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Summary:

Seattle-based games company Valve claims to make more per employee than even Google and does it without employing a single boss. How does the company manage to do so well with no hierarchy? The employee handbook lays it all out. Should others follow suit?

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When we spoke to GitHub’s Chris Wanstrath recently about how the company manages its partially remote team, he mentioned something about their setup that had nothing to do with telecommuters. The company has no managers,  though Wanstrath does get the title of CEO. Are they the only company nuts enough to go for this free-form collaboration style?

Apparently not, according to a recent excerpt from Seattle-based games company Valve’s handbook for new employees, which is stirring up loads of fascinating conversation on Boing Boing. Founded in 1996, the company lists its hundred or so team members on its site in simple alphabetical order and claims it’s more profitable per employee than Google or Microsoft. It also has a corporate culture some would view as paradisaical (and some probably terrifying), according to the handbook:

Why do I need to pick my own projects? We’ve heard that other companies have people allocate a percentage of their time to self-directed projects. At Valve, that percentage is 100. Since Valve is flat, people don’t join projects because they’re told to. Instead, you’ll decide what to work on after asking yourself the right questions… Employees vote on projects with their feet (or desk wheels). Strong projects are ones in which people can see demonstrated value; they staff up easily. This means there are any number of internal recruiting efforts constantly under way.

If you’re working here, that means you’re good at your job. People are going to want you to work with them on their projects, and they’ll try hard to get you to do so. But the decision is going to be up to you…

How does Valve decide what to work on? The same way we make other decisions: by waiting for someone to decide that it’s the right thing to do, and then letting them recruit other people to work on it with them. We believe in each other to make these decisions, and this faith has proven to be well-founded over and over again….

While people occasionally choose to push themselves to work some extra hours at times when something big is going out the door, for the most part working overtime for extended periods indicates a fundamental failure in planning or communication. If this happens at Valve, it’s a sign that something needs to be reevaluated and corrected. If you’re looking around wondering why people aren’t in “crunch mode,” the answer’s pretty simple. The thing we work hardest at is hiring good people, so we want them to stick around and have a good balance between work and family and the rest of the important stuff in life.

This approach may sound loosey goosey (and there are certainly type-A managerial folks out there hyperventilating at the mere thought of such a non-system) but as a thoughtful blog post by John Geraci, general manager at faberNovel New York, points out there is method to this madness, and it all hangs on letting folks choose their projects and then, critically, determining “the value and compensation of each employee by peer review.”

Do that and this no-boss system will actually “leave no room for unproductive people to hide. Nobody can pass the buck on to the next person, as that person is going to be determining their salary at the next review,” says Geraci. Plus, “you reward people for finding the position in the company where they can make the biggest difference.”

Of course, not every company can take advantage of this sort of productivity-boosting quasi-anarchy, Geraci points out. “Valve is … entirely self-owned with no outside investment, and it owns all of its own IP,” he writes. If you’re firm isn’t, this probably won’t fly. Nor will this structure work as a top-down restructuring, he feels, noting, “Valve didn’t design and impose this structure on itself from the top – it evolved organically toward it from the beginning.”

To be a startup that’s in a position to grow its own structure without outside investment is pretty rare (though GitHub, notably, meets the criteria), but given these restrictions, do you think a complete lack of hierarchy could work for other companies?

Image courtesy of Flickr user Gigi Ibrahim.

  1. If you hire all A players, or people who are in general better than you are, there is to my knowledge no other way to run a group or a company. In my experience, the best talent has to be convinced to join a cause – as opposed to ask them to do a task. in that sense, large companies are not that dissimilar from startups, both live or die by the caliber of their people

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  2. Jeff Jason II Friday, April 27, 2012

    This is an excellent way to run a gaming company. There is a very strong correlation between gamers and developers and they get to crowdsource their product decisions with this process.

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