Old problem: how to evaluate effort by programmers?

Microsoft’s Performance Evaluation System Roils Coders
This is a nice recent example of an age-old hidden action problem for managers: how to compensate brain workers, whose effort is intrinsically hard to monitor? The story here concerns Microsoft’s performance incentives for programmers. According to a recent report (by an organization that is trying to organize a union at Microsoft, so take the tone with a grain of salt),

The way it works is that under this system, managers can only give out so many high marks. If everyone on a manager’s team did 4.0 work, only two of them might be able to get them.

Benchmarking is a standard, almost necessary way to assess performance in an organization with a large number of brain workers, but no benchmark system is perfect, and it’s not obvious which will be the best system for a given environment.

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