Business 101: Incentives Work at Facebook. Talk, Not So Much
December 18, 2019
Many years ago, I worked on a project for a very large, quite paranoid company. I am not sure how I landed a project to interview about two dozen unit CEOs and interview each about technology. As I recall, my task was to group the CEOs into three categories:
Bluebirds—These were the CEOs who understood technology germane to their business unit, evidenced no particular fear testing and integrating such technology, and who were following the company’s marching orders.
Canaries—These were executives who evidenced fear of technology. These individuals were not likely to move forward in order to reduce costs and staff using technology whilst increasing revenue and profits for the company.
Sparrows—These were hapless commodity CEOs who did not know much about technology, were happy snacking near careless MBAs lunching in the park, and who generally reacted to what most other CEOs were doing with regards to technology.
I had a bunch of fancy criteria, scoring sheets, prepared and consistent questions, plus other odds and ends required for such a subjective job.
My findings, I believe, revealed that the technology question was stupid. The CEOs were accountants and lawyers. Knowledge of technology was abysmal. The CEOs as a group responded to one thing—bonuses and raises. Chatter about technology was essentially irrelevant.
Whatever DNA this group of big time “leaders” had was warped in the intense radiation of benchmarks needed to take home a fat pay packet and get a bonus big enough to choke an investment banker.
I thought of this project when I read “Facebook Is Still Prioritizing Scale over Safety.” There’s quite a bit of yada yada in the write up, but this segment explains what drives Facebook:
Facebook calls its product managers’ ability to hit their metric “impact,” and impact can count for high percentages of product managers’ evaluations, though it varies by position and level. At the end of the evaluation process, each individual is assigned a rating by a manager — ranging from “doesn’t meet expectations” to “redefines expectations” — which is algorithmically tied to their compensation. Managers at Facebook aren’t given discretionary raise pools (raises are handed out evenly based on ratings) and there is no appeals process for evaluations, making a good rating paramount if you work at Facebook.
In order to be a bluebird, Facebook managers follow the incentive breadcrumbs. Why? Money. Public statements and other interesting Facebook behavior are irrelevant.
Why? The explanation may be found in the precepts of high school science club management methods. These are not taught in MBA school; these are learned in high school science club meetings and late night dorm sessions among programmers and assorted engineering wizards.
To fix Facebook, change the incentives.
Stephen E Arnold, December 18, 2019
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