Earlier this month I wrote about a new service called Bonus.ly.  The idea behind the site is quite simple.  Each month employees are allocated a budget, be it financial or otherwise, that they can then allocate to their colleagues according to who they feel has performed well.  The idea is that peers will be much better placed to know who the top performers are than managers, and this peer recognition is better motivation.

The site is currently in testing so there isn’t a huge amount of empirical data to go on, but a new research paper suggests that they may be on to something.

The researchers wanted to test the performance claims of the kind of prosocial bonuses used by Bonus.ly.  To test things, they applied prosocial bonuses to a team of sales people in a pharmaceutical company.  They calculated that when a $10 bonus was given to a salesman to spend on himself, he only generated $3 in extra sales, so a $7 loss.  When the salesman was given a $10 bonus to give to a colleague however, the prosocial bonus yielded an extra $52 in increased sales.  Which is kinda interesting.

The authors of the research have a new book out in a few weeks where they chronicle the kind of social dynamics and psychological research behind selfless behaviour, and the benefits that can acrue from it.  It’s called Happy Money and could be well worth adding to your reading list.

They are however at pains to point out that taking an individuals entire bonus and making them spend it on other people may not be entirely a good idea as a motivational tool, even if of course if that employee does well they’re likely to get plenty back in return.  The feeling that money is being taken from you does kinda act as a demotivator.
It’s certainly an interesting use of money as a motivator however and if nothing else will provide some fascinating insights as these various approaches generate material and evidence as to their effectiveness.