CONCEPT:
Jürgen Appelo defined 6 excellent rules for rewards, and, even if I take stock in all of them, especially the last one, Reward peers, not subordinates, gives a very different perspective to this subject.
More information about Rewards : https://management30.com/modules/rewards-incentives/
Merit money : https://management30.com/practice/merit-money/
CONTEXT:
When I talk in my courses about rewards, I always like to recall a support request I received from a Spanish customer. This software company was facing considerable problems regarding the size of the user stories. After some consultancy with the teams affected, what came out was shocking: in order to increase the performance of the Scrum teams, the company’s management had attached a bonus to each sprint goal.
The effect on the teams was terrible, as the Scrum teams focused on getting the reward, and not on meeting the sprint goal! Because of this bonus system, at sprint planning only small, cristal-clear user stories with detailed requirements were accepted by the Scrum teams…
The solution I proposed for that client was that Time Boxing is what it is, with a stable team over time, already working on Scrum for some time and with an Agile mentality, Time Boxing would be 40 hours per week, overtime would not be allowed. . If the reward was achieved, it would be due to efficient time management, not due to over-effort. This variable meant that in the next 2 sprints they did not get the reinforcement, but if they really organized themselves in a more efficient and agile way, not chasing the prize but rather the goal of the sprint and therefore the incentive was a consequence of their improved work.
A lot has been written on extrinsic and intrinsic motivation. But at some point we all realized, that the subject is far too complex, so that there is no easy rule of thumb you can apply in your company to nurture intrinsic motivation: surely knowledge workers like money as anybody else!
However, what really stroke me by reading ‘Drive’ from D. Pink , is the fact that intrinsic motivation is ‘new’. It was 1949 at the University of Wisconsin, when Harlow and Deci, testing the behaviour of monkeys, mentioned for the first time what amounted to be the third drive (D. Pink, ‘Drive’). That is, over thousands of years, the human mankind was not aware that intrinsic motivation even exists!
When it comes to monetary rewards or bonuses, it is crucial to making sure that the subject ‘money’ is out of the table, so that people can concentrate on doing a great job. I normally recommend the companies I work with to pay their employees their market value: this way, money is not an issue anymore.
APPLICATION OF DYNAMICS:
One example, for the ones who don’t know it yet, it is worth to take a close look to the tool Bonusly: applying the concepts of ‘merit money’ you can distribute some self-defined currency units among your peers, with a short description why. Each and every company has the possibility to define how those units are converted into real money, all within a transparent process! Apple, Amazon, Nike.. are some of the enterprises were Bonusly is being successfully applies.
I have applied this dynamic every time I have been able to apply it with managers or direct managers (rrhh, etc.) who have a decision on the rewards in the company.
I list the 6 rewards rules in 6 post-its:
1. Do not promise rewards in advance.
2. Keep the early rewards small.
3. Reward continuously, not just once.
4. Reward publicly, not privately.
5. Reward the behaviors, not just the results.
6. Reward your peers, not just your subordinates.
Then, I allow the participants to position themselves in each of the 6 rules, indicating if they have made that reward by writing a publication with each practical example of the reward.
I ask what has been the impact of this reward.
Later, with another post-it color, I ask for the "anti-reward" of that reward that has actually been made.
Example:
1.- Do not promise rewards in advance.
Anti-reward: I have promised a reward in advance on a project if it ends on the date of amount Z.
A small debate is generated about the implications, conclusions, learning and impact of this situation.
It is about challenging to have rewards for group, team merits, not to incentivize with bonuses for individual goals. Try to group practices that reward the group, the team, not the individual above the group.
Finally, based on the 6 rules of Merit Money, we carry out the dynamics by groups:
1.- Identifying a current context of your company where Merit Money applies or can be applied.
2.- Generate a reward that meets the highest number of Merit Money rules
3.- Present the reward to the rest of the members
4.- How can we contribute to further improve that reward based on the Merit Money rules?
ADVANTAGES OF DYNAMICS:
It allows to know through this dynamic what policies are followed or should be followed, how effort is rewarded and recognized as a starting point for organizational improvement. It allows creating good conversations at all levels, what is good, what is right, how people perceive it, how we make them participate or not depending on our decisions.
DISADVANTAGES OF DYNAMICS:
If the people involved do not have sponsorship or empowerment in the organization, we must limit expectations to help at the top to identify future improvement actions, without raising hopes.
These people are not drivers of incentives or rewards and can fall into resignation or take advantage of the dynamics.
CONCLUSION:
The learning is based on the grouping of the rules with the participants, the disparity of cases, there are cases in which the way of granting the rewards (without being the 6 rules) has worked for them and, as they are learned, they take new possibilities of rewards. experience and contemplate a future, an improvement or evolution.
There are other cases in which they realize that they have not worked as expected, which opens the search range of why it has not worked.
Finally, in other cases, they see the 6 rules of rewards as a new way of applying and experimenting to see their influence and impact.
The main learning for them is how to move towards a group incentive, breaking with the individual incentive. If not only rrhh, c level members participate in the dynamics, also people from the teams usually serve to provide feedback at high levels with possible group freezing techniques, to align the organization towards a new way of incentivizing its employees thinking as a whole and not as an individual.
My personal advice for any company that seeks to obtain the best of its skilled workers is to avoid monetary rewards by integrating the annual bonus into the regular salary. Focus the group reward, breaking with the individual reward standards. After that, make sure that your employees' salary matches their market value, so that money is no longer a problem.
It is very important to manage the initial expectations of the dynamics so as not to have problems and, above all, to show these expectations to everyone, thinking about how to improve the whole, not to individuals individually.
MY LEARNING:
My learning is constant based on the 6 rules of Merit Money, the context in which they are applied and their rewards or real situations. I try to be spontaneous as a facilitator and help them with questions like "What would happen if you did this?", "How would it influence behaviors?" "What do you hope to get?" Generate spaces for experimentation contemplating the greatest number of implications for its success. The feelings that this dynamic often provokes are a mixture of surprise and initial frustration accompanied by final relief when they themselves are aware that they often apply incentives erroneously, causing the opposite effect to the desired one, focusing on the bonus and not on the objective, generating competition instead of collaboration. I always try to challenge myself and help dissect that why, which has caused a boomerang effect, contrary to what was desired, what have we inadvertently activated to provoke such behavior?
How can we contribute so that an incentive helps and does not cause the opposite effect? That is my challenge and continuous learning. See what motivators have been touched, moved, amplified and the reason to constantly learn from it.
NEXT STEPS:
We must try to ensure that this dynamic involves the talent area or the people with the power to change policies in the organization. Prior to the dynamics carried out, they must be put in context and informed of what is going to be done and what is going to happen, to align expectations. Subsequently, the following steps are to transfer the information objectively and carry out a reinforcement or workshop of measures to be carried out based on the information provided by the teams. Without it, nothing will be possible and we will not achieve anything.
