Day-to-day appreciation suits us better than Merit Money

Day-to-day appreciation suits us better than Merit Money

We place great importance on transparency. We value openness, courage and team spirit, and treat each other as equals. This also means that we expect our employees to think and act in a bold, entrepreneurial manner. To encourage this, last year we ran an experiment called ‘Merit Money’.

How we used Merit Money:
Merit Money is based on hierarchy-free evaluation. Countless studies show that the traditional bonus system does not have a positive effect on employees’ teamwork and morale in creative environments. With Merit Money, employees evaluate and reward their peers.

In late 2015, we decided to allocate 25% of the variable salary component to Merit Money. This is how Merit Money worked in concrete terms: at the end of six and then again at the end of 12 weeks, each person could give 100 points to their colleagues. They also had to give feedback in the form of requests. We then counted up the points per person and paid the variable salary component in line with this.

What happened next:
Merit Money was always an experiment for us. This approach eased the pressure of the new and unknown. However, we increasingly had the feeling that appreciation was missing. So we stopped the experiment in summer 2016 and decided that instead, we should show each other clear appreciation on a daily basis. This had a positive effect: morale increased and teamwork improved sustainably.

Why our version of Merit Money didn't work:
We broke some of the rules for rewards that Management 3.0 lays out, and therefore the conditions for Merit Money:

6-rules-for-rewards-768x432

  1. We applied the practice to the variable salary component. This was decided in advance and therefore not spontaneous or surprising.
  2. At 25%, the variable salary component was too big.
  3. Six weeks was too long a time frame. Often, not everyone could be there when the points were given out, which made the task even harder.
  4. We kept the transparency aspect.
  5. We probably focused too much on the results.
  6. We stuck to this rule: all team members saw themselves as equals.

Going forwards:
We are not yet sure whether we will try Merit Money again in a different form. At the moment, we think that day-to-day appreciation is more important. But it was clear, independently of Merit Money, that equal pay within the same salary band promotes teamwork and therefore suits our culture very well.

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