Monetary incentives are the petri dish where motivation grows in work environments, particularly in sales. Whether the culture that forms is a healthy one or not depends on context. Customers’ expectations of service providers are changing. People expect service not just sales. So how do you design an incentive scheme that supports customer service and results in sales?
I don’t pretend to know the answers. All I know from my experience as a service designer is that incentives (and remuneration) are factors that someone needs to be thinking about when change is being rolled out.
The paper “Personnel Economics: The Economist’s View of Human Resources” provides an overview of HR from an economic perspective. I hope to share enough of it so that you might read the whole piece. Here’s the teaser:
Personnel economics drills deeply into the firm to study human resource management practices like compensation, hiring practices, training, and teamwork. Many questions are asked. Why should pay vary across workers within firms–and how “compressed” should pay be within firms? Should firms pay workers for their performance on the job or for their skills or hours of work? How are pay and promotions structured across jobs to induce optimal effort from employees? Why do firms use teams and how are teams used most effectively? How should all these human resource management practices, from incentive pay to teamwork, be combined within firms? Personnel economics offers new tools and new answers to these questions.
The paper theorises on how pay determines culture in its discussion of piece rate pay versus performance pay. It talks about pay conditions that foster team work and cooperation and the trade-offs that they involve. It’s not all about money though, so the paper also considers “hedonic” factors like prestige, recognition, and working conditions.
It’s easy to measure the output of sales people, but how “service” is measured needs to be considered if the behaviour of staff needs to change to meet new objectives.
The article is by Edward P. Lazear and Kathryn L. Shaw can be downloaded via nber.org. It is available for free for those with access to academic databases. If you don’t have access the paper is $5, and worth every cent.
For a while during my time at Daemon I could talk geeky with the best of them – well at least follow the conversations. Jason Barnes, Daemonite development manager was filling me in on what the team had been up to recently. This included their visit to cfObjective conference where Geoff (head Daemonite) gave a talk on Varnish. The slides are online (nice HTML 5 slide deck btw). I was like Varnish!? What the? No longer working with developers means I no longer get to learn geeky things through osmosis. A hello ping on IM resulted in my schooling in Varnish – a service that simply makes websites, like Facebook and Twitter serve content fast.
Erietta: How’s the Daemon crew? All good I trust Jason: Yeah we are going well. Daemon sent the team to Melbourne for cfobjective Erietta: Was it good? Jason: There were some good sessions, Geoff’s varnish talk was very popular Jason: Varnish is a reverse proxy solution we now use Erietta: oooh! Jason:http://www.daemon.com.au/slides/varnish/index.html#slide1 Erietta: I am so dumb now, seriously, I don’t know what any of this stuff means any more. What has become of me?! Is this slide deck html 5? Jason: Yeah Erietta: Nice. I still need a dummies translation of what that all means though. I know it means “faster”, thats it. I’m too noob Jason: Basically you put a server in front of your applications, which takes the request, sends the request on to the server, grabs the html it returns, and caches it locally in memory (can overflow to disk as well). Next request just pulls from the local cache, you can also break your page up into smaller caches each with their own timeouts and then it’s about all the exceptions and rules and varnish makes it easy its veerrrrry efficient, scales very well. Erietta: OK, so it’s an intermediary server that gets the requests, has a cache of relevant html and serves that up to the next person who is asking for the same thing? Jason: and all runs on the tiniest server, so bang for buck its stellar Erietta: hmmmm Jason: has added benefits like if your application server dies it keeps serving from local cache. Erietta: So the request from the second person/user/visitor is basically just getting html only and not going to the app server at all. Jason: yep Erietta: aaah ok Jason: Not only that if 10 people simultaneously request while its fetching a new request they either a) get queued behind first at proxy or b) get served old copy if available its really good if you have a 30k newsletter drop that kills your server. Erietta: How does it differ to the caching engine you made for FarCry a couple of years ago. That had granular caching, if that’s a term I can use i.e. was able to serve new elements (updated content) while serving other cached content. Jason: well FarCry cache relies on cf threads still. This stands in front dedicated and is waaaaay more efficient. Its written specifically to do this task. Erietta: and technology agnostic obviously Jason: it manages memory specifically for this task whereas java memory management is architected for a different purpose Erietta: that being? Jason: well objects in code Erietta: as opposed to pages? Jason: so in java some objects live longer than others which means the memory is subject to garbage collection a process you can’t directly control. Whereas dedicated caching objects in varnish live until they are told not to live anymore because they were replaced. Java has a machinery in the java virtual machine which is way more complex than straight caching needs to be so varnish memory management is directly allocated and deallocated: https://www.varnish-cache.org/trac/wiki/ArchitectNotes Erietta: oh good you just linked me to a life story there. Give me the crib notes #lazyweb ! 😉 Jason: that last paragraph is the explanation, just highlights that the memory is written specifically for the task, not a framework that is flexible but with trade-offs, e.g java Erietta:
Jason: think Farcry is a framework which makes it easy to build apps but that framework means the trade-off is performance if you built every single page on a website from scratch with a view to optimising that page you’d be 1000x more efficient than using a framework Erietta: got it. So what other performance improvements have been made
to the FarCry framework while I haven’t been watching? Jason: we rewrote caching 😛 testing it as we speak. Uses a new algorithm which is dynamic replacement cache. It also factors in memory used into the caching mechanism Erietta: dude, that page is hard core. WHAT DOES IT MEAN! Jason: hehe ok so previously in FarCry the way we cached was using a number we made up per content type of objects cached e.g. 1000 for html. Now we have 1 single cache which does both objects and html snippets and it dynamically resizes itself depending on what’s going on so it checks the oldgen part of memory in the jvm to see if we are at 70%. Additionally its clever in the way it chooses what objects to evict in that it will be optimised so pages like homepage and news landing page etc aren’t ever evicted before a news article from 2006 so what you see on that dump is the resizes and the memory stats and hits vs evicts. 81452 hits vs 6743 misses is an awesome hit ratio. 8% miss rate which means only 8% of those object requests needed to go to the db (or if a webskin had to be rebuilt) Erietta: Sweet. That’s cool. What about performance of the site tree in FarCry? Has that improved? From memory it was using its own JS library? Jason: haha nope still same tree. We are using twitter bootstrap for our forms now on some of our projects. Additionally Matt’s refactored permissions so anyone can do them not just a dev, like we could hand over the webtop to a producer to configure for the client.
