It's really hard to come up with good performance metrics. Ideally, you want execs to make good long term decisions for developing sustainable growth and competitive advantage. To do this, they need some room to maneuver and freedom to operate to make these decisions. Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed.
If you tie comp to share price or EPS, they'll try to juice it with buybacks.
If you tie it to revenue, they'll try to grow too quickly and become unsustainable. They'll start doing anti-consumer things like denying refunds.
If you tie it to profits, they'll cut the business down to barebones and whittle away at resiliency and R&D in order to squeeze a bit more margin out each quarter.
Like Warren Buffett's co-ceo Charlie Munger once quipped, "show me the incentives and I'll show you the outcome".
> Imagine trying to tie dev comp to performance metrics like number of commits or bugs squashed.
I worked at a company that wanted to do this, and may or may not have behind the scenes.
When I explained that these could easily be gamed, their response was, "Why would someone do that?"
This was at one of the largest banks in the entire world while they were also trying to claim that they were a technology company that happens to do banking. Yeah, okay.
If you tie comp to share price or EPS, they'll try to juice it with buybacks.
If you tie it to revenue, they'll try to grow too quickly and become unsustainable. They'll start doing anti-consumer things like denying refunds.
If you tie it to profits, they'll cut the business down to barebones and whittle away at resiliency and R&D in order to squeeze a bit more margin out each quarter.
Like Warren Buffett's co-ceo Charlie Munger once quipped, "show me the incentives and I'll show you the outcome".