🧪 Experiment in the HAUS: A new Contributor Compensation Program

Documenting our experiment in helping DAOs better recruit & retain contributors

Dec 07, 2021

Last week, DAOhaus was featured on The Defiant: A Big Test for DAOs: Honing New Compensation and Contribution Practices, sharing a template for how DAOs can create a flexible compensation plan for contributors. Today, we’d like to go deeper into how we’re implementing that template for our own compensation plan - the principles, how it works, and how you can follow our progress.

With the rise of DAOs, we’ve seen more ‘workers’ transition to becoming DAO contributors, embracing more flexibility and control in how they spend their time. This is a win for both contributors and DAOs, vastly expanding the talent pool to anyone willing to show up and contribute.

📖 Background

At DAOhaus, this is no different. The DAOhaus platform is managed by Warcamp DAO, to which UberHaus has delegated responsibility for building, maintaining, and stewarding the platform. Warcamp current is a team of 20 (and growing) core contributors with different skill sets, time zones, and bandwidth availability. Each contributor is a member of one or more Circles, or functional working groups, underneath the Warcamp umbrella.

Contributors are currently compensated retroactively. Contributors informally request payment at the end of each month from their respective Circles according to the self-assessed value they created. Once the Circle verifies contributor requests, Circle leads then make a proposal requesting Circle funds for that month from the Warcamp DAO. Individual contributors then make formal proposals against their Circle to get paid.

As an MVP, this has been effective in bootstrapping compensation and getting a small group of contributors started. However, as we look to expand our team and accelerate our work towards our long term vision, we find there is room for improvement in the following areas:

Compensation clarity for contributor recruitment: While retroactive compensation is flexible, it is hard to attract contributors who want more clarity and certainty on their compensation before committing their time and effort.
Contributor retention & focus: Context-switching is common in DAOs for good reason, but it comes with attentional drawbacks. How can we better incentivise contributors who want more focus? Can we give contributors tools to manage their own workflows?
Contributor evaluation & growth: As more DAO members join, how can we help contributors evaluate their personal growth & development? How can the DAO effectively align compensation and value created within a non-hierarchical context?
Contributor ownership: As contributors add value, how can we give them greater ownership and governance power? This is especially important for new contributors, as we want to avoid entrenching power among only early contributors.

To solve these issues, we wanted to create a plan with the following principles in mind (these are the same principles the OpEd advocated for):

Contributors should have flexibility in how they engage with the DAO
Contributors should have flexibility in how they are compensated by the DAO
Contributor engagement and compensation models should be interoperable with that of other DAOs
Contributor value should be assessed in a bottom-up fashion

✨ Our new Compensation Plan

After many rounds of research, discussion and alignment, our new compensation plan consists of three pillars: base compensation, bonus compensation, and governance power.

🛠 Base Compensation

Our Base Compensation is very similar to what the Defiant OpEd outlined. In the spirit of Principles 1 and 2, , we’ve created two tracks. Contributors can now choose to be compensated for their contributions as part of either the Retroactive or the Commitment tracks.

Retroactive Track

The Retroactive Track is tailored to contributors wanting more flexibility or testing the waters before committing more substantially to Warcamp. This works the same as our previous compensation approach; contributors can start contributing whenever they want, however they want, and wherever they want. At the end of each month, they request compensation retroactively for their contributions, based on how much value they deem they’ve provided within their Circle.

Commitment Track

The Commitment Track is designed for contributors wanting to make more substantial commitments to DAOhaus and have more certainty about their compensation.

We’ve just over a month into this new approach, but in the spirit of building in public, we’re sharing how we are running this experiment beginning with two-month cycles; Starting in November, Warcamp contributors could select the Commitment Track if they wished.

Commitment Track Process

To uphold the ethos of decentralization and transparency, the processes for establishing base compensation are designed in a bottom-up and open manner. With that in mind, we start with a self-assessment phase where contributors indicate their Commitment and Value Levels.

Commitment Levels are expressed in percentages, referring to how much of their total time – or effort, or prioritization, or focus; contributors are free to use the measure that’s most relevant for them – a contributor desires to commit to DAOhaus. For example, someone using time as their measurement and selecting a level of 100% would be committing to spend roughly 35 hours a week, whereas someone selecting 15% spends 5-10hrs weekly with DAOhaus.

You’ll notice that these time estimates don’t line up with traditional “full time” hours. This is intentional. In the DAO space, there is a lot of value in forging connections across projects, so we encourage all Warcamp contributors to spend roughly 10% of their committed time contributing to web3 projects or DAOs. This is also yet another reason why we want to give contributors lots of options for how they engage with DAOhaus.

Value Levels are graded from 1 to 5, referring to the contributor’s expected value created during the compensation cycle. Measuring expected value is challenging and subjective, so once again contributors are free to use the measure that’s most relevant for them: DAOhaus experience, domain-specific knowledge, skill-specific talent, etc. For example, a contributor may justifiably grade themselves as an L5 contributor based on their high quality experience in Web3 or DAOs, recognition as a leader in their space, deep knowledge about DAOhaus, or any combination of those three. Conversely, L1 contributors tend to be new to Web3, with some experience in their area of interest and are just beginning to learn about DAOhaus.

While we begin with self-assessment, the DAO collectively has final say over which value levels each contributor is assigned. We’re still actively working on how best to do this in a way that balances DAO budget constraints and needs with our desire to drive compensation in a bottom-up manner (Principle 4)

How to determine Base Compensation

Based on each contributor’s Value and Commitment Levels, we pro-rate the compensation for each contributor from a fair value of a Level 5 contributor committing 100% (i.e. $12,000). From this topline dollar value, each contributor then selects the percentage they wish to receive in DAOhaus’ native $HAUS token vs. the DAI stablecoin. Thus far, most contributors have selected to receive roughly 25% of their compensation in $HAUS.

