Microbonus

Why Would Anyone Appreciate a Small Bonus?

By Raphael Crawford-Marks

Someone recently wrote to us, "I'm interested in the idea [of Bonusly], but the bonus amounts seem trivial ($10, $20). This could seem more insulting than positive. When you can't even buy lunch with your ‘bonus’, what's the point of working?"

A faulty assumption

On the surface, this is a totally reasonable conclusion to jump to. If an employee gets a small bonus of, say, $10 for closing a big deal or shipping a major feature, will they feel insulted that such a low value is being put on their work?

To get to the answer, let’s unpack the central assumption of the above question: that these small bonuses are the entirety of your compensation. This assumption is false. Small bonuses are given on top of salary, benefits, vacation, and and other common forms of compensation. If all you get for your hard work is a $10 "bonus," you should quit immediately and report your employer for violating minimum wage laws.

We can explore this further with a thought experiment: imagine that you are a worker who already receives fair compensation for your work. On top of that, you receive frequent, spontaneous, and meaningful praise from your peers in the form of small bonuses. Does this already happen at your workplace? How would you feel if it did?

This thought experiment hints at the complex reasons behind why we work, and what conditions are conducive to having employees who love their jobs.

Employees are people, and people have needs

Maslow's Hierarchy of NeedsAt this point, a bit of background on psychology is useful. I’d like to introduce one concept, Maslow’s Hierarchy of Needs. This pyramid models the order of human needs, which must be met in order for us to perform at a high level and feel fulfilled.

Your salary and other benefits help meet to two basic needs: physiological needs (healthcare, food, water, shelter) and security needs (you can save up a nest egg, maybe purchase a house, etc).

Small bonuses from Bonusly can help satisfy your higher-order needs. Peer recognition addresses the human need for belonging and esteem. An old-school businessman may scoff at these needs, believing them to be optional, but they’re not. In fact, "lack of appreciation" is one of the most-cited reasons for why employees quit.

Research by MIT economist Dan Ariely supports this idea. In a recent TED talk, he presented three key findings that demonstrate why small bonuses are so powerful:

1. Positive reinforcement increases performance.
Most of us already know that praise increases motivation. This research indicates that praise also improves performance. In other words, the praised and recognized worker doesn't just work harder, she works better.

2. Knowing our work helps others increases motivation.
Many managers will talk about doing work “for the good of the company.” What this research shows is that we also are motivated by knowing how our work helps our others. Peer-to-peer bonuses make it easy for employees to see how their work has directly helped their colleagues, thus increasing their motivation.

3. If we feel less appreciated, we want more money.
This impacts your bottom line. People who feel unappreciated want more money to do the same job. Despite the lower cost of a peer bonus program, this research shows that it can be more impactful than top-down recognition, as your employees are able to give and receive meaningful appreciation on a regular basis throughout the year.

As you can see, work — what we do, why we do it, and how we feel about it  involves a lot more than just money. There is complex human psychology at work. By understanding that psychology, you can make decisions and implement programs that will promote a healthier, happier, and more productive workforce.

Written by Raphael Crawford-Marks

Raphael Crawford-Marks

Raphael is co-founder and CEO of Bonusly, where his focus is on creating a work environment that enables the Bonusly team to thrive.

Originally published on November 05, 2014 → Last updated April 24, 2018