Thursday, September 10, 2009

Random Thought: When I become CEO, you get to slap me for $100

When I become the founding CEO of a company (which will soon grow into a large and very successful enterprise, of course), there are 3 principles I want to institute:

 1. Compassion as the Prime Directive
 2. Make it impossible for the CEO to ignore employee sentiment
 3. When the company wins big, everybody wins big

1. Compassion as the Prime Directive

Google's Prime Directive is "Don't be Evil" and Google has shown that it is possible to be non-evil while still making a crapload of money.  I want to push that envelope.  I want to go beyond not being evil, to show that a company can be compassionate and still make a crapload of money.

Truth be told, I don't really know what it means for a company to be compassionate.  I suspect this is something that takes a lot of trial and error to figure out.  But I don't think figuring out the exact answer is so important.  What I think is more important is that stating such a principle encourages people to think about it and measure themselves against it in every action and decision.  Even more importantly, perhaps, it gives them permission to question decision-makers and hold them to a high ethical and altruistic standard (like, "Hey, I don't think this is a compassionate decision, boss").

2. Make it impossible for the CEO to ignore employee sentiment ("Slap the CEO")

It's important to find a way to make it impossible for the CEO to ignore what everybody else is feeling. The best idea I can come up with so far is to create a system to allow any employee to anonymously slap a fine on the CEO.  Here's how it works:

  • Any employee can use the internal system to "slap the CEO" anonymously.
  • Everytime an employee does that, the CEO automatically gets $1000 deducted from his paycheck.
  • To "slap the CEO", the employee has to state what the CEO is doing wrong, what he/she should have done instead, how he/she should correct it, and why it's important for the company.
  • This is not for free.  Doing this will cost the employee $100, which is automatically deducted from his/her paycheck.
The idea is that doing this costs the employee real money, so it's not done frivolously.  Which also means that whatever the issue is must have really angered or bothered the employee, so it's important for the CEO to know.  And if the CEO gets a lot of "slaps" in a short period of time, it's something he/she cannot ignore because it's costing him/her real money (50 slaps in a week is $50,000, which is real money even for a CEO).

3. When the company wins big, everybody wins big

Back in the old days when my current employer was a small company, I observed that there was no politics amongst the engineers.  Whenever there was important crap that needed to be done, somebody just went ahead and did it.  Nobody needed to be ordered by managers, and nobody gave a second thought about receiving credit or looking good to the boss.

There were a number of reasons why that happened (eg, people liked and respected each other).  I think the most important reason was that, like in most start-ups, we each had a meaningful amount of stock options.  Because of that, everybody was keenly aware that if the company were to become very successful, we would each become very successful too.  Hence, it didn't really matter that the boss didn't pat your back for what you did, or if working for the common good interfered with your promotion (because doing the more important stuff for everybody's benefit took time away from your "real job"), all that mattered was making the company wildly successful, because that common good clearly led to handsome rewards for oneself.

Given this insight, I want to create a system where great success for the company leads necessarily and unambiguously to great rewards for everyone.  The best idea I can think of is to share a significant portion (10%?) of annual profits equally with every employee.  The sole variable is the number of days you worked in the year.  So 2 people who worked the entire year will get exactly the same profit-share, and one person who worked half the year will get exactly half the profit-share of the person who worked a full year.  It's as simple as that.  Everybody from CEO to receptionist gets the same amount.  This is in addition to your fair-market salary, of course.

Ten percent can end up being a lot of money.  If the profit per employee per year is $250,000, for example, 10% is $25,000 for each person, which is a meaningful amount of money for most people.  And if the company hits jackpot and makes a million dollars per employee, everybody hits a $100,000 jackpot.

The most important feature of this system is that there is no committee of managers hiding in a room somewhere deciding how much pork to allocate to each person based on perceived relative contributions.  The link between profit per employee and one's own reward is unambiguous and not subject to petty office politics.  When the company wins big, everybody wins big.  That's it.  And that feeling can be a powerful motivator towards common good.

Yes, this system has obvious downsides (eg, the free-loader problem, which needs to be solved) and would probably take us a few iterations to get it right.  However, the idea of a system that unambiguously links great company success to great personal reward immune to office politics is just too compelling to dismiss.  I, for one, would be willing to try it out with the future multiple millions in annual profits of my very successful multi-billion-dollar-company-to-be.

Caveat Emptor

I am obviously not (yet) a successful CEO.  So if I were you, I'd just ignore everything I say, as usual.


  1. Let me see, if I "slap" the CEO, it costs me $100 of my salary and costs the CEO $100 of his salary. So that's $1100 more in the company coffers. And we're going to share %10 of that... I think that if this company has more than 10 or so employees, and if those employees conspire, then they can game the system if each employee slaps the CEO. But each employee would be tempted to "betray" the conspiracy, to refrain from slapping the CEO--after all, it costs 100$ up front to participate. This could make an interesting game.

  2. I work for a non-profit. Do you have any thoughts about how a company that is never planning to cash in its chips and share the wealth could implement inherently compassionate strategies?