The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu


Monday, April 23, 2012

Strategic CSR - Employees

The article in the url below profiles one of the best ideas I have seen in a while—a new approach to allocating annual performance bonuses among employees:

Coffee & Power, a San Francisco odd-jobs start-up, granted each of its 15 full- and part-time employees 1,200 stock options this past January, to distribute among co-workers in whatever way they chose. A worker can plunk all his options onto one colleague or split them among the group, so individual bonuses are tied to how co-workers perceive each other's work.

Personnel decisions taken within companies (e.g., decisions to hire, fire, reward, and promote employees) are extremely subjective. We all are motivated by non-rational biases, prejudices, and misinformation. What this idea is doing is substituting individual self-interest for the non-meritocratic decisions of managers and executives. Of course, such ‘investment’ decisions by employees will also be guided by the same biases and prejudices, but by democratizing or ‘crowdsourcing’ the process (by extending it to all employees), the opportunities for abuse are diminished. The program’s rules reinforce this ethos:

Workers cannot reward themselves, nor can they give options to company founders, who already have sizable shares. (The money or shares allocated to employees each quarter varies depending on company performance.) Employees only know what bonuses they receive, but don't learn who allocated what. The company makes public a distribution curve of all the bonus grants, with no names attached, so workers can see what the highest and lowest bonuses were. … The biggest surprise: the third-largest allocation went to the ninth-highest-paid person in the firm, a remote developer who handles small tasks and spends a lot of time helping others.

It is an interesting thought-experiment to see what applications this concept might have in other areas of the firm.