We gave our employees money to improve their work experience and it paid off tremendously. This blog entry describes the idea and rules behind it.
We at the Softwareschneiderei are a small team of software developers working in a founder-owned company. We develop software since 15 years now and have experimented with a lot of management ideas and concepts. We can conclude that a lot of things don’t work for us while others are highly effective. There is no guarantee that anything we do works anywhere else, so don’t expect wonders just because it works wonders for us. But we are willing to share nearly every detail of our management style, and here is another bit of it: the “creativity budget”.
I’ve already blogged about this idea five years ago, but it’s still a good (and fairly uncommon) idea, so why not do it again? The name “creativity budget” (“Kreativbudget” in german) is actually really bad, but it stuck and we cannot realistically change it anymore. A more fitting name would be “work experience improvement budget” or something similar. The core of the idea is simple: Every employee can spend a certain amount of money every year to improve his/her own work experience. The investment doesn’t need to be profitable, the improvement doesn’t need to be effective, whatever was bought, the employee never needs to justify it. It’s just company money that the employee can rule over to improve the company in his/her fashion.
The actual ruleset is fairly simple: In recent years, the amount was defined to be 1000 EUR per year for each employee, regardless of actual job (development or administration, for example). Our students could invest half the amount (500 EUR). You don’t need to buy coffee or food, your work computer or laptop, all the basics are provided outside of the budget. You shouldn’t spend the budget on silly things just to get rid of it, but if you have an idea – even a crazy one – and think, “hey, that would be cool to have”, you just need to create a “purchase order” issue in our administration issue tracker and flag it as “on creativity budget”. We will buy it right away, without further discussion.
Why the creativity budget?
The most competent person to improve the work experience of an employee is he himself. Every hurdle we impose between him and his improvement ideas, like bureaucratic overhead or reviews, will only damage the improvement effect, but not improve the financial situation of the company. Our financial situation is directly linked to the productivity and happiness of all employees, so we will actually damage it by trying to go cheap. Not spending money won’t buy us happiness. And remember, we are a small company. The maximum amount of all creativity budgets combined is still only a small percentage of our total revenue (under 2%). If we can improve our total revenue just a little bit, it is totally worth it. But why speculate? We have hard numbers from the last dozen years that show that it works for us.
What did the budget gain us?
The most important gain is making room for errors. If you have to plea and convince higher-ups of an improvement, it better has convincing figures and a realistic chance of success. If not, you are the moron that suggested it. Using our budget, we can try crazy things and never need to explain ourselves. If it doesn’t work – who cares? If it works – well, you were the first, now we need to implement it for everyone.
We try things earlier. New technologies like solid state disks were frowned upon in the beginning – how long do they last, etc. We tried them early and got convinced quicker than most (but that’s another blog post).
We don’t calculate improvements first. One of the most common refusals for a new idea is the worry “what if everybody wants one?”. That’s the fear of upscaling paired with the fear of failure. What if the idea works and is a huge improvement and nobody wants it? We rather err on the side of monetary losses instead of productivity loss.
But what did it gain us precisely?
Well, to answer that, I have to present you the three categories of improvements we identified (without limiting the budget to them!):
- Hardware: A certain piece of technology believed to make work easier or more enjoyable. Examples are computer mouses (everyone has his favorite mouse), keyboards, monitor upgrades (if the default double 24″ aren’t enough), SSDs (before we got rid of spindle disks) or even your favorite computer brand. It gained us fine-tuned workplaces that fit perfectly with the developers using them – no “one size fits all”.
- Software: A computer program that you’d like to use even if that requires license costs. Examples are IDEs, editors, version control clients or even screenshot utilities. Don’t get me wrong – we had all these things before, but mostly open source products. If you want a commercial twin of a software, you don’t have to argue. It made our software landscape more diverse and introduced some products for the whole company – SmartGit is the example of choice.
- Wetware: An activity you’d like to undertake – in the professional context of your job. You want to visit that certain conference? Have paid training on a specific topic? This category introduced us to some conferences that are worth revisiting and some we’ve already forgotten again. We got trainings and went to workshops, without any upfront filtering or “strategic planning”.
We’ve gained a lot of agility in pursuing technical excellence, each of us on his/her own course. We gained the insight that “work experience” is something we can directly influence and steer. It makes already self-confident employees even more confident. And it relieves the boss from important, but highly individual micro-management (but that’s just my own personal gain from it all).
In giving every employee the power to improve his/her direct work experience, we improved our overall experience even more. In all these years, we never used up the budgets completely, but the effect is very noticeable. We acted on impulse, tried it out, reflected and adopted it if worthwhile. And it was very worthwhile indeed. Currently, we discuss the idea to double or even triple the budget per year and see where it leads us.