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Joel wrote excellent articles on developer compensation system used at Fogcreek. As a team lead and business owner, I would like to design a system that would work best for my team and my business, a system that is perceived as just and fair and transparent, a system that is easy to understand and implement but difficult to game.

And here's the catch: I have no experience in managing a team before, and I don't know what works and what doesn't.

How to motivate a team of software developers to bring out their full potential? Or more specifically, what do you think about the "ladder" Joel talks about in the aforementioned articles?

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At the moment this is a "list of X" question. I know it's not your intention, but that's how it comes over. If you can reword it (difficult I know) it has the potential to be a great question. –  ChrisF Feb 17 '11 at 11:37
    
@ChrisF, I've reworded the question, not sure whether it really improves. –  Graviton Feb 17 '11 at 11:46
    
It is better as it's now not asking for a list - even that's what you really want and are going to get - but perception is everything ;) –  ChrisF Feb 17 '11 at 11:59
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2 Answers

up vote 7 down vote accepted

Maybe this short presentation will help you. I found is seriously interesting. It's a 10 minute summary of dan pink's book: "Drive: the surprising truth about what motivates us". RSA animate: Drive

Also, a while back, Jeff Atwood wrote a blogpost on the subject, which I also recommend reading: The vast and endless sea

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+1, although it would have been nicer to mention the basic problem here: monetary rewards do 'not' improve performance, but may even stifle it. –  Frank Feb 17 '11 at 13:27
    
I didn't want to spoil the surprise ;-) –  Syg Feb 17 '11 at 13:37
    
+1 .. for mentioning Drive. –  explorest Apr 26 '11 at 13:35
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I don't have specific advice unfortunately, but two other things you should think about when designing your system:

1) Transparency. I know you want to avoid "gaming" the system, but the best way to combat that feeling of unfariness is for everyone to know exactly how the system works. If it is truly fair and a good system, then it becomes self-policing.

2) Consider some form of team rewards, and if possible make those more attractive than individual compensation. A flat (rather than percent of salary) profit sharing plan might be worth looking at here.

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