For instance, a Level 5 Contributor committing 100% of his or her time receives $12,000 a month, whereas a Level 3 Contributor committing 50% earns $3,500 a month. To incentivise longer-term alignment with DAOhaus, contributors can also choose to receive a portion of their compensation in $HAUS token instead of the DAI stablecoin.

Once all selections have been made and informally approved by the DAO, a Contributor Compensation Ratification Proposal is submitted and Warcamp DAO members vote to pass the proposal. You can view our first cycle’s Value and Commitment Levels for each contributor on the Commitment track, together with their monthly DAI and $HAUS payment, in this forum post. And here is the on-chain proposal ratifying these elections.

Through bottom-up assessments, ratification proposals and open discussion, this process helps create openness and transparency in determining compensation, unlike traditional human resources departments, which are opaque and more prone to bias.

Furthermore, in the spirit of Principle 3, using Commitment percentages helps contributors segment their bandwidth and signal availability to contribute to other DAOs. Our hope is that this helps contributors better manage their bandwidth and reduce burnout, as well as help DAOs better estimate and communicate the commitment they want from contributors. As this approach gets more widely adopted, this should create a more sustainable way for greater cross-pollination of contributors among DAOs.

💰 Bonus Compensation

Earlier this year, Warcamp began using Coordinape to distribute $HAUS tokens to contributors on a monthly basis. In our new Bonus Compensation program, we continue using Coordinape but have increased the Bonus allocation to 600 total $HAUS across all contributors, regardless of whether they are on the Commitment or Retroactive tracks.

In addition to putting $HAUS in contributors’ hands (see the next section for more), determining bonuses via intersubjective evaluation (i.e. Coordinape), is a bottom-up and decentralized approach to a couple other important areas of contributor “management”:

Holding each contributor accountable to their Value and Commitment Levels as the Compensation Cycles progress
Creating a framework to help contributors assess themselves and peers in terms of personal growth and development

For instance, if an L3 contributor on the Commitment Track has received more giveHAUS than their L3 peers, this could be a signal that they’ve been over-delivering and should be leveled up to L4. Conversely, If someone on a Commitment Track received fewer giveHAUS than their peers, this could be a signal for us to help them better hit their Value Level or review the right Compensation track for them.

As we go through more Compensation Cycles, we are looking to experiment with different amounts of giveHAUS per person, perhaps in proportion to their commitment % (for Commitment track) or the previous month’s received giveHAUS (for Retroactive track).

Our goal is to create a system that accurately and fairly evaluates the contributions and capabilities of Warcamp contributors in a non-hierarchical setting, informing contributors’ Bonus Compensation in the short term as well the evolution of their Base Compensation over the long term.

🗳 Governance Power

We believe that distributing governance power among all contributors is crucial to everything a DAO does. When contributors have actual power to determine the direction of DAOhaus, they approach their contributions as an owner or entrepreneur would, because that’s exactly what they are!

To distribute governance power over Warcamp to those that best know how to exercise it, we have a voluntary program for contributors to stake $HAUS received each month as Bonus Compensation for additional shares in the Warcamp DAO. The additional shares a contributor can receive is determined by intersubjective evaluation from their peers (as part of the Coordinape process).

Since their newly-minted governance power is a result of peer evaluation, we stay true to ensuring that our processes are bottom-up and transparent. Furthermore, as staking is voluntary, contributors have flexibility on whether they want to participate and how much they want to stake.

We’ve been thrilled that most Warcamp contributors have been staking almost 100% of their $HAUS received for additional Warcamp shares. This is a strong signal that Warcamp contributors are aligned with the long term direction and value of DAOhaus.

🔮 Moving Forward

As mentioned, we are beginning with 2 month Compensation Cycles so we can review and adapt as we go, and we plan to use Coordinape results to continuously evaluate performance and calibrate compensation. We will likely be experimenting with longer commitment periods and/or Cycle lengths as well as $HAUS token lock-ups and multipliers to further deepen long-term alignment between contributors and DAOhaus.

To us, creating effective and flexible compensation models is only step one towards creating a better contributor experience. As we look towards our next steps, we’d like to improve the qualitative and human aspects of being a Contributor, such as providing peer-support and feedback (through a buddy system) and ameliorating contributor burnout.

👇 Conclusion

DAOhaus is creating a new compensation plan to address the following problems commonly faced by DAOs.

Increase compensation clarity for contributor recruitment 💰
Increase contributor retention & focus 🎯
Create a foundation for contributor evaluation & growth 📈
Give contributors greater ownership & governance 🤝

The new compensation plan we are experimenting with consists of 3 core pillars:

🛠 Base Compensation: Our Retroactive and Commitment Track create clear compensation for flexible and focused contributors respectively.
💰 Bonus Compensation: Contributors give $HAUS bonus (as kudos) to each other, helping to evaluate performance & guide contributor development.
🗳 Governance Power: Contributors can stake their $HAUS bonus for Warcamp DAO shares, giving them more stake and alignment with DAOhaus.

We are running the experiment in cycles of 2 months and will update the community on the progress, results and learning. Meanwhile, if you’re interested in reading more, you can check out some of the discussion related to this new program in the original forum post and proposal.

If this article gets you excited and you’d like to get involved, join the Paladins’ Circle to help us improve and automate this process! You can also help us write our documentation and Handbook, as we run our experiments.

Finally, if you’d like to contribute to Warcamp more generally, we welcome you to join us as a Magesmith (product), Ranger (community and communications ) or Alchemist (tokenomics). Regardless, come say hi to us on Discord - we look forward to seeing you there!

Haus Party