Merit Money, how to make your employees define their own compensation

- Practices & Exercises

by Vasco Duarte

If there’s something we at Happy Melly believe in, it’s in ‘eating your own dog food’. (Personally, I couldn’t be happier that we aren’t in that particular business.)

Actually, the reason Jurgen Appelo started Happy Melly, is because he didn’t want to be ‘the boss’ of a brand (Management3.0) that was all about empowerment and self-organizing.

So he handed over the rights to a new company (Happy Melly). It’s in the end the stakeholders that decide.

Giving people what you think they earn

I have a board for Happy Melly.  Lisette, Johan, Vasco, Maarten, Sergey and Jurgen are on that board. They don’t earn a salary, but there is a small compensation available every month.

Every one of them gets the same amount of money. There’s only one rule: they can’t keep it. You see, it’s Merit Money, the idea is that they must give the money they get to other board members. They can do it equally, or give it all to the same person, whatever they want.

So if Lisette thinks Sergey did a great job creating, she gives him something extra. And since Vasco went on vacation (again), he gets a little less. Vasco might think Jurgen did a good job convincing Joe Justice and Wikispeed of how benefitial it is to join the Happy Melly family, so he gives him something more. And, since Lisette went on vacation herself, she get’s a little less from him as well. And so on.

I totally hated the idea

Last week I spoke with Lisette about the system. She admitted she didn’t like the idea at first. She actually wrote downright hate mails about it to her boyfriend, complaining about how stupid it all was. “Since I really can’t judge everyone’s input, I thought it wouldn’t work out. For instance, I don’t know whether Sergey writes amazing code.” But she changed her mind.

“Now I actually like the system very much. It really works, because we complement each other. Plus there’s one more reason to keep the communication going about what you’re doing. And although I don’t know if his code is good at all, I can see Sergey has put a lot of effort in something, for me that’s enough. Vasco can judge the code if he wants to.”*

That’s what I think is so smart about Merit Money; it motivates others to be as good and social as they can be. And there are very diverse reasons why someone is doing a good job, this system appreciates that. Also, it urges people to be constantly open about what they’re doing. Want to know how it works for others? Right here I wrote about Cláudio Pires and how he made it work in Brazil.

* Note from Vasco: Sergey does write excellent code.

Photo: Kat Yukawa (Unsplash)

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