Reputation-based Compensation

In a system without stated salaries, there needs to be a system to determine how members get compensated and how profits get distributed. Although members have an equal ownership stake, this does not equate to an equal share of the profits. For any business to be successful, its members should be rewarded and compensated in proportion to their contributions and accomplishments. Some members may make a lot of money, while others may make little or none. In fact, one might predict, or even wager, that the compensation of members would follow a power law distribution. That may be case, but if the compensation structure is designed properly, I think it will be fair. Though the compensation structure may depend largely on the type of business, one approach is to base compensation on reputation.

The reputation system of the Blog Cooperative is a measurement of the collective opinions of the organization of the knowledge, expertise, and accomplishments of each member. Each member's reputation is formed and compiled from the votes and ratings of his or her peers. As such, it represents as reasonable system on which to base the distribution of profits. A challenge in this area results from the fact that the reputation system has both quantitative and qualitative elements, while money is very much a quantitative thing. There would need to be a be a way to represent each member's reputation as a percentage, which could then be used to calculate compensation.

There are usually people in any business whose contributions are not readily apparent - that is, they are not immediately delivering more revenue than they are costing the company. Some of these people are truly excess and in many cases the company would be better off either redeploying them or firing them, however many of these people are involved in longer term aspects of the business. Some in setting up the infrastructure and underpinnings for the business, others in research into the future of the company, and others by helping the company avoid risks in the future (this last category can be the hardest at times to see the return - in the best case their work is never fully tested, they manage to contain and minimize the risk. Good illustrations of this might be cases where the risks in a business were poorly managed, resulting in cases such as Barings Bank which declared bancruptcy).

Excerpted from Searching for the Moon

Ultimately you should get out no more or less than you put in.

Reputation should therefore be a function of how much you give to the community and how much you have received from it.

For a global organisation I think the equation should look something like this:

time (put into maintaining the commons) / ecological footprint (resources taken from the commons)

I have to disagree - you SHOULD get more out that you put in.

In fact, an enterprise should be more than a "zero sum" game - it should be creating value over time - in part this is achieved by building on renewable but expiring resources such as individual's time and converting them into some other type of resource (money, intellectual property (even if open source still holds value), assets, "intagibles" such as awareness, brand etc)

In rewarding people you have to consider as well that the "value" of resources, including time, will differ and in many cases is less today than it was in the past - i.e. what $10 bought 20 years ago is not what it buys today, likewise the value of labor has changed as well.

Shannon, I agree that an enterprise, by creating value over time, should be more than a "zero sum" game, but this is by no-means guaranteed.

More importantly what, exactly, is value?

Personally, apart from 'assests' (e.g. land, property, machinery), I think all the things you happened to mention (i.e money, intellectual property, brand etc.) are, in reality, virtually totally value-less.

I would argue that increased community well-being (as defined by members of the community) can be the only true measure of real value.

However, most governments and businesses today take what It an extremely short-sighted, closed-minded and fundamentally incorrect view: that economic growth = improved well-being.

This is simply not true.

In fact, as economists such as Herman Daly (formerly of the World Bank) and Richard Douthwaite have shown, many Western Economies (the US and UK included) have actually been running in reverse for that last few decades (i.e. the increased economic growth they have experience over these years - as measured by GDP - has actually decreased well-being).

Two very good books on this are Beyond Growth (Herman Daly) and The Growth Illusion (Richard Douthwaite).

A good NGO working towards solutions to the economic growth short-sightedness is Redefining Progress

The reason why $10 buys a different amount now than it did 20 years ago, is because the current interest-bearing debt-based money system is inherently unstable. Even the historically most stable currency in the world (DM by the way) has lost about 50% of its value since WWII.

Similarly, in line with what Daly and Douthwaite suggest, the value of labour in the US has actually gone down so that an average US worker now earns less than 30 years ago! (see shared capitalism institute)

Like blogs, wiki and indymedia have reinvented and democratised media creation and distribution, new accounting systems are urgently needed to reinvent and democratise money creation.

The best reading about this can be found via reinventingmoney.com