Rewards in the World of Wikinomics

I recently finished reading Wikinomics: How Mass Collaboration Changes Everything.  It is a terrific book that paints an exciting picture of the future of business and, particularly, the future of work.  As the authors tell us in the Introduction:

Millions of media buffs now use blogs, wikis, chat rooms, and personal broadcasting to add their voices to a vociferous stream of dialogue and debate called the "blogosphere".  Employees drive performance by collaborating wiht peers across organizational boundaries, creating what we call a "wiki workplace".   Customers become "prosumers" by cocreating goods and services rather than simply consuming the end product.

I got to thinking about how rewards would look and function in the "wiki workplace".  Some initial thoughts:

Base Pay

In a work environment where employees increasingly move from project to project, developing their own interconnections, joining and leaving cross-functional teams, collaborating with peers both inside and outside their organizations, new rules and practices will come into play for base pay.  To the extent that these workers remain the captive employees of an organization, I envision a transitory model built around sets of progressive salary bands or ranges for different disciplines or career paths (e.g., general human resources or accounting) - not unlike the approach some employers have taken to implementing broadbanding. For example, a set might encompass four different overlapping salary ranges for a particular discipline; perhaps "Apprentice", "Contributor", "Specialist" and "Master.  Progression through the bands or ranges (i.e., from the "Specialist" to "Master" salary range) would be based on demonstrating both high quality and reliable collaboration as well as the increasing ability to function as an autonomous, self-directed, value creating agent within the organization.

Eventually, as work becomes more self-organizing, we would migrate to a model where many workers operate as their own independent consultancies - freelancers, if you will - by bidding for project work at rates based on the "market" for their particular skill or discipline.  Perhaps an individual's going rate will even include a contribution to their personal, portable benefit package, consistent with the scope and duration of a project or team effort.  In this scenario, Human Resources could contribute by acting as an internal agency for talent - facilitating the posting of project and work team opportunities as well as the bidding process.

Performance Management

In the world of Wikinomics, which features far less traditional hierarchy and more peer collaboration, I can envision that traditional direct supervisory relationships might be replaced by someone acting more in the role of advisor or mentor.  This role would be less about direct oversight and management of a worker's responsibilities, and more about providing a resource person to:

• Suggest developmental steps and activities
• Help collect, discuss and address performance feedback
• Be an advocate and facilitator in linking the worker with opportunities that fit their capabilities and aspirations

It goes almost without saying that peer performance feedback will play an increasingly critical role in managing performance in the "wiki workplace".   This will require refining and tailoring our existing 360 degree feedback systems and processes, and perhaps creating new ones.  One characteristic of ongoing peer production communities seems to be the emergence of a "council of elders" of sorts, to oversee things like project codes of conduct, quality control and dispute mediation.  Perhaps a body like this will also play a role in providing performance feedback to contributors.

Incentives/Variable Pay

Many - perhaps most - of the pioneers of mass collaboration such as Linux, YouTube, and Wikipedia run on voluntary and nonmonetary participation.  Wikinomic's authors predict that one of the big developments coming over the next decade will be a shift from voluntary, nonmonetary participation in peer communities to a model where participants directly monetize their contributions.  As this shift occurs, and the corresponding line between "internal" and "external" contributors becomes increasingly blurred, it will become important that both sets of players are rewarded based on a similar platform. 

Given the values of community, openness and shared decision making that govern today's models of peer production, I believe it will be important that this reward platform retain some element of group incentives.  Even if individual participants receive some level of "base pay" in accordance with their contribution and involvement, a group incentive component of some kind will help reinforce the sense of cooperation and shared destiny that will bind the team together in pursuit of its mission.  It may be a straightforward as a profit-sharing plan, tailored to reflect the different types and levels of contribution.  The key thing is that it provides a way for contributors to share in the success and value that they help create.

How do you see rewards in the "wiki workplace" of tomorrow? 

Comments

[Frank Giancola]

Ann,

I recently did some research on the demise of the functional organization and the associated increase of unstable jobs and obsolescence of job-based forms of pay, as advocated by some of the leading compensation thinkers. I found that the leading thinkers in organization design do not subscribe to this theory. On the contrary, experts such as Michael Hammer, the father of the process-centered organization, and Jay Galbraith, see an important role for the functional organization as the primary organizational form, or as the foundation or parent in a multi-structured company, in which it provides stability, strategy, specialized expertise and a counterbalance to the task force structure.

It also serves as the home base for employees who work on task forces to ensure they retain their professional roots and to improve specialized knowledge and skills. Although task force participation may require additional skills, such as project management and team building, employees are still assigned to one based on their functional expertise. Thus, for most people, a new system for classifying and paying employees, such as skill-based pay, is not necessary, as claimed by the compensation experts.

Frank

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AB - Frank, as always I appreciate your bringing your experience and knowledge to bear on these topics. I do agree that there is probably always going to be an important role for the functional organization to play - but it will change over time and likely in ways that we can't easily see in advance. To the extent that employees are aligned with an organization, I also agree that many of the fundamental compensation management tools we have today (like salary ranges and/or bands) will apply to the nature of "wiki work" in these future organizations. However, I concur with the authors of Wikinomics that the relative proportion of "freelance-types" to "employees" will continue to shift over time, and that we will increasingly see more of the first group and less of the second. I am observing this happening even today, in the marketplace where I do business.

I can't resist - though - a quick swipe at Michael Hammer's credentials for predicting future organizational trends and their implications; the last book of his that I read (Leading the Revolution) dedicated many pages to singing the praises of Enron as a model company for the age of innovation and reinvention. So I am inclined to take his thinking with a grain of salt!

[Frank Giancola]

Ann,

I cited Michael Hammer not because of his predictions about the future, but because of his experience consulting with the process organization. He's not a futurist.

Enron's fall has been attributable to the corrupton of their executives, auditors, lawyers, and investment bankers, not with their organizational model.

Funny thing---the rise of the freelance group has been predicted for over ten years, but its growth has not met the predictions, as shown by these facts:

•Independent contractors, on-call, temporary help, and workers provided by contract firms, comprise just 10.7 percent of the workforce (14.6 million), up slightly from 9.9 percent from 1995 (12.1 million) (Bureau of Labor Statistics 1995 and 2005).

• Contingent workers are not represented strongly in two Information Age occupations only 5.6 percent of computer programmers and system analysts were self-employed in 2004 (Bureau of Labor Statistics 2006).

• Intel and EDS, examples of firms organized according to flexible new economy principles (Bridges 1994), eliminated tens of thousands of permanent jobs in the past five years, but made no mention of being able to minimize the impact by contracting the size of the contingent labor pool (Intel Corporation 2006; N.Y. Times 1999).

Frank

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AB - Interesting data - thanks for sharing it here. As always, you are the voice of clear and reasoned thinking - supported by a sound command of the facts.

Its difficult to argue with the data, particularly that of BLS, but I can't help thinking (and I admit that I may be biased based on the seat from which I view the world) that there is tremendous growth happening in the sector that represents people - like me - who are in small businesses (1-5 people), rather than functioning as freelancers per se, and that is missing from those numbers.

At any rate, I appreciate your continued comments! Lots to ponder!