merit money: motivation beats traditional bonus system

Merit Money: Overcome the flaws of the traditional

bonus system@jkriggins

@management30

89% of orgs think people leave for money.

12% actually do.

@agilePHL

64% of employees that quit their jobs don’t

feel recognized.

“Paying people for work, without destroying their motivation, is one of the

most difficult challenges for management.”

Jurgen Appelo, Managing for Happiness

@jurgenappelo

“Traditional bonus systems rarely have a positive effect on people’s

performance.”

Jurgen Appelo, Managing for Happiness

What’s wrong with traditional bonus systems?

• Traditional bonus systems focus on the cumulative and rarely have a positive effect on people’s performance.

• Pay-for-performance doesn’t work.

• It’s impossible to measure all aspects of a job or a person.

• Metrics often ignore team collaboration.

• Rewards distract, disrupt creative thinking.

• More complicated they are, greater cost to company.

• If you have numerical goals to meet, you’re less likely to take risks and innovation fades away.

• The goals keep raising — is there a limit?

• If you expect rewards and don’t receive them, you become demotivated, feel cheated.

• Individual rewards create a “me” culture of finger-pointing. So can group bonuses.

• It’s top-down and un-transparent.

• Is usually connected to equally awkward and rare performance reviews, no context.

Life Rule: People will game any system…so just do your best

But why are bonuses still good?

“Research has shown that both financial and non-financial incentives

can change behaviour, reinforce performance, and induce more effort.”

Tomasz Obloj, The Guardian

“What people earn is a result of an organization’s interaction with its environment. An organization’s

income cannot be fully predicted; therefore, what people earn should be the sum of their (predictable) salaries

and any (unpredictable) extras the organization can afford to hand out.”

Jurgen Appelo, Managing for Happiness

Earnings = salaries + extras

Salary = a Living Wage

What is Merit Money?Rewarding people according to their

merits.

1. Must be peer-to-peer recognition, not top-down.

2. Must have some sort of value or turn into something — money, giftcards, donations.

3. Is a mix of Kudos (acknowledgements, reasonings) and Merit Money (value).

4. Must be public.

5. Acknowledgement must be ongoing.

6. Tools make it more transparent & organized.

Rules of Merit Money

Or use your own project management tool or shared spreadsheet to track it!

• 32% of users were more satisfied with their job

• 45% were more likely to keep working with their company

• 78% were more likely to praise their colleagues

Random survey of hundreds of active Bonusly users

Effects of Merit Money

How small to medium sized businesses are applying

Merit Money & other “unexpected” rewards

• Bonuses make people feel valued and, when done the right way, motivated

• Bonuses make people feel appreciated.

• If done the right way, it can influence specific behavior.

• Another reason to celebrate!

11 team members, 100% remote

Motivation #1: Self-Learning

“A tool of investigation. It helps you to look at yourself and ask the questions: What did I do to get something?

What did I do that didn’t get anything?

“It stimulates me to constantly seek out what other things I can do to be more present. If you get points, why five and not ten? What can I do next time to change that?

It becomes a game of learning where you’re constantly challenging yourself to do more.”

Patrick Verdonk, Happy Melly Team

Motivation #2: Learning Stimulator

“When I don’t have a lot of points, I learn something and I think about what I need to improve.” He says the system really helps him learn about people and how they are –- what makes them tick and in turn what they appreciate.

Yoris Linhares, Happy Melly Team

At Happy Melly, new ideas, new initiatives are valued much more over the day to day.

Each kudo + point is linked to a team value.

Motivation #3: Self Acceptance

“Americans are generally considered overly — and fakely — enthusiastic by other cultures. I have a naturally

enthusiastic personality and I try to be conscious of keeping it tamed because I know how it’s perceived. Through Bonusly I learned that my enthusiasm was something that the team appreciated and it made me more comfortable just

to be me.”

Lisette Sutherland, Happy Melly Team

Motivation #4: Connection

Through Purpose

Mission StatementValue WordsTransparency

Connects our remote team

88,900 team memberson-site U.K. work

cross-company profit distribution

125 team members, co-located in Spain

• Healthy lunch720 plantsSlippersBarceptionTypeCoins + Bonusly

“I don’t think that Merit Money affects my day-to-day motivation. However, it’s always a really nice surprise when someone recognizes me for

something I did. It makes me feel like my work—whether it’s something small or big—is noticed and

gets appreciated.

“I also really enjoy recognizing others for something awesome that they’ve done. This is just as important

—if not more—than receiving typecoins!”

Bozena Pieniazek, Typeform

“For some, it’s the position they’re in. Someone serving coffees at the bar who interacts with the

whole company is more likely to receive bonuses than a developer who primarily works with the

two others on his team. He isn’t really recognized by the work he or she does [as] developers are not often individually recognized for the work

they contribute to the product.”

Nabeelah Ali, Typeform

“Sometimes I bring in snacks or things to eat for the team knowing that it will. And I think it’s a push for me to do things out of the ordinary and go beyond expectations.

It’s also nice to be recognized for work I do outside my immediate team.”

Nabeelah Ali, Typeform

• #teamwork#leadership#problem-solving#innovation#customer-service#vision#help-out#results-focus#creativity

64 team members, co-located in Spain & California

• Culture ClubRedbooth on Fire

(badass Employee of the Month)

sweet hoodiessmall cash prize on

purpose

“The main idea is to recognize and congratulate those employees who’ve

made great impact and contributions in Redbooth. The employee who has been

voted the most gets a really nice ‘Redbooth on fire’ hoodie and 100€.”

Daniella Sikora, Redbooth

20 team members, 100% remote

• total profit-sharinginitiative based payoutworkationsOptimizing for Happiness

“When we hired people it wasn’t just about hiring people to earn money off them. It was really about working with really creative people.

“We profit-shared right from the beginning. All the profit we make extra — we pay relatively high salaries not only for Spain but internationally —

we distribute among our employees.”

Stefan Klumpp, MobileJazz

Share your stories!On your blog, on your social media,

on your interviews. This helps spread happiness at work, while recruiting

and retaining the right kind of teammates.

Presentation given by:Jennifer Rigginsebranding.ninja

@jkriggins

Want to read more about these inspiring organizations?• MobileJazz’s ‘3 Culture Lessons’ and

their awesome team blog

• ‘Redbooth on Fire’ and Meet The Team

• Typeform’s ‘3 Startup Culture Lessons’ and Meet the Team

• Happy Melly’s Happiness at Work blog, Meet Team Awesome, and Join the Job Satisfaction Movement!