Do you know how to recognize, encourage and reward culture, values and good behaviors without losing the effectiveness of recognition in the medium and long term? No? Then join this talk to learn about a collaborative and continuous system for recognizing behaviors, culture and values. I will share our learnings, pains and continuous improvement using this practice.

1. Bonuses in an Agile Company: Our Successful Application of Merit Money
Agile Connect Day

2. About Knowledge21
+ 100 impacted companies (2018-2019)
+ Offices in Brazil, USA / LATAM and Europe - ONLINE
+ 20.000 certified people
+ 25.000 hours dedicated to transforming our customers (2018-2019)
+ Trainers in several internationally certified formations
+ We started in 2013 with trainings and 2016 with consulting

3. Some European Clients

4. Ricardo Caldas
https://www.linkedin.com/in/ricardo-caldas-agile/
● I used to be developer, business analyst, manager
and others roles.
● I worked at the Rio 2016 Olympics and was
responsible for the Games Website and App;
● I learned about agility in 2012 but started working in
2017 as a Product Owner, Scrum Master and Agile
Expert;
● Agile Expert at Knowledge21 since 2019;
● Management 3.0 Trainer;
● Helps teams and organizations in the agile
transformation process.

5. LET’S

6. What problem do we want to solve?

7. How can we incentivize better performance?

8. How can we reward people for the work
they’ve done?

9. Better! How to incentivize good behaviors?

10. Do rewards motivate people? Absolutely.
They motivate people to get the rewards.

12. Tell me how you measure me and I will tell
you how I will behave myself

13. Ok... How to incentivize good behaviors?

14. Focus first on intrinsic and then on extrinsic
motivation.
Intrinsic Extrinsic

15. Fairly Paid and the Maslow Pyramid
Motivational
Hygienic
Self-Realization
Esteem
Social
Safety
Physiological

16. Is it possible to create an environment in which rewards can positively impact our
motivators without losing their effectiveness of recognizing in the short and medium
term?
Question...

17. There are many practices, but let's talk
about Merit Money

18. First I’ll talk about assumptions and
introduce one person...

19. Jurgen Appelo
● Author of Management 3.0 and Managing for Happiness, How to Change the World
and Start Up, Scale Up, Screw Up books;
● Jurgen says that decades of research prove that the traditional bonus system rarely
has a positive effect on the performance of knowledge workers and he proposes
changes defending 5 crucial factors to reverse this situation;
● The 5 crucial factors are the assumptions for a good and collaborative reward
system;

20. 5 Crucial Factors - Assumptions
● Salaries should always be expected. Bonuses shouldn’t be. Always keep bonuses as a surprise.
When bonuses become frequent and anticipated, they ought to be converted to regular salaries.

21. ● Salaries should always be expected. Bonuses shouldn’t be. Always keep bonuses as a surprise.
When bonuses become frequent and anticipated, they ought to be converted to regular salaries.
● Earnings should be based on collaboration, not competition. When determining how much
people should earn, the main criteria should be their collaborative work toward a common goal.
5 Crucial Factors - Assumptions

22. ● Salaries should always be expected. Bonuses shouldn’t be. Always keep bonuses as a surprise.
When bonuses become frequent and anticipated, they ought to be converted to regular salaries.
● Earnings should be based on collaboration, not competition. When determining how much
people should earn, the main criteria should be their collaborative work toward a common goal.
● Peer feedback is the main performance measurement. Contributions to a shared purpose are
best detected and evaluated by peers, not by managers. Only the whole system knows all the
details.
5 Crucial Factors - Assumptions

23. ● Salaries should always be expected. Bonuses shouldn’t be. Always keep bonuses as a surprise.
When bonuses become frequent and anticipated, they ought to be converted to regular salaries.
● Earnings should be based on collaboration, not competition. When determining how much
people should earn, the main criteria should be their collaborative work toward a common goal.
● Peer feedback is the main performance measurement. Contributions to a shared purpose are
best detected and evaluated by peers, not by managers. Only the whole system knows all the
details.
● Creative thinking can grow the compensation system. Expect that people can (and will) play any
system, and tap into that creativity by inviting and supporting it, instead of driving it out.
5 Crucial Factors - Assumptions

24. ● Salaries should always be expected. Bonuses shouldn’t be. Always keep bonuses as a surprise.
When bonuses become frequent and anticipated, they ought to be converted to regular salaries.
● Earnings should be based on collaboration, not competition. When determining how much
people should earn, the main criteria should be their collaborative work toward a common goal.
● Peer feedback is the main performance measurement. Contributions to a shared purpose are
best detected and evaluated by peers, not by managers. Only the whole system knows all the
details.
● Creative thinking can grow the compensation system. Expect that people can (and will) play any
system, and tap into that creativity by inviting and supporting it, instead of driving it out.
● Compensation can be used to nurture intrinsic motivation. Make money a reflection, not a
competitor of people's curiosity, honor, acceptance, dominance and all other intrinsic
motivators.
5 Crucial Factors - Assumptions

25. MERIT MONEY

26. A collaborative and continuous bonus system
model that encourages support and recognition with
a focus on actions and behaviors that really
contribute to the improvement of the team as a
whole.
The main idea of this model is to create a safe
environment based on mutual trust between team
members, empowering them to share the
responsibility of recognizing the work of their
teammates and rewarding them according to their
own criteria.
What is Merit Money?
We have a lot of autonomy, and therefore, a lot of responsibility.

