Blockchain and Employee Loyalty Programs: Has PayPal shown the way forward?

It’s no secret that blockchain can revolutionize the world, but can it revolutionize employee loyalty programs? Luckily for us, PayPal has taken this question to heart and has created its own blockchain-based employee loyalty program … and we would like to talk about it.

Blockchain and Employee Loyalty Programs: Has PayPal shown the way forward?

Photo by ZSun Fu on Unsplash

It’s no secret that blockchain can revolutionize the world, but can it revolutionize employee loyalty programs?

Luckily for us, PayPal has taken this question to heart and has created its own blockchain-based employee loyalty program … and we would like to talk about it[4][6][7].

Specifically, we wanted to know (1) what is an employee loyalty program, and (2) how would a blockchain improve its performance.

In so doing, we took a very brief look at PayPal’s new blockchain-based employee loyalty program and assessed what, if any, takeaways can be taken from their program [4][6][7].

Lastly, we decided to split this article into two parts. Part One will cover employee loyalty programs and PayPal’s blockchain-based employee loyalty program. Part Two will cover blockchain’s applicability to employee loyalty programs and some of the hurdles in the application.

Employee Loyalty Programs

Photo by rawpixel on Unsplash

An employee loyalty program, also known as an employee rewards program, recognizes employees for their contribution to the company by incentivizing contributions with rewards, such as the oh-so famous “employee of the month” recognition award [1][2].

Employee loyalty programs are meant to motivate employees to perform at their best, lower turnover rates, and raise employee morale [2][3]. Further, employee loyalty programs can even encourage employees to recommend others to join the business [2].

Employee loyalty programs can recognize employees in a variety of styles, but the two most popular are top-down recognition and peer-to-peer recognition [11]. Top-down recognition occurs when “an employee’s supervisor witnesses and recognizes their contributions” [11]. Peer-to-peer recognition occurs when managers and co-workers are empowered to recognize their fellow co-worker’s contributions [11]. Principles that can lead to a successful employee loyalty program are:

  • Timeliness;
  • Frequent;
  • Specificity; and
  • Visibility [12].

Timeliness is actuated when managers recognize employee contributions at or near the time the contribution because that is when it will be most impactful [12]. Frequent is actuated when employee contributions are recognized and rewarded on a consistent basis [12]. Specificity is actuated when managers recognize employees for particular contributions, rather than providing general statements so employees know which contributions provided the most value[12]. Visibility is actuated when employees are recognized for the contributions in a public, rather than private manner [12].

PayPal’s Blockchain Employee Loyalty Program

PayPal Logo.^^^

Loyalty Program Overview

PayPal recently launched their in-house, blockchain-based employee loyalty program (hereinafter “Loyalty Program”) for employees who participate in “innovation-related programs and activities” [4][6][7].

Employees will be rewarded in tokens, redeemable for over 100 experiences including “play[ing] poker with PayPal’s vice presidents” [4][6][7].

The Loyalty Program website acts akin to a social media feed where employees can like and comment on innovation activity [4][6][7].

Loyalty Program Review

PayPal has provided a good example of how to implement a blockchain-based employee loyalty program.

First, the Loyalty Program easily meets the purported or ideal goals of any employee loyalty program:

  • Incentivized mechanisms;
  • Transparent goals; and
  • Recognition accountability [1][2][3][4][6][7].

Furthermore, the Loyalty Program encourages both top-down recognition, as managers can recognize employee innovation activity by rewarding them with tokens, and peer-to-peer recognition, as employees can track their fellow co-worker’s innovation activity on the Loyalty Program website [1][2][3][4][6][7][11]. Moreover, the Loyalty Program embodies the four principles necessary for a successful employee loyalty program [1][2][3][4][6][7][12].

Second, PayPal has improved its simple, yet quite effective, employee loyalty program by implementing an application-specific blockchain to track employee performance [4][6][7]. In so doing, PayPal has made some very significant achievements that other companies can look toward for their own employee loyalty programs [4][6][7].

