Crowdsourced compensation is one of those terms that can send people running in the other direction, or at least just look at you with a smirk. The immediate image in most peoples’ heads is of a company run amok, employees having free rein over payroll decisions, perhaps even an unsustainable utopia of giant paychecks for all.
It’s easy to overlook the benefits of crowdsourced pay with such vivid imagery. Fortunately, the reality of crowdsourcing is far less extreme. Typically, a relatively small portion of the overall payroll budget is devoted to crowdsourced methods, like social recognition.
The efficiency and success of such programs comes from the ability of all employees to spread out that investment, both across people and across time, which collectively yields greater impact than if used in a more traditional, lump-sum manner.
Instead of a year-end, top-down bonus, that same amount of money can be spread throughout the year from the bottom-up. The cadence helps to ensure a more even source of motivational energy and social connection. Such methods are also more inclusive, spreading a wider net of energy across employees.
To realize these benefits, it is important to get a few key psychological dynamics right. For crowdsourced pay to be maximally effective, there needs to be the right balance between psychological safety and a sense of autonomy.
Psychological safety is important because employees have been empowered to decide to whom, where and when to distribute the social recognition investment made by the organization. Without a sense of safety, it is all too easy to fear making the “wrong” decision or receiving backlash for a particular nomination or type of award.
While manager approvals and program guidelines are available to keep spending in check, a lack of perceived safety can still prevent a robust culture of recognition from forming. Having an “award advisor” or other communications can help provide a sense of safety by demonstrating the expected norms or providing examples of what others have done.
Safety is only half of the equation, though. Equally important, employees need to feel a sense of autonomy. Too much structure and employees will not feel empowered to select the appropriate level or type of recognition, again stalling the positive effects that the program could have.
The power of crowdsourced pay comes from employees who see the contributions of their colleagues and feel empowered to select the right award that equals the impact of the contribution. That sense of empowerment further contributes to positive cycles of engagement.
Balancing safety and autonomy is familiar to many parents, but applies equally as well to HR professionals seeking to get the most benefit from their social recognition programs and transition more of their compensation investments to crowdsourced methods.
Does your organization provide the right amounts of safety and autonomy with its programs?
As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.
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