In 1729, Jonathan Swift wrote a satirical essay of the same name, wherein he suggests population control by eating infants. What I am about to suggest here will produce, I suspect, the same amount of shock and outrage as Swift's essay.
Let me assure you, gentle reader, that I am not proposing a revolution of existing companies. I think this proposal will only work for brand new companies, and probably only certain types of companies at that. In addition, I am only making arguments for an experiment, one which I think has never been done but which I think could produce remarkable results.
We're All In This Together
This is one of the most common arguments used when attempting to motivate an employee to give something up -- time, money, privileges, free soda pop -- without getting something in return. But if we really are all in this together, why is it necessary to work so hard to make a convincing argument? For that matter, to mention it at all?
"We're all in this together" is an attempt to trigger enlightened self-interest mode. So, for that matter, is "you want to be a team player, don't you?" There are other versions but they all come down to the same thing.
The problem is that humans are apparently hard-wired as fairness-detection engines. If something isn't fair -- even if it's not obvious or if someone succeeds in convincing us it is fair -- something very primal is triggered and we get an uncomfortable feeling that things aren't right.
I suspect that fairness-detection comes from natural selection. There are great benefits in working together. A tribe survives by working towards a common interest. You could expand the concept of "tribe" to include, for example, an artisans guild within a city.
Working towards a "greater goal" than your immediate needs requires faith that, if you work for this other thing, eventually you will also benefit. Let's call this the payoff gap. If I say "let's all go hunt an animal and then we can eat," there's virtually no payoff gap. But if I say "you should vote (for/against) socialized medicine because it is (good/bad)," there are so many factors and steps between voting and the ultimate results that there's a very big payoff gap. On top of that, there can be layers of indirection to insulate the leaders (who convince you to follow them) from responsibility. By the time we find out whether something works or not (and that can also be obfuscated), the leader can be "too busy" on another crusade to take responsibility for past crusades (and can motivate you to let the past go by again citing a "higher goal," for example saying "let's not play the blame game").
How do you get naturally deselected? Well, suppose a charismatic leader convinces you that "we're all in this together" and that everyone should work to build walls for a castle, so that we can all be protected from marauders. Sounds reasonable, so you do it. Next, we need food to feed our soldiers who have the full-time job of protecting us. Also sounds reasonable. In dire times, the soldiers must work quickly in concert, so we need a hierarchical command structure, and the logical person to be at the apex is that same charismatic leader. Now you've just put all your eggs in one basket -- albeit one logical step at a time -- and you hope that your charismatic leader still feels like "we're all in this together." And doesn't turn out to be too much of a psychopath, to the point where he says "now I'm in control, I can do anything I want." If that's not the case, you've just become a slave and he works you to death in order to enrich himself -- boom, you're out of the gene pool. Left in are those who get suspicious faster.
The idea that we are hard-wired for fairness keeps coming up in the books I'm reading; apparently this is the result of numerous experiments. I know that personally I have a very sensitive unfairness detector. I'm going to take fairness detection as a fundamental, unchangeable aspect of everyone who works in a company.
Are Companies Fair?
Consider the example of Hewlett-Packard. A place where, once, people left and then came back -- it was such a great environment to work that you missed it. One of the most important things they did, established by the founders, was to make sure no section got so large that everyone couldn't know each other. If it did, it was broken into two sections. There was also a fierce dedication to education and development of employees.
I don't think any publicly-held company can resist the forces of quarterly profit maximization. No matter how committed you are to your principles, it's like being in a leaky submarine. The pressure of the water outside is constant and ready to take advantage of any pinhole. Once the submarine is submerged in the stock market, it can never surface or go into dry dock, so eventually you'll have leaks, and eventually you'll fill up with water (everything you do will serve quarterly profits). So it happened with HP, to the point where they decided that it was time for a merger with Compaq.
I suspect that most people inside the company could see this was a bad idea. It was obviously bad from the outside; never for a moment did it make sense to me. But senior management decided it was going to happen, and they hired Carly Fiorina as CEO, primarily for the merger.
It must have been just awful to work at HP and watch the company you love plow full steam ahead into the Compaq iceberg, after being told again and again that you shouldn't worry your pretty little head over things that only MBA royalty can really understand.
What happened when the board finally fired Fiorina in 2005? She received $21 million in severance pay, and an additional $21 million when Hewlett Packard's board bought out her company stock options and pension benefits. Her compensation package sparked a lawsuit from shareholders.
The fallout from this has gone on for years. HP has basically become every other company you don't want to work for. They have even apparently adopted "furniture police" to cram cubicles closer together -- this would never have happened at the HP I consulted for many years ago. How many jobs would Fiorina's 42 million paid for? But once she accepted the CEO position, it didn't matter what she did, she was set up for life.