There’s no news yet as to how this portal is being utilised but its a nice idea spawned by the desire to make an expanding team feel more connected.
Atlassian is growing…fast. We expanded into a new floor and I was given the challenge of making it feel more Atlassian. I wanted to make something decorative, but also functional. Keeping the company connected becomes more challenging the bigger we grow, we span multiple buildings so some teams can go days without seeing each other. Staff do chat through Instant Messaging (IM) frequently, but people communicate more effectively when they are face-to-face.
Everyone talked about the revenue/rights quandary but there was no real talk of how they were strategising for the digital age. Except for , a singer songwriter who has leveraged social media to connect to her fan base, build a loyal following and even crowd sourced $11,000 via the Pozible platform to fund her first album.
There was talk at the outset of how well ARIA did “engaging” fans this year on Twitter. So what? The ARIA awards are on television. It’s got a pretty good head start because its being broadcast.
Somehow it just seemed that the panel, with exception of aforementioned indie songstress, was hanging on to the old way of doing business. They reinforced the status quo again and again – acts still need the music business, there’s no such thing really as independent artists. Um, yes there is and the hecklers* in the crowd started listing acts: The Jezebels, John Butler Trio, amongst others.
The topic of discovery and curated listening was raised by the . The consensus was that serendipitous discover wasn’t all that it is cracked up to be and listeners need those cool music types to tell what they need to hear. OK so Genius, and other recommendation engines don’t work and won’t improve? So tag classification systems on Soundcloud or Hypemachine are useless? I know I’m a relatively savvy user but I also have faith that users, given a good service and a good UI, will explore features made available to them if they find them useful.
The panel, I think it was Ben Shepherd from Sound Alliance segmented the music audience into two types: loyalists and casual listeners. It was implied that casual listeners will never pay and will be satisfied with free streaming music services and illegal downloads. I think these guys just hang out with the cool kids. There is a whole mainstream audience out there – sure they might listen to Susan Boyle sometimes – but they are happy to pay for music. Case in point, the entire Apple iTunes platform proves that if you create an ecosystem that makes purchasing seamless for the user they will indeed pay. What royalties artists derive from this is another matter entirely and nothing to do with social media and the music industry.
Repeatedly the panel kept talking about the web as a channel but not about social media as a platform. But it was worse than that. The web channel they spoke of looked entirely like a broadcast option only delivered via their specific platforms or partnerships. Convenient.
An audience member pointed out that the three revenue streams of artists (synchronisation as in licensing from film and advertising, touring and merchandising sales) have changed only marginally and that the album, except for the top 10% of artists, has always been a loss leader. He asked Dan Rosen of ARIA where they fit in the new model of rental versus ownership (audio below). The response was that ARIA will support any legal way of purchasing music where rights/money flow back to the artist.
This led to the question of whether ARIA are exploring a streaming music chart? Sweden has one and apparently artists generate more revenue from streaming music services than they do from iTunes. OK this is interesting stuff but its platform, not social media. I also was left with no impression that ARIA are actively lobbying and negotiating with the likes of Spotify, soon to enter the Australian market. They most probably are, it just sounded so reactive on the night.
Ironically it was Ben Shepherd from Sound Alliance who was skeptical of whether Spotify will provide artists with the royalty cheques they deserve. We had learnt earlier on the night that radio only pays 1% royalties for the music they pay. This is clearly a disgrace, particularly when you consider the size of businesses like Austereo. He projected the Spotify IPO could raise a billion dollars the Australian advertising revenues of Spotify in the millions* but he lamented that they would likely pay only minimal royalties. Why did I preface this as ironic? Because Sound Alliance themselves don’t necessarily pay their music writers for their content.
Sam Buckingham finished the night with a point that was at least on topic. Social media is about making fans and keeping them. And of course so much more.
Full disclaimer: Some of those said hecklers are my friends and are themselves either music fans or music industry boffins.
Thanks to Jo Sabin for subbing this post.
* Thanks to Ben Shepherd who clarified what he said in regards to the potential Spotify IPO, correcting me in his comment below.
It’s worth reading this article about the treadmill desk. Don’t dismiss it as a novelty. Its an example of how an idea was born, implemented, how its usage changed over time and how the concept spawned a new idea — the walking meeting.
Then Levine had another idea. If people could work while they were walking, why couldn’t they have meetings as well? And so the concept of the walking meeting was born. His plan was that a designated walking track could be marked out in an office using carpet tape. Two people walking together could both wear coloured badges so that everyone else knew they were in a private meeting and shouldn’t be disturbed.
… remarkably a Minnesota financial recruitment company called Salo heard about his ideas and decided to put them into practice … “we found that walking meetings not only tended to be more productive than sedentary ones, they’re also, on average, 10 minutes shorter.“