The traditional bonus system is demotivating and flawed. Learn from real small to medium-sized businesses about how they use Merit Money and creative reward systems to encourage team collaboration through peer to peer recognition and acknowledgement. Merit Money is a practice by Management 3.0 adapted in hundreds of companies looking to promote a culture of innovation, intrinsic motivation and gratitude. Learn more about Merit Money and read more stories of it in practice here: https://management30.com/practice/merit-money/ This presentation was originally given at the Management 3.0 Meetup in London: https://www.meetup.com/London-Management-3-0-Meetup-Become-Better-Managers/ and given by me, Jennifer Riggins: http://ebranding.ninja Thank you to the companies that continue to share their experiments with us! To read more about these specific companies and their stories: Typeform: https://redbooth.com/blog/startup-culture-typeform Redbooth: http://www.happymelly.com/redbooth-peer-to-peer-recognition/ Mobile Jazz: https://redbooth.com/blog/company-culture-mobile-jazz Happy Melly: http://www.happymelly.com/our-merit-money-retrospective/

1. Merit Money: Overcome
the flaws of the
traditional bonus system
@jkriggins
#aginext

2. 89% of orgs think people
leave for money.
12% actually do.
@agilePHL

3. 64% of employees that
quit their jobs don’t feel
recognized.

4. “Paying people for work, without
destroying their motivation, is one of the
most difficult challenges for
management.”
Jurgen Appelo, Managing for Happiness
@jurgenappelo

5. “Traditional bonus systems rarely
have a positive effect on people’s
performance.”
Jurgen Appelo, Managing for Happiness

6. What’s wrong with
traditional bonus systems?

7. • 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.

8. • Metrics often ignore team collaboration.
• Rewards distract, disrupt creative thinking.
• More complicated they are, greater cost to company.

9. • 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.

10. • 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.

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

12. But why are bonuses
still good?

13. “Research has shown that both
financial and non-financial incentives
can change behaviour, reinforce
performance, and induce more effort.”
Tomasz Obloj, The Guardian

15. “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

16. Earnings = salaries +
extras

17. Salary = a Living
Wage

18. What is Merit Money?
Rewarding people
according to their merits.

19. 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

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

21. • 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

22. How small to medium sized
businesses are applying
Merit Money & other
“unexpected” rewards

23. • 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!
10 team members, 100% remote, different commitment levels

24. • Each month, each team member receives 100
points which they are able to give away.
• Always related to a #team-value.
• When company is profitable, bonus is allocated,
based on % bonus points received. Total
accumulates.
• Monthly, team rolls a die. If a 6 is rolled, it’s paid
out.*
*Happy Melly team isn’t very lucky, so when a 6 is actually rolled, it’s a
dang good payout

25. 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

26. Motivation #2:
Learning Stimulator
hat I need to improve.” He says the system really helps him learn about people an
Yoris Linhares, Happy Melly Team

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

30. Each kudo + point is linked to a team value.

31. Motivation #3:
Self Acceptance
nd I try to be conscious of keeping it tamed because I know how it’s perceived. Th
Lisette Sutherland, Happy Melly Team

32. Motivation #4:
Connection
Through Purpose
Mission Statement
Value Words
Transparency
Connects our remote team

33. 88,900 team members
on-site U.K. work
cross-company profit
distribution

34. 125 team members, co-located in Spain

35. • Healthy lunch
720 plants
Slippers
Barception
TypeCoins + Bonusly

36. “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

37. “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

38. “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

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

40. 64 team members, co-located in Spain & California

41. • Culture Club
Redbooth on Fire
(badass Employee of
the Month)
sweet hoodies
small cash prize on
purpose

42. “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

43. 20 team members, 100% remote

44. • total profit-sharing
initiative based payout
workations
Optimizing for Happiness

45. “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

46. 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 Riggins
ebranding.ninja
@jkriggins
Slides Available: slideshare.net/eBrandingNinja

47. 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!