Now, if you're an HP employee and any manager gives you any variation of "we're all in this together," what do you think that will do to your fairness-detection circuits? For that matter, most senior managers in most companies are distant and excessively paid, so how can you go into any company and believe "we're all in this together?" So, when you hear it, you know it's wrong and you think "you're lying to me about this, what else are you lying to me about?"
Discussions of excessive compensation are the rage right now, for good reason -- why are people getting all these crazy bonuses for doing such a bad job? It would be too easy to get lost in the money aspect, but that's not what this is about. Here's a statement[1] by James Barksdale, when he was CEO of Netscape: "If the decision is going to be made by the facts, [then] anyone's facts, as long as they are relevant, are equal. If the decision is going to be made on the basis of people's opinions, then mine counts for a lot more." He said it in a public forum, but I'll wager most CEOs think it. If you've seen the most recent incarnation of Robin Hood, you might be reminded of King John, after using the "we're all in this together" ploy to get his vassals (whom he has been mightily abusing) to fight off a French invasion, deciding at the end that he was chosen by God to be king and would not keep his promise (made before the battle) to treat them equally.
I keep thinking that our companies resemble nothing so much as a feudal system.
The Proposal
Hold onto your crowns and helmets. What I'm about to suggest seems crazy, but I wonder if it isn't the same kind of "crazy" as open-spaces conferences, where the attendees spontaneously decide the session topics. That is, an inversion of organization that turns out to work better than anything we've tried before.
What if everybody in a company got paid the same amount?
I don't mean "capping the maximum pay at 5 times the minimum pay" as some organizations do. The book Drive was built on one piece of research, which has been tested again and again: for non-rote work, carrots and sticks are counterproductive. So if that's true, let's completely level the playing field, and remove pay from the equation.
I admit this would create a very different world, since most likely we'd just take the profits from this quarter (or whatever time division you choose) and divide them up. Anyone working in this company would be forced into a savings mentality -- better stash most of it away because you don't know what the next pay period will be like (if you're self-employed, you already live in that world). On the other hand, if things go well, you benefit directly -- we really are all in this together.
But how would you ever be able to hire one of those golden senior managers with an MBA that gives them the power to make magically-correct decisions? You know, like HP did? Or like Apple did when they ousted Steve Jobs and replaced him with the soda-pop salesman (an outstanding disproof of the "management is management" principle)? I'll suggest something else radical here: someone who understands the company and the business is far more valuable than someone who has specialized in "managing any kind of business" (or, more importantly, is not smart enough to know that isn't possible). More than one person who's been through an MBA program has pronounced that what they actually need to know could be learned in a few weeks.
Why, indeed, is senior management any different than any other kind of job within the company? Who, other than senior managers, believes that the excessive power and compensation is essential for the job? The people who have rigged the system did so after gaining power -- and an excessively high proportion of them test positive for psychopathy. This produces what I consider a tremendous benefit: it turns away the people who want power. If the money and power is what you're all about, you should look elsewhere. But if you really want to work in a place where "we're all in this together" (it's a really good feeling) then that's how we do things here.
At the other end of the spectrum, what about hiring a janitor? Well, if it's a problem for you to reduce the size of your share for such an unskilled job, then maybe we can all spend a little time cleaning up ourselves, maybe during the inevitable productive lulls. People often say that when you get stuck, it's really good to do something different. Plus, all that sitting around is killing us; getting up and cleaning the bathroom or the kitchen could be a great health benefit as well.
Now, if upper management tries to use this approach in a conventional company, trying to convince me of the benefit to everyone, my fairness circuit will kick in and say "you're trying to save money so you can get a bonus." But if we are truly in this together, then I'm more than happy to participate -- in fact, it makes me feel connected.
OK, so perhaps we are cleaning our own bathrooms but we still need some kind of facilities people to help out. What kind of person might you get by offering an equal share of the company proceeds? Someone who might even be able to do other jobs in the company? In startups, people often reminisce fondly about the early days when "everyone did everything" -- why does that have to change? Why should we create a system where people have a structure to justify saying "that's not my job?"
I could go on with the "what if?" scenarios but I've laid out the basic idea. I'm sure you can think of lots of companies and structures where it seems like it wouldn't work, and that's fine (although I suspect it would work in many more cases than it seems). But I'm only interested in where it could work. You'd have to start a company from scratch, I think; it would be too awkward to do it to an existing company. And the best candidate for a first experiment would be something like an intellectual-services company -- a software development firm is a good example. The people that would want to work in such a system would be self-selecting. Those who must have salary differences, and those who must always know what they are going to be paid (and who believe in the certainty of a regular paycheck) will go elsewhere. The people who will work for your company will be the ones who are ready to do things differently.
It's a start in defining the kind of company I want to work with.
[1] From Hard Facts, Dangerous Half-Truths and Total Nonsense, Page 31.
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