· Features

Hot topic: Peer-to-peer bonuses

A growing number of businesses have introduced peer-to-peer bonuses, otherwise known as ‘microtippping’, according to the BBC

US rewards firm Bonusly, one of the first providers to offer the scheme, said the aim is to ensure employees get “meaningful and timely recognition” for good work. So could microtipping boost morale at work? Or does it risk turning rewards into a popularity contest?

Robert Hicks, group HR director at Reward Gateway, says:

"Peer-to-peer recognition is the foundation to establishing a culture of continuous recognition. While praise from a manager contributes to employees feeling recognised for their hard work, recognition from peers can be just as meaningful.

"There has been a huge rise in the number of UK businesses giving their staff the power to hand out small cash rewards. These can be an effective method of motivating employees, but it needs to be done right. If the system is strongly aligned to a company’s mission then the right behaviours will be recognised and rewarded, which in turn prevents a popularity contest.

"However, we’ve found that non-financial peer-to-peer recognition can be just as effective; eCards are becoming increasingly popular and are a simple and cost-effective way for employees to take time out of their day to recognise their colleagues.

"Creating a culture of recognition positively affects business performance, and giving managers and employees the tools to give timely, visible, and social recognition fuels the best results."

Monica Franco-Santos, reader in organisational governance action, execution and implementation at Cranfield School of Management, says:

"In theory this type of bonus looks like a good idea. But in practice it is unlikely to work for many organisations in the long term. This is because it is based on a set of assumptions that research tells us are not valid in most companies, including that performance can be measured in an accurate and reliable way, that people are unbiased, that employees notice the ‘good’ things their peers do, and that staff have the knowledge to be able to assess their colleagues’ performance.

"Most companies will be unable to mitigate against these factors, meaning that any benefits they experience from implementing such a scheme (such as improved employee morale) will be short lived.

"In the long term this type of bonus is likely to damage performance and wellbeing, with a proliferation of gaming behaviours, interest-based alliances between colleagues and biases leading to increased conflict in the workplace, and additional stress and anxiety."

Check back tomorrow for part two of this hot topic

This piece appeared in the July – August 2019 issue. Subscribe today to have all our latest articles delivered right to your desk