Last reviewed 11 July 2019

When a colleague does a good piece of work, have you ever felt like “tipping” them to recognise a job well done? No? Well the practice of peer rewards looks set to start making waves in UK businesses.

“Peer-to-peer rewards”, “peer-to-peer micro-bonuses” or “peer-to-peer tipping” looks set to be the latest initiative introduced to recognise and award hard work. The key difference with this initiative, as recognised by the name itself, is that employees do not have to wait for recognition from their manager but can be, instead, rewarded by their peers and colleagues who may be at the same, or even lower, level than themselves.

The rise in the UK

Originally launched as a business initiative within the US, there are a variety of online companies to which employers can sign up to provide employee recognition. One such company, Bonusly, provides a monthly allowance to each employee which can be used to allocate bonuses to colleagues as “fun” personal recognition of their contributions. Once allocated, employees who have received bonuses can redeem these in an online reward catalogue which contains generic rewards as well as those provided by the organisation; the company uses an example of lunch with the CEO as a potential reward. Speaking to BBC Radio 5 Live, Bonusly revealed that 250 UK firms were using their scheme to provide peer rewards to around 10,000 employees, a significant increase of 75% in the UK within the previous 12 months.

There are a number of other schemes available, with organisations having the ability to determine exactly how the rewards system will work within their business and how this correlates to monetary value. For example, certain schemes may provide a monthly pot of money, others allocate points which build up to a financial reward or some grant a larger amount of money to be awarded over a longer period, such as a yearly allocation.

When planning reward systems, organisations will need to ensure they have evaluated the effectiveness of the scheme and how this will work in practice. For example, if one pot of reward money is allocated to employees every year, are there processes in place to ensure the employee does not run out of bonuses within the first month?

With tipping in the hospitality industry seen as a sign of receiving good service in the UK, it was only perhaps a matter of time before “colleague tipping” was seen as a logical method of recognising good work from colleagues. This does not mean, however, that such schemes come without any potential drawbacks.

Benefits of peer-to-peer rewards

A peer-to-peer rewards initiative can be linked to the organisation’s values and goals, thereby helping to increase employee engagement in line with the company’s ideals. Certain employers may also align reward schemes towards certain areas that need a greater focus or push, for example, monthly reward schemes may allow rewards to be granted to recognise great work in meeting monthly targets for productivity, quality, service, etc.

While it is recognised that millennials and “baby boomers” have different ideals when examining what they want out of their professional life, it is understood that most employees believe it is important to receive recognition for their contribution within the workplace. Although this can be closely associated with factors such as salary and job title, there is no prohibition on employers making use of alternative methods to increase the recognition factor in their organisation. Where rewards are allocated online or via an app, employees can easily see that they are being recognised, with rewards often adding up to a larger “prize” and feelings of appreciation.

It can be a grumble from certain employees that they do not feel that the importance of their role is recognised by those around them, regardless of how positive or frequent their feedback is from their immediate manager. Demotivation can also be a significant risk factor where employees feel that they work harder than their peers but receive no extra recognition. Providing employees with the tools to reward their colleagues will increase peer-to-peer recognition and help employees create positive working relationships with those around them.

Most organisations have processes in place to allow employees to receive feedback from their manager, generally in performance appraisals or periodic reviews, however the infrequency of these meetings can result in some employees getting little value from positive feedback. This is especially the case where the employee performs well at the start of the appraisal period meaning the formal feedback is delayed greatly. Having a colleague reward system in place allows timely feedback to be given, as each “tip” will be perceived as good feedback from peers and managers. This ensures the employee does not get disheartened during the review period, and prevents a dip in performance or productivity as performance is monitored on an ongoing basis through the bonus system.

Disadvantages of peer-to-peer rewards

As with any other practice which relies on decision-making, there is real potential for reward schemes to be abused or to cause negative implications within organisations, regardless of how well intentioned the reason behind introducing the scheme was.

Allocating rewards among colleagues can result in claims of favouritism, whereby certain employees may claim that they are not being rewarded for their contribution while others are for reasons other than their workplace performance. With some reward schemes showcasing employee leader boards, it may be easier than ever for employees to claim they are being treated negatively when compared to their colleagues as a clear comparison can be drawn. Employees may also feel that they should have received a reward in certain circumstances and, if they aren’t awarded one, this may cause further disgruntlement regarding unfair allocation of rewards. Real or perceived abuses of the system are likely to lead to significant negative consequences, whether these are breakdowns in team relationships, employee grievances being raised or employees becoming disengaged and demotivated. In reality, the reward system can have the opposite intention of what was intended.

Alongside favouritism, decisions regarding whether to tip a colleague or not can give rise to incidents of discrimination, for example, where this decision is made on the basis of an individual’s protected characteristic. This issue becomes harder to police and limit as all employees have the power to award colleague bonuses, rather than just trained managers, and may be influenced by discrimination or unconscious bias when doing so. There is also a great risk of falling foul of the Bribery Act 2010 where the intention behind allocating a reward is connected to improper behaviour.

To combat any negative connotations, it will be important to set parameters and rules in place for the operation of the scheme. Such rules may include outlining any minimum or maximum rewards, restricting repetitive rewards within a certain time period, and confirming how complaints can be raised.

Making employees aware of the reasons behind the scheme and the objective that is being pursued will help to ensure the reward system is operated in the way that the organisation intends, as employees are more aware of why and when rewards can be issued.