Is it possible to build an employee reward program where gamification is central to the design, not a frilly add-on?
Surprisingly the answer is yes and the case is documented in the book Transformative HR by John Boudreau and Ravin Jesuthasan. Their chapter on Shanda Interactive Entertainment, one of China's largest operators of online games, shows that gamification can disrupt what we think we know about employee reward programs.
Gamification is the science of using rewards like points, badges, and social interactions to promote desired behaviors. The techniques arose in computer games to motivate players to keep playing and to enjoy themselves.
Websites have been adopting the same techniques to get people to buy more, promote the site to their friends, and become more emotionally connected to the site.
Since gamification is about driving behavior it falls squarely into the domain of reward systems.
One of the main differences between traditional reward programs and gamification is that in the later, rewards are very frequent.
The traditional reward system in a large organization runs on an annual cycle. Work all year, and at year end the employee can expect a salary increment and maybe a bonus. To the mindset of someone who grew up on texting instead of snail mail, that pace seems ridiculously slow.
Shanda goes gaming with employee rewards
Shanda Interactive Entertainment is in the booming world of computer games, in the booming nation of China. It is an environment where the employees want to see their progress; there is lots of opportunity elsewhere and they do not want to wait a year to find out if they are on track or not.
The heart of Shanda's employee reward system is that employees earn points for day-to-day achievements and the accumulation of those points is what drives salary increments.
There are two kinds of points: ordinary points for performance of their regular job and extra points for taking on special projects.
Employees can also lose points if they make a mistake-just like a failure might show up on a performance review; however instead of spending a year wondering how the mistake will affect their progress they are docked the points right away and they can set about earning them back.
When employees have earned enough points, they go up a level and get the associated salary increment. The system is designed so that the average employee can go up a level each year based on ordinary points. Star employees go up much faster.
This can be seen as a way of moving someone up, through a broad salary band.
A significant promotion cannot be earned by point accumulation alone, that takes approval of a committee, just as it would in any other company.
The seasoned reward professional can immediately imagine all the ways this could spin out of control, but rather than dismissing it, ask yourself what governance mechanisms would be required to keep it sane.
Shanda does have controls; for example, there are not an unlimited number of points available and the system is regularly tweaked both to keep it engaging and to tamp down problems.
Also think about the employee population at Shanda. It's young; the average age is 24. You have bright, achievement-driven young people working very hard to make the company successful in a highly innovative, turbulent and competitive business.
All the work around deciding what ordinary and extra points are available can be seen as a means of goal setting. Employees are given goals. The importance of goals is made explicit. Employees are rewarded for day to day achievement of those goals. It is a good fit of employee reward system design to the organizational context.
Is gaming the future of employee reward programs?
I do not expect companies to adopt the Shanda system wholesale; I do expect that more and more of the principles of gamification will be applied to reward systems. In some ways, it's really just an extension of pay for performance.
Perhaps we can be inspired by Shanda's willingness to invent something radically new to rethink ways of giving our young employees more frequent feedback and more frequent rewards.