The more obvious way is very obvious: we had a professor who told us he'll be grading us by first tallying up the answers, and then applying a bell curve to the scores, so that X% of the students get an A, Y% get a B, etc., and some Z% of the students will fail. As you can imagine, everyone was up in arms about how obviously unfair this is.
The less obvious case, but close to what you describe, was scolarships. For almost every "track"[0], scolarships were awarded for top X% of students. In the "track" I was in, and another one in our faculty, the scolarships were instead given to anyone who crossed a certain absolute grade threshold, in (IIRC three) tiers. The higher the tier you reached, the more money you got, independent of how other students fared (probably subject to budget constraints, though).
Now, I can't prove it, but there was one other notable difference between our "track" and that other one with same scolarship model, and every other "track" at the university I was aware of: ours were famously cooperative, everyone else was fiercely competitive. I don't think it's a coincidence. My university experience was that of everyone helping each other out, because it was always a win-win both socially sometimes financially. Everywhere else, this was unthinkable - helping other students created a risk of them getting ahead of you and taking your scolarship.
I'm dismayed to see the same thing repeating in companies too.
--
[0] - I can't seem to find the correct word to describe the set of students across the years who pursue a degree in a particular subject (e.g. "Computer Science") on a specific faculty. I.e. the vertical slice.
The term I'm looking for, though, is the set of batches abstracted over time. That is, all students who take CS at particular faculty of particular university, regardless of the year they started. A sequence of "batches". Such students will share curriculum and specific teaching staff. This is in contrast to another such group that e.g. does Applied CS at the same faculty, or Theoretical Physics at different faculty.
> For almost every major, scholarships were awarded to the top X% of students of that major.
Yes, I believe "students of a major" is the best term.
(I did some manual post-processing inside HN text box though, as Org Mode doesn't support having single cells spanning multiple columns or rows.)
Although that usually refers to former students, and doesn’t include current students.
[0] - I can't seem to find the correct word to describe the set of students across the years who pursue a degree in a particular subject (e.g. "Computer Science") on a specific faculty. I.e. the vertical slice.
It worked the same way at my University with the same outcome as yours. 7 years after graduation we still maintain regular contact as a group with my classmates.
Good managers recognize the value of role players. Not everyone can be a top performer. It's an absurd expectation to have for any organization.
The problem with this is not the size of the bonus pool.
The immediate problem is the thresholding. Due to the sharp threshold, the bonus will practically never stand in proportion to performance. An employee that is judged to perform at a level of 6.1/7 gets nothing, but the one at 6.3/7 gets a lot. This makes the scheme anti-collaborative.
The less obvious problem is the ridiculousness of the idea that you can assign accurate individual performance numbers to people. These things are insanely noisy to the point of being meaningless. It ends up effectively a lottery. That would be fine if you called it a lottery, but by pretending it's not you create perverse incentives.
There are only two ways to do bonuses well:
- either forego individual bonuses and reward the entire company equally (or maybe scaled by salary) based on company performance, or
- hand out individual bonuses only to true (statistically verified) outperformers -- in this case you might end up not handing out any bonuses most years.
Goldstein and Spiegelhalter did a paper on league tables for organisations (e.g. schools and hospitals) along the lines that noise in the data made the results questionable.[1]
Perhaps the idea transfers to individuals within an organisation that uses stack ranking?
[1] https://www.bristol.ac.uk/media-library/sites/cmm/migrated/d...
There are no boni for top performers in my company at all. If business is good everyone gets a bonus. The only exception here is sales. Here people are more competitive. I guess I would get martyred if I even suggested it for other departments. And I believe it would be pretty bad for morale and teamwork overall. It is good that people don't use energy to present themselves in a good light and instead solve the problems we have. I still believe there is a lot of incentive for employees to see the company performing well. As you said, I have the impression that this becomes a background issue if employees compete with each other.
There was a time I would love to have worked at Blizzard, even while being aware of the volatility and risk of the industry. I wouldn't want that today regardless of compensation. Still, I don't believe it is either or. Both systems you suggest probably have an overall net negative effect for development. There are other forms for employees to participate on company success. Administration for employee boni is wasteful overhead for the most part.
If it is true what the article reports, I believe the manager did the correct thing. On that metric he might be a high performer among his peers.
There is the one where the company wants to reward top performers. I think this one is most common, and I have never worked at a company that doesn't so some form of bonus budgeting that tries to capture a group of employees who are performing well and give them a bonus. The budget itself dictates how many employees can fit into that group, so ultimately what happens is a natural bell curve of the biggest rewards going to the perceived top performers, as agreed upon by managers usually at the organization level.
The other more insidious stack ranking involves a punitive element, whereby a group must necessarily be singled out for performance improvement reasons. This is the type of thing where managers, no matter what the team members actually accomplished, have to put someone on a performance improvement plan or start performance managing them to "get them up the bar" because someone naturally has to fall into the "bottom performer" bucket of stack ranking.
I think the former is common and pretty unavoidable unless a company has an unusually large bonus budget pool available. The latter approach is what causes problems with companies, because all of a sudden team mates become competitors and cultures can go downhill rapidly. Think Amazon, Microsoft under Ballmer, and GE under Walsh.
It's kind of interesting how many companies who are doing the former bonus budget pooling eventually get seduced into doing the latter and destroying their culture.