Valve don’t even fire people like a normal company – Varoufakis on hiring and firing

The vision of Valve as a utopian game developer’s retreat was dented the other week, when details of internal lay-offs and firings were made public. In an interview with the EconTalk podcast, transcribed by Gamasutra, Valve’s in-house economist Yanis Varoufakis spoke about the company’s hiring and firing process. It is, as you might expect, all a bit weird.
“It does happen,” Varoufakis said about staff firing. “I’ve seen it happen. And it’s never pretty. It involves various communications at first when somebody’s underperforming, or somebody doesn’t seem to fit in with the rest of the company.
“In many occasions people simply don’t fit in not because they’re not productive or good people, but because they just can’t function very well in a boss-less environment. And then there are series of discussions between co-workers and the person whose firing is being canvased or discussed, and at some point if it seems there is no way that a consensus can emerge that this person can stay, some attractive offer is made to the particular person, and usually there’s an amicable parting of ways.”
The hiring process is similarly crowdsourced. “Let’s say you and I have a chat in the corridor, or in some conference room, or wherever. The result of this chat is that we converge to the view that we need an additional software engineer, or animator, or artist, or hardware person. Or several of them. What we can do is, we can send an email to the rest of our colleagues at Valve and invite them to join us in forming a search committee that actually looks for these people without seeking anyone’s permission in the hierarchy, simply because there is no hierarchy.” Anyone within the company is then invited to take part in the interview process, and consensus is sought before a hire is made.
Varoufakis also details the pay-review process, which he says is largely bonus based. He notes that there’s no upper limit to bonuses, so thanks to the nature of mutual review, “bonuses can end up being 5, 6, 10 times the level of the basic wage.”
“I wasn’t with the company long enough to notice, but there must have been situations where somebody didn’t fit in and eventually was edged out of the company,” Varoufakis admits. “But the vast majority of such moves simply contribute to the overall efficiency, and to the private joy of working there.”