The Kudo Box

There are many wrong ways to reward employees. A simple but effective approach is to install a “kudo box”, which enables people to give each other a small reward.

In one of my courses, Paul Klipp, president and Scrum coach at Lunar Logic Polska in Poland, told me how he created a rewards system. He explained that his employees can give anyone a gift worth 20 euro. They call it kudos and it can be implemented as an email to a central mailbox, or slipping a note in a cardboard box. (They started out with movie tickets, but since not everyone enjoys airborne popcorn, the gifts can now be anything with a similar value.)

The management team never questions why someone is rewarded. When anybody in the company feels someone deserves a reward, he or she gets it. Paul will personally bring a handwritten kudo note, and a tray of gifts, from which the receiver can pick one item. And everyone will hear about it, on Facebook and on the internal chat system. Paul told me these gifts work extremely well, and he loves the fact that all employees are involved in catching people doing good things. It is a low cost reward system, and trust is never abused.

A similar system was implemented by Philip Rosedale, former ceo of Linden Lab, creators of the virtual reality platform Second Life. Rosedale called it the LoveMachine. It was a tool that enabled employees to send notes of appreciation to their colleagues. According to Rosedale, recognizing each other’s hard work makes everyone feel great. And because everything is transparent, managers gained useful insight into which people were performing well, and which people never received a compliment.

The kudo box fulfills the six rules for rewards, and works much better than bonuses and other forms of financial motivation.

No matter if you call it a Kudo Box or a LoveMachine, a public system that enables people to give each other small unexpected tokens of appreciation for doing a good job, meets all six basic principles of good rewards. The evidence is overwhelming. Therefore it’s sad that many managers still haven’t figured out what’s wrong with their rewards systems. Maybe they are too busy thinking about their own bonuses?

This post is an excerpt from my new article called Kudo Box. Do you want exclusive access to innovative practices? Do you want to be the first to read the new articles? Do you want to learn more about Management Workout?

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