Valve's unusual corporate structure causes its problems, report suggests

It's well-known that Valve doesn't work like other game studios. Valve's flat corporate structure means that, as its own New Employee Handbook reads, "we don’t have any management, and nobody 'reports to' anybody else. We do have a founder/president, but even he isn't your manager." The symbol of this freedom is the office's wheeled desks, which allow employees to form ad hoc teams by moving together when someone—anyone—proposes a project that interests others, then wheeling away once they decide to move on.

It sounds like a wonderful place to work, free from hierarchy and bureaucracy. However, according to a new video by People Make Games (a channel dedicated to investigative game journalism created by Chris Bratt and Anni Sayers), Valve employees, both former and current, say it's resulted in a workplace two of them compared to The Lord of The Flies.

Part of the issue is the fact Valve uses stack ranking, an employee evaluation technique that a Blizzard employee was recently fired for protesting against. Every year, Valve's staff judge each other through a series of meetings that result in an overall ranking of every employee, and that ranking determines who receives higher salaries in the next year. With no managers to communicate exactly how the judgements should be made, or how the resulting pay changes will be decided—presumably by the board of directors, which Valve still has—the effects on employee behavior seem quite noticeable.

"One of the most interesting ways you could see it seeping in was when people specifically did riskier projects near the beginning of the year," a former Valve employee told People Make Games. "And then they'd go back to the more well-known ones as it gets closer to review time because recency bias would make people focus on that stuff."

Another effect was to reinforce Valve's lack of diversity. More than one interviewee highlighted that, even compared to the rest of the videogame industry, Valve is an extremely white and male company. While at other studios a diverse-hiring initiative would come from management, at Valve it had to come from the employees themselves. As an interviewee said, "Valve's structure is what makes it difficult to gain momentum on anything where the value-add isn't immediately obvious to certain people though, and that certainly includes any project where the word 'diversity' is mentioned."

Even well-intentioned employers have an unconscious bias toward hiring people like themselves, and a study of symphony orchestras that switched to blind auditions showed that simply removing the jury's knowledge of each musician's sex dramatically increased the number of women who were hired. Valve's a company founded by two white men in an industry that's already biased toward them. Lacking anyone to push for changes to its hiring methods, while the rest of the games industry has slowly become more diverse Valve has seemingly gone the opposite way. 

"It feels like they've passed a critical mark," said an ex-employee. "It used to be that there were maybe 10 or 15% women in the development teams so nobody was usually the only woman in the room. But definitely now I think they've dipped below that point."

Another occasion when Valve's flat structure seems to have affected decision-making was its response to indie developers pulling their games from Steam as a criticism of Valve's silence on Black Lives Matter. Though Bratt mentions "several employees I've spoken to blame Valve's leadership outright for that decision," more of them were of the opinion it was a lack of leadership that prevented "months of discussion" from resulting in a statement and a plan for how to release it that satisfied everyone. 

In the end Valve didn't release any statement, instead sponsoring two events including the Game Devs of Color Expo and, an interviewee who is currently employed at Valve said, "Ultimately the thing that was landed on was that Valve would give every employee $10,000 to do with whatever philanthropic desire they have."

One decision was apparently decided at the top, and that's Valve's policy of no longer policing what's on Steam. An ex-employee explained, "Something that Gabe [Newell] would like to say is that if we were a video store he wouldn't want to carry The Sopranos if it was up to his personal taste, but he recognizes that that's an extremely successful and popular television show. And so even though he felt like it had no societal value it's not something that should be banned. We would argue that there's a difference between us thinking something has little societal value and us thinking it has negative societal value."

Ignoring Newell's unpopular take on The Sopranos, it seems like this was one occasion when the company's remaining founder had the last word. "I disagreed with his free speech absolutist stance," an interview subject said, "but also that our team was railroaded into adopting the stance as well. It really left a sour taste in my mouth."

When Valve's staff aren't being railroaded, when they're wheeling their desks around free and easy, it's easy to wonder what they're actually doing. There must be a lot of desks clustered around the ongoing Steam Deck project, of course, but it's a running joke that Valve doesn't make many games. Its last major release was Half-Life: Alyx, not counting Aperture Desk Job, the tech demo for the Steam Deck.

"I'm told that Valve would almost certainly have shipped more games, not necessarily better ones but definitely more, had it adopted a traditional company structure that doesn't allow employees to walk or roll away from projects as easily," Bratt says. "But ultimately Steam's success has meant Valve's income has not been dependent on the next game it ships in a very long time."

Which is why Valve's unlikely to change any time soon. Difficult or thankless tasks seem to be left to whoever wants to earn brownie points by tackling them—one of the video's most surprising revelations is that firings are handled by whoever volunteers to do them—and tackling problems like the unmoderated hate speech that fills Steam's forums aren't the kind of fun project anyone's likely to wheel a desk around for. Steam continues earning fistfuls regardless, and there's no motivation for Valve's corporate culture to change.

People Make Games' video report is over 45 minutes long and covers a lot more ground than this. Despite what Valve stans will say it's not a "hit piece," and is well worth the time it takes to watch if you're at all interested in what goes on behind the scenes at one of the most influential companies in PC gaming. Their video on how Roblox is exploiting young game developers is another worthwhile watch.