by Jurgen Appelo
We practice what we preach. And so it is with the merit money idea (a peer-to-peer bonus system) that we borrowed from Management 3.0 and that we have implemented with Bonus.ly. Yesterday, we had a brief retrospective about the practice. We have been using it for 9 months now. This is what came up in our conversation.
What Works Well with Merit Money
It feels good to give something to another person and to say “thank you”. It is one of the 12 Steps to Happiness! We don’t feel it’s about the 100 points per month or about the money; it’s the joy of being appreciative towards one another. Merit money reinforces this attitude because there’s always some pressure to distribute our points.
It is good to have a constant reminder that we should not simply take contributions and achievements of team members for granted. Most of us have switched from distributing points once per month to doing this on an almost daily basis. It’s quite easy to set a daily recurring reminder for it in a task list or calendar, so we don’t forget to say, “Well done!”
It’s nice to connect our rewards to our team values. That makes it easier to decide whether to say thanks to someone for something that they did. The team values are a reminder of the kinds of behaviors that we want to reinforce. If #kindness is on the list then kindness can be rewarded.
And of course, it is great to receive compliments, especially when they are unexpected. It happened more than once to me that I thought I was being a blunt and insensitive prick in my communication, only to be surprised later when I received points for my honesty!
What We Can Improve with Merit Money
There is some concern that collaboration is easier in some jobs and for some people. A financial officer may find it harder to receive points from peers than a marketer, and some consider this unfair. That may be true, but it’s also true that handsome people get better jobs and tall people are likelier to become presidents. The world is unfair.
All of us have benefits and shortcomings in unequal measure. But I’m 100% certain that any person in any job can do their best to be appreciated by other team members. There is no reason to hide your #curiosity, #patience or #commitment from your peers.
Some may find it a bit stressful to give points, particularly near the end of the month, because (in the tool that we use) the budgets don’t carry over to the next month. But we’ve agreed that none of us should feel obliged to distribute all points. If you don’t know what to say “thank you” for, then say nothing. That’s perfectly fine. It’s better than polluting the results with comments such as, “Thanks for paying my invoice” or “Your hair looked nice today.” And if you don’t want to participate in this system at all, that’s allowed as well. However, don’t expect to receive any thank-you notes from your peers either, because they are allowed to apply a tit-for-tat game strategy.
Last but not least, it is important that team members realize that merit money is meant to reinforce good behaviors. That means points should (in my opinion) not be given for work that is expected as part of a job description. For example, I don’t give our team member Nicolas points for making good videos because making good videos is his job. That’s why we hired him in the first place. However, I did give him points this week for his latest videos because they were better than ever. In this case, it was the continuous improvement that I appreciated.
Wrapping Up
The points we earn monthly from our team members translate to real bonus money once in a while. We do this by rolling a dice every month, which gives us a one-in-six chance that we’re getting paid a bonus. If we don’t get paid, the bonus budget simply rolls over to the next month. This way, we keep the payout unexpected so that we cannot count on it, which I consider a good thing for now. And it’s fun. Louise rolled the dice this time and she rolled it well, which means we’ll get paid this time. I hope nobody gives her points for that!
The majority of our team is quite happy with our merit money system. Granted, we can make things better. Some of us have valid concerns and it’s up to the entire team to address those issues. Who knows, they may even be rewarded for that.
What are your findings with merit money? Do you have any concerns? Let us know!
Also interesting: Management 3.0 Tools for your Retrospective
Photo: Unsplash
Hi,
Do you know other systems that implement this idea except Bonus.ly?
We are thinking to write our own, but would prefer to use existing one.
Best regards,
Artem
Seeing that the article itself as well as the comment are 3 to 4 years old – how went it further, Jurgen? Can you share an update?
Hi Ulrich, this is Lisette, one of the M30 team members. We are still using Merit Money every month (using Bonusly). Each team member gets 100 points to distribute as they please. Every month, our finance Queen sets aside a percentage of the profits – and during our first monthly meeting we roll the dice. If we roll a 6, we get a payout based on the number of earned points. If we roll anything else than a 6, we put the money into a virtual holding tank until we DO roll a 6.
Merit Money still works great as a form of showing appreciation on the team. It seems to be fairly distributed – and getting a random bonus payout is always fun.
Thanks Lisette,
so you did not adjust at all your initial setting?
Also I would like to know:
* Apart from being fun – do you (all staff, especially those described as the ones being on the unfair side of life :-)) feel it still motivating? And how does it feel when the bonus finally is paid? Is it really true from your personal experience that you feel more motivated in advance than after the bonus?
* How much in percentage is the bonus you’re distributing this way? Do you see/Did you experience critical volumes? If I remember correctly Jurgen recommended not to take the vast amount of the salary into this system but to keep the “vonus” a rather small amount of the total… Have you experiemented with the volumes/quotas?
I would be glad about any more “experience story telling”. 🙂
Thanks in advance and best regards,
Ulrich
Ulrich, as far as I know, everyone finds it motivating. It feels great when a bonus is finally paid, because we never know WHEN it’s going to be paid – and random extra money is always nice to get.
It’s not the actual money that is so motivating – though it’s a nice feature. What IS motivating is all the feedback and appreciation you get from colleagues on a regular basis. It helps to know what people like about working with you. And it’s nice to feel appreciated – regularly.
The amount of bonus money that gets set aside varies from month to month – it is based on how much profit we earn as a company. We’ve experimented a little bit with different amounts but have settled on a formula that seems to work for everyone. It is not a lot compared to our salaries – but it’s not so low that it’s insignificant either.