Valve is one of those companies that are known within their particular industry by basically everyone. For a PC Gamer not to have heard of Valve is like a professional football player (and with that I mean Soccer to all Americans) not having heard of the off-side rule. Over the years, Valve has brought forth several monumental games such as Half-Life 2 but, maybe due to the fact that they have much to live up to now when it comes to games, in recent years, they have been focusing on increasing the influence of Steam within the market and to become the dominate distribution service around. They pretty much succeeded and, as a natural byproduct of their success, managed to band together with a whole army of followers praising Valve for their achievements and agreeing with basically everything their Messiah, Gabe Newell says.

Due to that and because they are somewhat of a white knight in shining armour if compared to other big companies in the industry, Valve gets away with lots of things. Ambiguous and secretive when it comes to their  inner workings, speculation on how the company actually operates have been running high over the years only to be fuelled by the fact that the publically available handbook states that Valve employs no managers – Gabe thrones above them all.

Now Valve's economist-in-residence Yanis Varoufakis spoke with EconTalk on a Podcast talking about Valve's specific structure, how it gets round to employing or firing people and how much it pays to each individual.  I could now explain to you the whole thing, but why do so when Yanis already made it perfectly clear in a company approved fashion.

How Valve hires:

"The way it works is very simple. 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.

"And then we form spontaneously the search committee, and then we interview people, first by Skype, and then we bring them in, if they pass the test, to the company for a more face-to-face personalized interview. And anyone who wants to participate does participate.

"And then during that day -- it's usually a day-long event -- emails are fired all over the place with views whether this person should be hired or not until some consensus is reached where there's effectively no one is vetoing the hire of that particular person."

How Valve fires:

"Firing people is hard in an anarcho syndicalist environment but it does happen, 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."

How Valve pays:

"This is a haphazard process. The payment mechanism is to a very large extent bonus-based. So the contracts usually have a minimum pay segment in it, which is more or less established by tradition. And then the interesting part in this contract is how much is left to the peer review process, which is very complicated. It involves various layers of mutual assessment.

"In companies like Microsoft or elsewhere, usually the bonus is something between 8, 15, 20 percent of the basic salary. In Valve, I'm told, there's no upper limit to bonuses. Bonuses can end up being 5, 6, 10 times the level of the basic wage."

"When it comes to determining bonuses, you can vote in favor of somebody else getting a bonus, but you can't vote for yourself.

How do people work in a 'boss-free' environment:

"You'd be astounded to see how it's done in a totally decentralized fashion. So, if we are working on a particular game, you and me, and we come up with an update we want to ship, we ship it. And we don't tell anyone. Regarding advertising and marketing, the interesting thing here is that while you have this anarcho syndicalist, bossless environment within the company, the company itself, looking at it from a political economy point of view, has created a great deal of monopoly power in the marketplace."

"It is important to understand that such spontaneous order-based enterprises rely to a large extent on individuals that believe in the social norms that govern their existence."

"Most of the people there, all of them, have been hand-picked to be excellent at what they do. They're usually on top of their game elsewhere before they join the corporation."