A Rewarder Experience

Saturday, May 30, 2009 Saturday, May 30, 2009

This week I happened to listen to an unusual podcast in which Linden Lab founder Philip Rosedale was interviewed by tech maven Jon Udell in his wonderful series “Interviews with Innovators”. Philip spoke on his ideas for managing a software company, and in particular some of the very unusual people management techniques he’s pioneered at Linden Lab. 

Everyone knows Philip is a visionary and technical whiz, but after hearing him speak during the 44 minute podcast, it’s quite clear that he knows a lot more than simply the technical aspects. He has some intriguing ideas for motivating people that I had not heard previously.

Philip describes an internal system known as the “Rewarder” used to award monetary bonuses to deserving staff. Here’s how it apparently works:
  • An unspecified portion of the Lab’s profits are set aside each quarter (and yes, Philip indicates that Linden Lab is quite profitable today, unlike some other companies like Twitter, for example)
  • Every quarter each employee is awarded a fixed and standard quantity of “points” in the rewarder system that they can award to other employees they feel has done great work
  • The points cannot be kept for themselves, and must be awarded to others
  • Points can be assigned all to one individual or split up among many in varying amounts, with no restrictions other than staying within the assigned quantity of total points
  • Points can be awarded to a “proxy” who can award them on the individuals behalf (for example, if a project was successful, you could award points to the project’s manager to split them up among the project’s team members)
  • The profit allocation is then split up among all staff based on the point totals awarded to each participant at the end of each quarter

This is a very different scheme for motivating the staff; most companies have a traditional bonus system where managers go into a smoky back room and do battle over their favorite employees’ bonuses. Usually this approach is not particularly accurate or welcomed by staff - although I'm certain staff enjoy any money received. But Linden Lab’s Rewarder approach is very innovative and places the responsibility for determining bonuses directly in the hands of the staff themselves, not in management’s control.

It’s reminiscent of Second Life itself, where the content is managed by the users. At Linden Lab, bonuses are apparently managed by the staff, too. Who can argue with that?

If you’d like to hear the entire podcast (and be aware it’s 44 minutes in length), you can find it at IT Conversations right here.


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