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Start-up Bonus.ly is introducing a peer-to-peer bonus system that might transform employee incentives.

Employee motivation is one of those issues employers often try to solve with bonuses. Who receives the treasured prize is up to the managers; tough luck if they don't like you. Now Bonus.ly, a start-up offering a peer-to-peer bonus scheme, wants to give employees themselves the power to decide who the top performers are.

Bonus.ly's peer-to-peer rewards work like this: A business leader signs up to the site and sets an overall budget. The system allows managers to establish the currency that will be used, be that financial or non-financial. The staff then reward each other in small amounts, say £10 or £20, when they think a colleague has deserved it. At the end of the month, the company settles the balances.

“When workers feel recognised, they will perform better, work harder and are more motivated,” said Bonus.ly co-founder Raphael Crawford-Marks. He argues that peer-to-peer is a better way to motivate and reward people in the knowledge economy, where responsibility tends to be more scattered than in traditional, hierarchic organisations.

He believes that employees competing for peer rewards are motivated by the recognition itself. "Because of flatter teams, managers often aren’t aware of what’s going on in their teams," he says. "These other bonus paradigms don’t do a very good job of giving a tight feedback loop--of rewarding in a timely and publicly manner when employees do something really well."

Bonus.ly should also be a way for managers to keep a handle on team dynamics. To prevent that friends will simply reward friends, every award is listed publicly in a Twitter-like feed, which discourages favouritism.

The Bonus.ly system is currently in its alpha testing period, and available to use for free. The plan is for it to remain free for the duration of this time, after which companies will be charged on a per-employee basis.

With so many in the management world of the impression that cash bonuses do more harm than good, it’s certainly an interesting approach to boosting motivation and performance. Could you see yourself using it in your business?

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