Merit Money: A reward scheme that works!

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by Louise Brace

If you don’t know what Merit Money is, let me enlighten you!

Merit Money is a reward scheme, where the whole team rewards each other, based on our perception of an individual’s merit during the month. You are given a certain number of merit points each month and you distribute them to your team members. Far removed from your traditional bonus scheme, Merit Money is not set by management and there is no fixed target.

In the past I have worked for companies that awarded bonuses based on individual and team targets. I found these unfair and uninspiring. Why? Because they were based on the singular objective of achieving a monetary target for the company. What is inspiring is a team collaborating on various objectives that contribute to the overall growth of a business.

Traditional bonus schemes tend to encourage competition amongst colleagues; with each team member working on their personal target. You rarely look up to see the bigger picture. Merit Money does the opposite. It pulls a team together. Rewarding your colleague’s work, rather than worrying about a personal target means you get to appreciate the role of the team and the extent of each member’s contribution to the overall objective: making a better company grow.

Merit Money generally doesn’t get paid out at the end of every month, quarter, or year, as a traditional bonus does.  Merit Money is about sharing the profit when it’s available. Motivating the team to make it happen. As you accumulate points, you can choose to cash your points in for real money, when business profits are favourable. Or roll them over for a bigger share as the profits accumulate.

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Some companies offer a merit money scheme, which is similar to trading on the stock exchange. In this case Merit Money is based on the profit and number of points of each team member, the value of which, can go up and down. It’s up to the employee to decide if they want to cash in their points, or wait for the value to go up.

You are not fighting to win a regular bonus, you control it, by being the best you can be, in more ways than one: your attitude, contribution, ideas, creativity, etc.

Back to our Merit Money experiment: After Month One, I got to see just how motivating the scheme was. Looking back to the beginning of the month I admit I was skeptical. Merit Money was presented to me in one of my first interviews with Happy Melly. I was attempting, in a roundabout way, to ask about salary. The wonderful Lisette Sutherland, told me, “We work with a merit scheme, where we pay in hugs”. Hugs? I thought. Hey I love the Happy Melly project, but heck, I don’t work for hugs. I need to pay bills and eat.

Lisette reassured me that hugs converted to cash, but I still didn’t really see the value until the end of month one. Actually we decided to change the currency of hugs to something less sentimental. Still undecided; for now, we’re just calling them points. When I sat down to share out 100 points, I understood just how cool Merit Money is. It compels you to revisit the work and contribution of each of your team members and evaluate your experience working with them.

We use IDoneThis to update our daily work, so I was able to revisit the calendar month to check out what my teammates had been up to. We shared out our points and wrote a single line statement on how we felt each person contributed during the month. It’s great giving, but it’s also really cool getting to see how others perceive your contribution. Positive or not, it motivates you to do better. To be better. Working as a remote team, the exercise helps us to visualize what team members are doing in other countries. 

Each month, you can change why you distribute points. It doesn’t have to be on overall performance. As Jurgen Appelo said to me, “Each month I change the question. The first month was: Did they impress me with their involvement on the new team?. In February it will be different. But being specific about the criteria, helps to better notice things. It’s like the difference between, what do you see around you? versus, what do you see around you that is blue?”

Merit Money was new to some of my other teammates and I was curious to get their reaction after the first month.

Jennifer Riggins, our content marketeer, told me: “I was a little nervous before I did it but then I just went with my gut for Merit Money. It helped that I got to explain everything clearly to each member for why I gave them how much money. Plus it REALLY helped that our accounting team member had created a spreadsheet that did the 100 points and all the math for me. Merit Money is also a great way to make sure everyone knows how accountable they are and what people perceive of their contribution. It assures that we all work on our communication skills, making sure everyone knows what we were doing.”

Our video guru Nicolas de Vicq, was also skeptical: “My first experience with merit money has been a challenge. Firstly, because I took it as a strong responsibility to translate my personal feedback into credits and secondly because receiving credits from others or not, is an incredible way to see and measure how people value your contribution in the team. A strong kick to get to know team members better and to deliver my best value!”

Lisette Sutherland, who’s been working with Merit Money for a while now, commented: The challenge for me with merit money is giving useful feedback that lets my colleagues know what I appreciate about their work.

My goal is to build trust and create cohesion on the team. In addition to using iDoneThis to go back and look at the work that was done during the month, I keep my own notes. When someone goes out of their way to help me (like attending my webinars and workshops), I write it down. And when I feel I don’t know what someone is doing – I let them know. It’s also a good flag for me to reach out more often (instead of relying on them to keep me updated).”

First month. And I’m convinced that Merit Money is one experiment that is going to bring our flexible working team closer together. And create happy, positive working experiences.

5 thoughts on "Merit Money: A reward scheme that works!"

  • PhD says:

    I like the Merit Money idea and how it generates positive feedback for the good things you’ve done. How does your system work for negative feedback? If you split feedback into 3 section :
    1) Start doing …
    2) Stop doing …
    3) Continue doing …
    then this system only covers section “3 – Continue doing …”.
    Has this been the case for you? How do you highlight the things you’d like someone to start/stop doing?

  • Louise Brace says:

    Hi PhD, In this early stage of our experiment. Two months in. We are using Merit Money to communication our perceptions of commitment and enthusiasm. And I believe that will continue. As we progress along our journey and get to know better the roles and skills of individual team members, I am sure we’ll be more confident to offer constructive feedback, over negative feedback. But watch this space!

  • Douglas Fischer says:

    Any updates about this? I’d like to know how it’s working nowadays!

  • Tahseen Binte Mahmood says:

    Hi everyone,
    I am Tahseen, Masters student studying in Germany.

    May I ask, what is the difference between moving motivators and merit money system? It feels like it is very similar. How can I differentiate it with logic?

  • Management 3.0 says:

    Hi, thanks for your note. Merit Money is bonus money, that we give colleagues based on if we want to reward them with a job well done. Moving Motivators is a game to better understand our colleagues’ and our own, intrinsic and extrinsic motivations. Learn more here about Moving Motivators: and here for Merit Money:

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