27. Experiment with the Agile Coaches for 8 months:
● 1,000 monthly “Meritecas” for each Agile Coach (9 pax).
● Distribute within the team in the way that we believe is the most fair.
● Each transaction must be justified in a short text of a maximum of 280 characters.
● Each “meriteca” is equivalent to R$ 1.00.
Only restriction: no “meriteca” deposited by the company could remain in your wallet.
Our Practices with Merit Money

28. Distributed Values
R$3.075
Biggest Bonus
Given Out in a
Month
R$72.000
Total
R$250
Lowest Bonus
Given Out in a
Month
R$1.000
per coach
in 2017
R$1.520
Highest
Average R$1.130
Lowest Average

29. ● Responsible with Autonomy;
● Peer recognition is the best feedback;
● Shared responsibility;
● Improving our systemic view;
● It showed team maturity;
● Extrinsic motivation is also important;
● Bonuses without competition;
● Behavior > Results;
● Promotion of a culture of continuous improvement;
● The importance of visibility.
But what do we learned from this practice?

30. Merit Money Evolution

31. ● We started using emails to all recognitions and rewards;
○ Financial team copied to organize the payments by the end of the months;
● We changed to Google SpreadSheets;
○ A group called “Meritequeiros” were born to organize and consolidate the recognitions
data, restrictions and etc.;
● Values per Coach Monthly Evolution
○ 2017/04 - R$ 1,000
○ 2018/04 - R$ 1.500 🆙
○ 2019/05 - R$ 500 ⬇️
○ 2020/04 - R$ 0 🤷🤷 🤷🤷♀️
○ 2020/06 - R$ 500 🆙
○ 2020/10 - R$ 250 ⬇️ ♻️
Merit Money Evolution

32. ● Values per Coach Monthly Evolution
○ 2017/04 - R$ 1,000
○ 2018/04 - R$ 1.500 🆙
○ 2019/05 - R$ 500 ⬇️
● We realized that the value was high and some individuals started to behave in order to earn
greater rewards;
○ 1st assumption was broken: Salaries should always be expected. Bonuses shouldn’t be.
● The practice was stopping to be for feedback, recognition, culture and values and was for the
reward;
● So we downgraded the value and gave visibility to all the Agile Coaches.
2019/05 - Value Downgrade

33. And what happens in March 2020?

34. ● Clients were crazy;
● Market was crazy;
● Economy was crazy;
● Many doubts what would happen next.
Covid-19 appears...
WHAT TO DO?

35. ADAPT YOURSELF

36. ● We adapt our products, trainings and services;
● Agile Coaches working 100% remotely with our clients and trainings;
● We changed some financial and empowerment policies momentarily;
● Values per Coach Monthly Evolution
○ 2017/04 - R$ 1,000
○ 2018/04 - R$ 1.500 🆙
○ 2019/05 - R$ 500 ⬇️
○ 2020/04 - R$ 0 🤷🤷 🤷🤷♀️
Adaptability
WHAT TO DO?

37. MERIT HUGS

38. ● From April 2020 until May 2020;
● Hugs instead money;
● You can hug anyone;
● Keep using our culture and values to hug and reward behaviours;
○ Collaboration, Consistency, Evolution and Careful;
● Abroaders Agile Coaches started to participate.
Merit Hugs Practice

39. Merit Money Restarted in June 2020
● Business were stabilized;
● Money instead Hugs;
● We returned to merit money restrictions and practices still using our culture and values to
recognize and reward behaviours;
○ Collaboration, Consistency, Evolution and Careful;
● Abroaders Agile Coaches kept participating.

40. Merit Money changed in Sept 2020
● We signed a tool to automate the practice and become more organic;
● Agile Coaches can recognize anytime (not just by the end of the month);
● Easy, Interactive and fun to recognize behaviours and our culture and values;
● Visible to all company.

41. You have a Recognition...

44. ● We loved the tool, practice and the interaction;
● We decided do broken update one assumption:
○ Peer feedback is the main performance measurement. Contributions to a shared
purpose are best detected and evaluated by peers, not by managers.
● From October, Merit Money it´s for all company circles (Agile Experts, Back Office And
Founders / Partners) on the same practice.
● Why?
○ We have no managers, no bosses, no hierarchy cause we are totally Management 3.0 and
we are using Holacracy and O2 (Organization Organic) “Structures”;
○ We are empowered, conscious and responsible enough to made this decision;
○ We want recognize other circles people;
● But we changed the value from R$ 500 to R$ 250 (same value used on Back Office Circle).
Merit Money changed AGAIN in Oct 2020 ;-)

46. We have a Rain of Recognition...

48. We are enjoying the journey

49. Tadeu Marinho Avelar Leão
This talk is a Recognition to...

50. ● Google Images
● Management 3.0 - Knowledge21 Study Case
○ https://management30.com/case-study-merit-money/
● Knowledge21 Blog
○ https://knowledge21.com.br/blog/merit-money-sistema-de-recompensa-colaborativa
● Management 3.0 - Merit Money Practices
○ https://management30.com/practice/merit-money/
● Abraham Maslow in his 1943 paper
○ "A Theory of Human Motivation"

53. Knowledge21 - USA / Spain / Portugal
www.knowledge21.com / www.knowledge21.es / www.knowledge21.com.pt