everyone thinks the system is a freakin’ disaster“. Instead, say “I have a hard time using the system as it’s designed“.
In really uptight and unresponsive groups, preface your concern with “I can only speak for myself, but…“. But don’t forget, in zero tolerance bureaucracies, keep your “I” trap totally shut tight and keep toiling along in quiet desperation.