How to figure out individual bonuses in Agile teams.

It’s not about the money.  If you haven’t seen Dan Pink on the surprising truth about what motivates us then you must watch this now.  In fact, you know what, just watch it again anyway.

Also, we’re much more motivated by short term rewards vs long term rewards, something called ‘hyperbolic discount’. We discount the future reward, and over value the short term one.  It’s why we don’t got to the gym. 

It’s also a key reason that Agile as a development approach can be very motivating: a weekly cycle, the thrill of showing off your work to your peers every iteration at your demo or showcase is a reward you can look forward to getting soon and regularly.  Teams find this success addictive and motivating. I think this is also why a regular team lunch, or knocking off early on a Friday for a few drinks, is a good motivator and reward for a team.

So let’s imagine you work for BigCo and have to figure out the bonus structure for your Agile team(s), what should you consider ?

First make sure you’re paying everyone a fair salary for their role and make sure that there is good parity within the team.  If you haven’t got this much right, then your environment will turn toxic with jealousy way before bonuses are even due.  In the past it may have been considered quite rude, or not the done thing, to share your salary with your co-workers.  Today, especially among Gen Y, it is almost a norm to discuss pay, bonuses, etc openly… or on Facebook at any rate.

My second instinct is to say it’s all for one, and one for all – Agile is about teams.  If there has to be a reward or bonus, it should be applied evenly to the whole team – that’s the only thing that’s fair in a cross functional, team focused work method.

Finally, Agile teams are good at recognising individual performance; the weekly retrospective and the transparent team mode of working builds a culture where often teams will call out stellar performance by individuals. As a team lead or manager, watch for these clues and use your discretion to reward those individuals with pay rises or other incentives. If you are careful and have your finger on the pulse, this is a fair way to reward individuals who have gone above and beyond in a way that that other team members won’t resent. But, remember it’s probably not about the money – often the best reward for someone who has gone above and beyond is the chance to take more responsibility or autonomy, the chance to improve themselves and gain mastery or the chance to influence the direction of their team and work gaining a stronger sense of purpose.

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7 Responses to How to figure out individual bonuses in Agile teams.

  1. Absolutely love it! I loved Dan’s book and these RSA animations are absolutely stunning, every time!

  2. Jordan says:

    If the team is rewarded equally, then what is the motivation for any individual to excel?

    There seems to be none…. It is a great way to have an average team but not a way to attract the heavy hitters.

    Once again what is the reason to do anything above average in the scenario you describe?

    Jordan

  3. James says:

    I address this in the last paragraph. I’m not suggesting that there should be zero individual bonuses – just not your traditional big company KPI driven ones. My experience is that so called ‘heavy hitters’ are either very much team players, wanting the stimulation of other talented colleges and wanting to coach junior team members along the way anyway … or they are prima donnas not worth the chaos they create along with their talent. Perhaps more crucially, my observation over the last 10 years of running high performance teams is that the motivations for those ‘heavy hitters’ are not monetary but more focused around autonomy, mastery and purpose. But that’s a big topic in itself for another post.

    • Jordan says:

      Well you do address it a little but who is to make those determinations? A real manager? A scrum master? The team itself? That in itself is a big question. Yes the Heavy Hitters want autonomy but they certainly don’t get that in Scrum… which agile process gives them the autonomy and creative space to get real work done?
      Jordan

      • James says:

        Individuals have to report to someone, typically that’s a team lead, sometimes it’s a manger of a few teams. In either case that leader has to have their finger on the pulse to make the right calls about bonuses or incentives. If you think Agile doesn’t offer room for autonomy and creativity then you’re doing it wrong – BUT, like I said before, not everyone can handle the collaborative environment, especially some developers with very large brains.

        • Jordan says:

          Right, everyone is doing it wrong. Sigh. Not that hubris ever gets involved.

          And these managers, who do nothing, since their agile transformation are supposed to magically discover this how?

          So now we have Scrum overhead and management and traditional overhead. I go into this on my blog post “Scrum as the new command and control”.

          Also I think it is funny, and self serving, how managers always dream and claim that “developers don’t really care about money…” Of course they do! An above average developer wants an above average company, an above average project, an above average office environment AND an above average salary!

          Most managers think they deserve to be well compensated and the same with the above average developers.

          Jordan

  4. GAY says:

    Excellent case. I’m liknoog forward to your post as to why Product Owner is also a full-time job. :)

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