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What could be the potential impact of a company introducing a system allowing employees to grant bonus points to each other?

This implies that bonus points are translated into monetary value added to the salary on a monthly basis.

In practical terms, each employee would have a monthly allowance of bonus points that can be granted to co-workers. The bonus points expire at the end of the month, and do not carry over into the next month. All the transactions are visible to anyone.

Specifically, how do you think this could improve the following areas:

  • Motivation and job satisfaction
  • Corporate culture
  • Communication
  • Making the company a fun place to work
  • Performance and product quality
  • Attractiveness for potential new hires

Do you have examples of companies which have adopted similar bonus systems and how it worked for them?

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    Sounds like you are looking to commit teamicite. This is not a full answer by SE standards, but please read this carefully.
    – nvoigt
    Commented Feb 1, 2015 at 11:17
  • @JoeStrazzere: yes, that's more or less this kind of thing, only that there is a maximum monthly limit that one can grant to a co-worker.
    – ccpizza
    Commented Feb 1, 2015 at 19:34
  • Joel's philosophy on this topic would fit in quite well in Mother Russia.
    – Dunk
    Commented Feb 4, 2015 at 19:18

3 Answers 3

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I think nvoigt has nailed this one. Teamicide is a great word by the way. Terrible idea.

However, it's worth going into why the extra dimension of having staff rate each other is a terrible idea. A quick Google for "employes rate each other" yields this Reuters article:

"

Ryan Ackers, a recruitment adviser at the Dutch human resources consulting firm Randstad, said self-awareness on the job is crucial for career success, happiness and compatibility with co-workers. But he said some employees could perceive the feedback negatively.

“When a person is asked to share their opinion on another person, a popularity contest can result, and though many may get lots out of the apps, some may be offended and even hurt," he said. “If they see themselves not getting rated the way they expect, it could create animosity and low morale.”

"

That's pretty much it, while feedback from your staff is important when evaluating performance, you will destroy the team if you implement it in this way. Doing this every n months also means people will figure out who's rating them what eventually.

As a personal anecdote, we used to rate University group coursework on this basis and, although the stakes were clearly lower and I have no evidence that I didn't get full marks from everyone (your staff will have that evidence), I don't remember being keen to work with the same people twice.

Edit:

Pepone mentions gaming and discrimination. In parallel to the advice given to managers in Joel Spolsky's article: "the only way to prevent teamicide is to simply give everyone on your team a gushing review", the best outcome here is that staff game the system to everyone's benefit.

So the best outcome is that purpose of the exercise is completely undermined... but wait there's more. "To the benefit of Everyone" could become "everyone in my al fresco lunchtime club" or "everyone of us guys". I think you see the discrimination problem creeping up here.

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  • Its actually worse than that it would lead to cliques and gaming the system and leave the company open to race sex and disability suits
    – Pepone
    Commented Feb 1, 2015 at 13:13
  • Good point, I've extended my answer. Incidentally I've +1'd the question because it's valid and there's a lot of interesting discussion on the effects of such a policy. I sense, however, the OP will not be a fan of this answer.
    – Nathan
    Commented Feb 1, 2015 at 14:41
  • So you think people not getting rated the way they expect by their manager (instead of co-workers) is not also going to create animosity and low morale? The fact is that there is no easy way to accurately evaluate people who work in jobs where output can't be easily measured. However, in the overwhelming majority of cases, co-workers know exactly who are the "good" people and who aren't. So while all ways have their issues, being rated by your peers seems to have the best chance of giving the most accurate performance reviews. "Cliques" can't influence everyone's review of others.
    – Dunk
    Commented Feb 4, 2015 at 19:07
  • @Dunk I would largely agree with Joal Spolsky about formal review process. I think co-worker feedback is important but must be carefully done. I think there are better ways to do it that "you don't get a bonus because Tom and Harry gave you a low score", ways that focus on constructive improvement even. I also think that formal reviews are an crutch for managers who avoid continuous feedback. ... Let me just emphases. The OPs wish to involve peers in staff evaluation is a good one. (Sorry my answer didn't say that) I'm not personally sure how to make it work. Is there a question on that?
    – Nathan
    Commented Feb 4, 2015 at 19:22
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    @Nathan:For 23 years I've been doing software development. Only 1 company actually "formally" had employees do peer performance reviews. At no other company was my performance and contributions described better and in as much detail as at that company. So in that regard, peer performance reviews are good. Where it fell apart is that the department manager, who knew very little on the specifics of each person's performance, would tend to totally ignore the actual text describing the performance and peer's evaluations. So my opinion is that peer reviews can work, I just don't know how.
    – Dunk
    Commented Feb 4, 2015 at 19:25
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I worked for a company (name withheld to protect the guilty) that allowed something similar but not identical to this. It was a bonus scheme open to the whole company, specifically:

  1. There were a number of tiers, starting at a $US50 bonus and going up to $US1000. Management approval was required for anything above the first tier, although it was rarely declined.
  2. Rewards were provided as gift cards from a long list of country specific vendors. This is mainly to avoid the increased taxation for direct monetary rewards.
  3. Broad guidelines were in place for each tier to ensure equivalent effort was required for each tier.
  4. The rewards came from dedicated cost centers to not disadvantage a project or team that wanted to reward its staff.
  5. Currency conversions for non-US staff and taxation implications were handled automatically.
  6. Management tracked the rewards and the recipients of higher tier awards got executive visibility.
  7. Awards could be made anonymously or publicly (chosen by the person giving the reward).

This system differs from the OP's in that it is not a rating system - a lack of reward does not mean the individual has not done his or job, just that he or she has not been visibly exceptional. However, as stated above, anyone in the company can give a reward to any other.

This was successful in some ways. For example, it was easy to give someone a monetary reward for working late or over a weekend. Rather than go up the hierarchy to beg for that voucher or movie tickets, you just gave them a lower tier award. If someone helped a different team, it was sometimes easier to give them a reward this way then bill from one project to another.

However, although there were guidelines and examples, its use differed from one team to the next. For example, some salespeople would reward each other after each major sale, effectively becoming an additional source of commission. Thankfully, I was not aware of any team that degenerated into a "work for reward" only situation.

The biggest problem with such a scheme is many roles are just not motivated financially that much. Roles were success can be clearly translated into monetary compensation are usually already on commission. Similarly, many senior roles already have bonuses or stock allocations based on meeting their KPIs.

While no one is going to refuse additional compensation, paying people what amounts to a small fraction of their annual salary to is not going to be a significant motivator. It is better to promote them, publicly recognize achievements or give them more responsibility, particularly for the longer term.

However, if you want an easy way for people to reward good behavior without the ability to punish bad behavior (as giving a low rating might) or open to abuse (giving someone a low rating as "pay back"), this is a good place to start. Staff also did not have to give bonuses, saving the time a compulsory rating system may consume.

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Allowing folks to send official "Thanks!" notes to each other, with an explanation of what they're being thanked for, can be a good way to encourage letting managers know who's having impact that they might have missed. (And if these are publicly posted it might help encourage others to make extra effort or applaud those who do.)

But to avoid abuse i would recommend limiting how many of these each individual can write per year/quarter/whatever, and if there's any direct value accompanying them keep it down to $15 or so -- a lunch, more or less. And there should be limits on how often the direct prize can be won.

We've experimented with several versions of this -- peer-nominated employee of the month things, "blue thanks" awards, and so on. I'm not sure how much they've helped, but i don't think they've done any harm.

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