(Working) Life’s a Game? (April 2020)
Credits instead of bonuses, virtual remuneration models and playful ways of performance control: Gamification is all around. For gamers, dreams might have become true. For employment lawyers, the next level has just begun.
After game theory has become popular in economics, mechanisms known from videogames and social media platforms are gaining momentum in business. This phenomenon is often referred to as gaming or gamification. While one might expect gamification to be mostly found in hipster start-ups or the gaming industry itself, it might sound surprising that even large corporates in conservative industries have started to experiment with gamification concepts. Gamification is slowly but steadily becoming part of everyday working life: Gamification should support targeted recruitment, HR development and motivate employees when learning new things. Gamification is considered as a means for performance enhancement. When companies revert to gamification in combination with virtual compensation models, employees can even increase their salaries
What is gamification?
Gamification takes advantage of the gaming instinct of employees, applicants or business partners. Gamification already starts with little things like the visualization of work results with progress bars or rankings and high score lists. However, it can also be applied by using toytown training software specially developed for a company’s business case. Through playful e-learning (for example training sessions structured like a video game), employees should acquire new soft skills faster and more intensively, with fun and ambition. Gamification sets positive instead of negative incentives.
One of the most sophisticated applications of gamification relates to remuneration. Letting key employees participate in a company’s success as well as rewarding the best performers and specialists in addition to their fixed salary and creating additional performance incentives is not new. However, there are digital remuneration models on the markets that have a strong connection to ideas of gamification. Virtual remuneration models, for example, do not involve employees in a way that they actually become the owner of the shares in rem, combined with membership rights. Instead, the company reflects its corporate value and its further growth in value in the form of virtual shares, each of which embodies the corporate value on a prorated basis. The employees are paid this virtual current share price at the end of the agreed term, regularly after expiry of a vesting period, or when a specific event occurs. In other words: the company goes one level further, you receive more coins. You remain on the same level, there are no new coins available for you. Employees participate in the economic success, but also in the failure. Membership rights such as voting, information and participation rights are excluded, which is only to be expected from a gamer’s perspective. No player in a videogame sets the gaming rules either.
Despite the futuristic-looking name, “virtual remuneration” is already a fixed component of the working world. In the start-up scene in particular, employers benefit from the motivation boost associated with employee participation in the success of the company.
Another aspect of virtual remuneration is the way in which money is paid to an employee. Usually, be it fixed or bonus, remuneration is transferred to an employee’s bank account. In virtual remuneration models, it has become more popular though to transfer remuneration in a virtual way, for example through “credits”. Credits can be assets that can only be used internally, including for things such as purchases within video games. This is the latest point at which lawyers raise their eyebrows.
In the framework of their digitization emphasis, German politics has already taken up the topic. Gaming and gamification have been the subject of a discussion round by the future-of-work think tank of the Federal Ministry of Labour and Social Affairs in October 2019. So what will the future of work hold? Gamification as the rule rather than an exception? A big share of gamification’s fate in Germany might depend on how the legal challenges will be approached.