By The Editor
Businesses frequently use the incentive of a one-off bonus payment or reward to acknowledge the good work and commitment of some employees. But it can be tricky to reward one at the expense of others, and can create internal tension.
A small start-up company in America is using a new approach to awarding bonuses, effectively letting its staff take control and decide for themselves which employees deserve the rewards and recognition.
Management at San Francisco-based Coffee and Power granted its 15 employees an identical number of ‘stock options’ (commonly used in the United States, and very similar to shares). The employees were then required to divide their options between other staff members however they wished. The only rule: people are not allowed to keep any of the options for themselves.
Those that ended up with the highest number of options would then receive the highest reward, regardless of seniority or exposure – for example, the ninth highest paid person at the company got the third largest figure.
The only issue for the employees is the stock options have no monetary value as yet as the company has not been publicly listed, and, perhaps controversially, results are issued which rank the size of the employee bonuses. There’s also a risk that employees will award their bonuses based on friendship groups rather than merit.
But Coffee and Power co-founder Philip Rosedale is happy to persist with his system, believing his employees are far more qualified to award bonuses than he is, and others agree with the concept.
“Who knows better than employees themselves who the contributors are or [who is] the go-to person with a technical problem?” says Carnegie Mellon University management professor Denise Rousseau.
It’s all part of a theory that handing over more power to employees and giving them a greater say in the day-to-day running of a business can result in higher levels of employee satisfaction and retention.
What do you think of the idea of allowing employees to assign bonuses? And have you implemented any initiatives to hand greater power to your employees?