Voting and popularity
July 6, 2007
The management committee at work is constantly trying to find the fairest way to distribute bonuses. They obviously want to reward top performers, but they also want to make sure essential people don't get overlooked for their contributions. To this end, they have created a new incentive structure based on, bizarrely, voting. Each person at the company gets 100 votes that one can distribute as you choose (no fractions, no negative votes, no voting for yourself) to one's co-workers. After the votes are counted the bonus pool is divided up according to what proportion of the votes each participant receives. Now, this is already an interesting game theory problem, but there are a few additional catches that make it even more interesting.
First, there's a huge incentive to get a large bonus. Any bonus over a certain value is deferred for two years. However, this deferred money gets you a "virtual" share of the company, so you share in the profits and growth of the company for the next two years. Given our company's growth thus far, this could be a significant amount of money - much larger than an undeferred bonus. Second, anyone with too small of a potential bonus gets nothing at all.
Recently I had to cast my votes, and I thought about how best to vote. Obviously there are several strategies groups of people could use to game the system. However, the managers admitted that they would bust the vote if it was obvious that someone was manipulating the system. Therefore, it is important to make your votes seem plausible. Assuming you are engaged with the spirit of the program and want to reward those people who you believe to be particularly strong performers, it is difficult to see the best strategy. I eventually decided to vote for only a few individuals with a large number of votes hopefully propelling them into the ownership bracket. I'll try and get the other people next time. Although, with the way our upper management likes to experiment, there may not be a next time.