The Peer-To-Peer Bonus System

In a business that depends on collaboration, you should receive your bonus from your colleagues (not from your manager) with a peer-to-peer bonus system.

Source: The Peer-To-Peer Bonus System

This is a great article from Jurgen Appelo that describes a better way of distributing bonus money to employees.  Annual reviews and managers deciding on bonuses only demotivates everyone.  There are lots of articles that talk about this and lots of proof behind it.  And let’s face it, we don’t really need all that proof, the vast majority of us experience it every year.  This is one of the first articles I’ve seen that has given a concrete example of an alternative…and I love it!  Here’s what I like about it…

Frequent Feedback

In a typical performance review cycle, you have a review once a year.  If you have a really good manager, you are talking about it throughout the year and getting feedback on your performance more often than that, but my experience is that there aren’t a lot of really good managers.  Even when I was a manager, I know I struggled with giving frequent feedback.  It’s hard.  So we get feedback once a year on how we are performing, at least from the perspective of our manager who often times doesn’t see much of the day to day stuff.

In this system, you are getting feedback on potentially a daily basis from the people you are directly working with.  You get much better insight into what behaviors are helping, and you also can look at what you are doing that isn’t getting feedback.  If there is something you are spending a lot of time on that isn’t generating any feedback…does it deserve that much of your time?  It might, but it’s something to consider.

Focus on the Positive

The other thing I really like about this system is it focuses on positive feedback.  Any parent knows, encourage the positive, ignore the negative.  It’s hard to do, but definitely more effective.  I’m currently on my sixth toddler, and there is no time this is more obvious than during the toddler years.  Telling my 18 month old daughter no is just a sure fire way to make sure whatever she is doing continues.  Obviously we are not to that extreme as adults, but we do still like attention.  And lets face it, job descriptions these days are so generic they are just about useless, so it can sometimes be a bit unclear exactly what you are supposed to be doing in your job.  Receiving positive feedback will do a much better job of helping you find how you can best contribute because it lets you know what you are doing that is helping the most.  Do more of that and other things like that.  That’s not saying we should never have discussions about negative things, but only discussions about the negative is definitely not helpful.


So how effective is your feedback system and review process?  Hopefully you have realized how counter productive and even harmful the standard annual review process is, so here is something you can look to as a potential alternative.  I know you may not have the authority to completely change how reviews are done, but maybe you can utilize something like this inside the existing system to help alleviate some of the problems the existing system has.  Definitely head over to Forbes and check out Jurgen’s full article for some more details.

The image at the top of this post, “Peer to Peer”, is a derivative of “P8269454.tif” by Sigfrid Lundberg, used under CC BY-SA. “Peer to Peer” is licensed under CC BY-SA by Development Block, LLC.

Comments on this entry are closed.

  • I’m not so sure about avoiding or ignoring the negative. I think there is valuable feedback loops and learning that is missed if we don’t address negative stuff… it just must be done in a constructive and not demotivating way.

    • Thanks for the feedback Peter, and good point! I agree we should talk about the negative, but it seems like in a lot of organizations that is just about the only feedback people get. A lot of managers aren’t good at giving feedback so they only do it when absolutely necessary, which is usually something negative. There needs to be both.

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