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Tuesday, July 05, 2005

Today I decided how I would like to compensate employees if I ever started a company. This model works under the assumption that all employees would be knowledge workers. Probably a valid assumption until the company grows to 25+ employees. At any rate...

The idea is that the companies net income is divided by total man years invested in the project. Based on an individual's number of years of service they will get more or less of the profit. Individuals who are hired with more skill then others will be compensated with a higher salary - not given "bonus years". "Years" effectively act as shares. Years can become vested, and years can be taken when an employee leaves. To keep senior personal motivated, a standing rule would be that you can be terminated by vote from your peers. (Nasty perhaps, but I can't think of another way at the moment.)

This places the hiring incentive on people like or better then yourself - where it should be. Gets rid of the "will I get my bonus this year?" mentality. Makes people think about all aspects of the company - not just code. And rewards people for being nice just as much as for being good coders. ...and I really like the simplicity.

It is not without problems, but...

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