Secrets of Human-Capital Management, December 2007 David Creelman
Favour Exchanges Most of the topics I discuss are proven best practices. This time I want to present a more radical idea: the use of complementary currencies within organizations. Complementary currencies - what I will call “favour exchanges” - are well grounded in monetary theory and have been used in many places to strengthen communities. They are particularly useful when communities are under economic stress. I can’t point to any examples of companies using favour exchanges, but it is likely that somewhere, someone has already adopted this technique.
Organizations as Communities Some organizations are little more than machines meant to make money for the owners. However, others are more like communities and the leadership explicitly nurtures that sense of community among employees. Over the long run, creating a strong sense of community in a company is a pretty good way to make money as well.
There are lots of things companies do to build a sense of community. The main technique is communicating and living a set of values. Speeches, celebrations, and profit sharing are all ways of creating a sense of community. In the US some companies, like Chick-fil-A, explicitly draw on religion as a community builder. However, if you really are serious about building a community then you should consider using one of the most powerful social technologies ever invented: money.
Money serves a few different functions, but for a community it can be seen as simply a way to facilitate the exchange of favours. Favours flow naturally through any group of friends: I do something for Peter, Peter does something for Maria, Maria does something for me. But if we have some way to track the favours, some kind of alternative currency, then I can exchange favours even with people who are not my immediate friends and that can bind together not just a small group, but a whole organization.
How It Works A favour exchange is known as a mutual credit system. The simplest unit of exchange is an hour. If an employee agrees to help another by looking after their kids for two hours then the helper gets two hours credit in the system and the other now owes two hours. This can be kept track of on something as simple as a chalk board, but these days it makes sense to do it on the web.
There does not have to be a lot of formality to the system; after all, this isn’t about real money, it’s about facilitating the exchange of favours. No one needs to approve the transaction, as soon as two people agree on a favour they just enter it into the system.
Technicalities Yes, there are technicalities. You need to ensure people don’t go deeply into ‘debt’ where they accept lots favours, but never put anything back into the system. You need to have a dispute resolution system. You need some way to kick start the system. However, there are no irresolvable problems. These sorts of mutual credit systems have worked well in many communities. Exchanging favours comes naturally to people, it really is in our DNA, we are social creatures.
The Payoff When people exchange favours it offers a tangible benefit. How wonderful it is to get someone to help you carry that heavy table upstairs when all you have to do in return is help someone else’s child learn fractions. How nice to earn credits by helping someone set up their home computer and then spend them on singing lessons. But the tangible benefits are not the most important thing. What is most important is the strong fabric of friendship a favour exchange yields.
There is also a payoff to the company. Employees will not want to leave a company where they feel part of a strong community - even if the company can’t offer the same benefits as a bigger firm or has forgone salary increments due to tough times. Employees who use a favour exchange will have a network of friends that criss-crosses the company breaking down silos, easing information flow and aiding cooperation. A strong community makes a strong company.
Conclusion A favour exchange might simply be a nice perk or it might be the steel web that saves a company from falling apart. It’s not a tool for everyone. But for companies that truly value community - or are simply desperate to weather bad times - a favour exchange is a little known, inexpensive and powerful tool.
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