It was fascinating for us to read about the Top 50 problems with Performance Appraisals on ERE. It was even more amusing to identify how FairSetup addresses most of these problems.
The article written by Dr. John Sullivan starts out with a promising quote:
90% of performance appraisal processes are inadequate. –Salary.com survey
OK, something we already know. He goes on to say:
We released a guide to how to perform collaborative performance evaluations using FairSetup. Read more about it here.
We posted a new page covering the benefit of self-throttling.
FairSetup offers numerous advantages over existing models:
- Salary/Hourly pay for time, not impact.
- A high salary doesn’t always translate into productivity.
- Paying hourly creates an incentive to spend more time.
- FairSetup: people accept a lower salary and participate in the upside. This “skin in the game” results in employees caring deeply about the outcome.
- Stock Options/Equity are a bad short-term incentive.
- Hard to evaluate actual worth.
- Require significant effort to deploy.
- Equity is hard to take away – there is no divesting.
- Dilution is not a good solution for large dynamic teams.
- Stock options generally expire after an individual leaves.
- Stock options can have reverse vesting, but it’s rare.
- Tax issues…
- FairSetup: impact-based compensation can be paid out as part of salary and an individual automatically divests over time after departure.
- Bonuses – are not an effective way to manage people unless very carefully used.
- Small bonuses – people are upset because they don’t make enough.
- Large bonuses – people are upset because then the boss must make an even larger undisclosed amount.
- FairSetup: the compensation is transparently connected to profits.
Our first video explaining why FairSetup is a good idea from a revenues and costs standpoint. As we are just experimenting with video, any feedback would be appreciated.