Bonuses in an Agile Company: Our Successful Application of Merit Money

Hey everyone, how are you?

Some time ago, Tadeu Marinho (one of my mentors) published the case study on the Management 3.0 website about Merit Money, created by Jurgen Appelo telling us about our experiment and learning with this practice and I would like to continue this publication by telling everything that has happened since then. Management 3.0 sobre Merit Money, criado por Jurgen appelo contando como foi nosso experimento e aprendizado com essa prática e eu gostaria de dar continuidade à essa publicação contando tudo que aconteceu desde então.

For those who haven’t read the case study or don’t know what Merit Money is, access the links below for more details:

After the experiment (which took place in 2017), we decided to keep it as a continuous practice within the company and over the years we are evolving and adapting the use of Merit Money at Knowledge21. Knowledg21.

See how our evolution was:

The recognitions stopped being by e-mail and started to be in spreadsheets;
We created a group of people to consolidate the recognition and organize the donated values. This group was called “Meritequeiros”;
Everyone should do the recognitions until a certain date in the month. If 1 person did not, no one will be recognized;
We started to collect metrics and information from practice;
Coach values ​​have been updated over time:

  • 2017/04 – R$ 1,000
  • 2018/04 – R$ 1.500 ?
  • 2019/05 – R$ 500 ⬇️
  • 2020/04 – R$ 0 ??  ??‍♀️
  • 2020/06 – R$ 500 ?
  • 2020/10 – R$ 250 ⬇️ ♻️

Looking at the values, some questions emerge:

Why did it increase?
Why did you download?
My God, why did you zero then come back and down again?

Calm down, I’ll explain ;-)

In 2018/04 we increased the amount to R$ 1.500 per coach because the company was making a lot of profit and we think it is fair to reward Coaches more.

Okay, but why did you drop the value 1 year later? Since the beginning of the practice in 2017, we consolidated the recognitions and followed the metrics of distribution of values ​​by coaches and in 2019In a few months the distribution of Merit Money did not happen because some restrictions were broken (restrictions previously aligned) and with that , some individuals were harming themselves because they were contando on the amount to be received.

This behavior broke the first premise mentioned in the practice of Merit Money, which is:Salaries are to be expected, bonuses are notThat is, some individuals were counting on the bonus money as a salary supplement and this could not happen. Worse, they were hurting themselves.

No problems and for that reason in 2019/05 we lowered the amount to R$ 500 per coach but we gave visibility to all involved (and at that time we were already twice as many coaches in the company) and we continued with the practice.

I can already see, Ricardo. The same thing happened in April 2020, correct? So you have lowered the value to ZERO Merit Money

ope! Covid arrived in March 2020 and customers, market, economy went crazy. Not to mention the uncertainties of what lies ahead. So we made several adjustments to the company’s OKRs, one of which was financial and Merit Money went into freezing.

The most important thing for us is that at that time the practice was no longer for the money or the bonus. It was really for the power and pleasure of recognizing our culture and values ​​to individuals and teams and we adapted and created MERIT HUGS.

That’s right, it is still worth giving hugs instead of money and we made only a few adjustments:

  • Coaches from outside Brazil started to participate;
  • We could recognize anyone from the company, there was no longer the restriction to recognize only peers (Coaches for coaches);

It was a sensational 2 months because literally the practice was not for the money but for the recognition and hugs !!!! It was great to be able to recognize everyone in the company and not just our peers (coaches for coaches, back office for back office).

After 2 months we were already stabilized and reorganized and we returned with the practice of Merit Money as it was before, same values, recognition between peers, but the feeling was that the “joke” was no longer the same. It was less fun to recognize only peers.

It was then that in October 2020 we consciously decided to break a Merit Money premise: Peer feedback is the main measure of performanceYes, we decided to use the same Merit Hugs “system” where everyone could recognize everyone (Coaches, Mkt, Finance, Partners, etc.).

And why did we do that?

We learned to “play the game” and we already know that it is due to culture and our values ​​and not the bonus:
Teams have a lot of responsibility, maturity and empowerment;
We lowered the amount to R$ 250 because it was the amount used by one of the teams (and we don’t want to break the 1st premise again);
For the pleasure of being able to recognize culture, behaviors and intrinsic motivations but also extrinsic motivations (which we know is also important);

This change is being sensational because when we enter WeCare (online platform) to make the recognitions, it is possible to see how different circles (Mkt, Finance, Experts and etc.) and individuals are recognizing each other.

You Have a Recognition…
Recognitions between circles 😉

Está sendo uma jornada muito legal e tenho certeza que trará resultados mais positivos ainda na nossa cultura e valores mas só poderei partilhar com vocês esses resultados daqui alguns meses, final de contas, as métricas estãos endo coletadas, lol 🙂

I wanna share the link to a talk what I did in October 2020 about Merit Money at the Agile Connect in Portugal

That’s it folks, see you soon in the next article.

If you want to talk more, look for me and I will be happy to talk to you.

See you soon ;-)
Ricardo Caldas

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