Merit Increase in a self-managed group. Experiment 4: Star Awards

At this point, we have experimented quite a bit with different methods and, more importantly, we have grown in terms of trust, transparency and self-management. Check out our previous experiments if you haven’t done so yet (Experiment 1, Experiment 2, Experiment 3).

This time we wanted to tackle one of the flaws that all of our previous methods had, and that is to provide recognition right after the fact and have a process that runs throughout the year rather than just once every 6/12 months. We still had to stick to the corporate annual budget cycle so this is what we did:

8 Stars

There are a couple of things that made us create a “currency” for appreciation. After we ran Experiment 3, participants, in general, expressed that they didn’t particularly enjoy to use direct cash because it made the exercise too much about the money and deviated the attention from the recognition itself.

In addition to this, we don’t always know the available budget, when will be approved, how much it will be or even whether we’ll have one. It’s easier to have an artificial currency that you can exchange for real cash once your organisation has the money ready for it. So receiving a star will be seen as recognition and even though it will be converted to money at some point, it is nice to be recognised right away and enjoy that bit without thinking about money.

Why 8? That’s a great question. We used our gut feeling and previous experience on this. In Experiment 1 you could mention 3 names, in Experiment 2 you could mention up to 15 names and in Experiment 3 there was no limit in regards to how many people you could include in your distribution. With all that in mind, after studying how people behaved in these experiments and also considering how much budget we would typically get for increases, we decided that 8 was a good number both for having a reasonable monetary value when we convert it but also to convey that a star is valuable. Having only 8 for the whole year would make everyone carefully think about who deserves one, rather than just give them away easily for any little thing. We wanted a star to be meaningful.

As few rules as possible

After the 3 previous experiments, the group is now mature and hence we didn’t feel like we needed to set so many rules. We wanted to give people as much freedom as possible to use their stars as they considered appropriate. Stars could be given at any time, to anybody and even several stars to the same person, as long as you didn’t give them to yourself. We only set the limit of the stars (8) and made clear that all the stars will be published, who gave it, to whom and why. Also, because humans tend to procrastinate we said that 4 stars would expire in 6 months just to avoid people forgetting or keeping all the stars for the end of the year which would defeat the purpose of moving to a spontaneous method.

Oh yes, there was one more rule, if you wanted to cash out the stars you received at the end of the year, you had to participate in this exercise, meaning that you had to give out at least 1 of your stars.

Counting Stars

When the year was over, we would look at how much budget there was for this purpose and make a direct conversion dividing the total budget by the number of stars given. Each employee would get that value for every star received. Simple.

If somebody received so many stars producing their increase to go beyond their salary range, they would get a promotion. We actually loved this because promotions are a consequence of a salary increase earned by everyone’s recognition and not the other way around.

Things we considered

There were a few things we considered that we didn’t end up implementing. You may want to try them out though, so here they are:

  • Combine the stars with another method. You could dedicate a percentage of your budget to the Star Awards exercise and distribute the rest with a different method like splitting it equally among all employees to ensure a minimum raise for everyone or delegate some of it to the teams or apply a different method to that bit. Your imagination is the limit.
  • Allow giving a star to an entire team and split its value among its members.
  • Set limits. For example, an employee can only give out up to 4 stars to their team members but the other 4 need to be given to colleagues from other teams.

starsWhat worked well

  • We didn’t have a single employee who didn’t receive at least 1 star. Most people received several during the year for specific contributions, sent by a colleague together with a nice piece of positive feedback. This really motivated people and helped us keep doing our best through the year.
  • Everybody was happy for people receiving a lot of stars, they’re just great employees and teammates and if they received 20 stars it was because they really deserved them.
  • The fact that the stars were public could influence people on their decision. Maybe someone was thinking of one person to give them one star but then changed their mind when they saw that they had already received a lot of them. While we were concerned about things like that happening, and they probably happened, we still think that the positive impact of sharing recognitions frequently with everyone created way more good than bad.

Not so well

  • Again we didn’t have feedback about things to improve. Most feedback was to recognise something great about someone so additional methods needed to be used to fill that gap.
  • With this method, we still have cases of employees that interact with many people and their exposure made them more likely to be considered by more people versus those who spend more time out of the office, with clients or more isolated who are inevitably considered by fewer people as a candidate for a star award.

In Conclusion, this method was an extraordinary exercise. The feeling of giving a star, receiving it and even seeing how others were recognised was a boost and having 8 stars per employee, we had plenty of happy days throughout the year. Still, we think we can do better and that is why we’re working on the next Experiment, one that we think will fill most of the missing pieces. Stay tuned.



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