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Letting the rank-and-file make the call on bonus awards

Dan Wisniewski
by Dan Wisniewski
June 4, 2012
2 minute read
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Looking for a performance incentive plan that fits today’s workplace? Consider doing what this company did.
This case study comes courtesy of Philip Rosedale, co-founder of Coffee & Power in  San Francisco:
We wanted to get our employees in on the action of rewarding each other’s performance.
After all, employees know which of their colleagues are good at their jobs – they work alongside them every day.
That was especially true for a small company like us.
The problem: We didn’t want a reward system to turn into a popularity contest or something where staffers’ feelings get hurt.
It’s all anonymous
So we set up a system where employees can anonymously reward each other on a quarterly basis.
Here’s how it works: Once every three months, we send an email to our employees – both part-time and  full-time.
In it, we explain they’ve been given 100 credits. Those credits represent stock options in our small but growing company.
Employees are instructed to think about their co-workers’ performances over the past quarter, and we give them 48 hours to allot those credits among colleagues in any way they choose.
Showing people where they stand
We had to lay down some ground rules as well.
Most important: Staffers couldn’t reward themselves.
Employees also can’t give credits to the company founders – they already have stock options.
Once the 48 hours is up, we tally all the credits.
We then send an email to each person informing them of how many credits they received and how that translates into stock options.
Finally, we send out a companywide email of an anonymous  graph showing where employees fell from highest to lowest bonus tallies.
As a final reward, we name the top three employees whose colleagues rewarded them the most credits.
Multiple benefits
The program has worked so well that we’re not sure why other companies aren’t doing this.
One, employees have repeatedly mentioned how great it feels to be able to reward each other’s hard work.
Two, the program empowers employees and shows we trust them and their judgment.
Finally, and most importantly, the process removes a major monetary decision from our supervisors’ performance reviews.
Without having to decide how much bonus money to allot to their staffers, managers are responsible primarily for helping employees be more successful at their jobs.
And that’s a win for everyone.
 

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