For example, PayPal’s attempt to create its blockchain in-house relieves the need to rely on third parties to create and/or maintain their blockchain, or having to build their rewards program on another blockchain network such as Bitcoin or Ethereum [4][6][7]. By building their own blockchain, PayPal has complete control over their network, and does not have to worry about rifts in a third party blockchain network’s community leading to unwanted hard forks [9].

Additionally, PayPal can use their employee loyalty program as a reference in implementing their own blockchain payments solution or possibly offer their blockchain-as-a-service (BaaS) to other companies who want an employee loyalty program [4][6][7][8].

Though, it must be kept in mind that PayPal is one of the largest payment processing companies in the world, and has the funding and expertise to create their own without derailing their existing business model [4][6][7][9].

Conclusion

Employee loyalty programs are an effective means of encouraging employee performance through incentivized mechanisms [1][2][3].

PayPal’s blockchain-based employee loyalty program, therein to encourage participation in “innovation-related programs and activities,” provides us with an interesting example of how blockchain can apply even in this area [4][6][7].

From hereon, it will be interesting to see how PayPal will use their employee loyalty program to aid in its development of a blockchain payment solution and whether PayPal will offer their employee loyalty program as a BaaS to other companies [4][6][7][8].


Notes

^^^ = Use of “PayPal” logo is solely for normative use and is in no way shape or form an endorsement by PayPal of the views expressed herein or of Greyscail Blockchain Review in general. PayPal and Greyscail Blockchain Review have no relationship nor should one be implied from the contents of this article.


References

[1] Bonusly, The Guide to Modern Employee Recognition: What is Employee Recognition?, https://bonus.ly/employee-recognition-guide.

The Guide to Modern Employee Recognition — Bonusly
The Guide to Modern Employee Recognition provides the foundation of knowledge you need to build and support a culture…

[2] LoyaltyGator, Employee incentive programs are very rewarding, https://www.loyaltygator.com/employee-loyalty-program.

Employee Loyalty Program — Employee Rewards | Loyalty Gator
Employee rewards programs help engage and retain staff plus reduce turnover.

[3] Bonusly, Why is Employee Recognition Important?: Disengaged employees cost businesses an estimated $550 billion dollars last year in the United States alone., https://bonus.ly/employee-recognition-guide.

The Guide to Modern Employee Recognition — Bonusly
The Guide to Modern Employee Recognition provides the foundation of knowledge you need to build and support a culture…

[4] Ana Berman, PayPal Launches Blockchain-Based Innovation Reward System for Employees, CoinTelegraph, https://cointelegraph.com/news/paypal-launches-blockchain-based-innovation-reward-system-for-employees, Dec. 10, 2018.

PayPal Launches Blockchain-Based Innovation Reward System for Employees
Major global online payments system PayPal has launched a blockchain-based reward system for its employees. Financial…

[5] Angela Bao, Building an International Business Model on Blockchain, ReachFurther, https://www.eastwestbank.com/ReachFurther/en/News/Article/Building-an-International-Business-Model-on-Blockchain, Apr. 23, 2018.

Building an International Business Model on Blockchain
Global blockchain technology market is expected to reach $12.48 billion in 2025. (Photo credit): Westend61 Blockchain…

[6] Rishma Banerjee, PayPal Introduces Internal Rewards System Based On Blockchain, BTC Wires, https://www.btcwires.com/c-buzz/paypal-introduces-internal-rewards-system-based-on-blockchain/, Dec. 8, 2018, 21:30 UTC.

PayPal Introduces Internal Rewards System Based On Blockchain | BTC Wires
Paypal, is the American company operating a worldwide online payments system allows online money transfers and serves…

[7] Liam Walker, Using Own Blockchain, Paypal created “Employee Reward System”, Evercoin news, https://www.evercoinnews.com/2018/12/14/using-own-blockchain-paypal-created-employee-reward-system/, Dec. 14, 2018.

Using Own Blockchain, Paypal created “Employee Reward System” — EverCoinNews
Headquartered in America, Paypal is a worldwide online payment gateway that allows the user to transfer money online…

[8] PYMNTS, PayPal Looks To Make Crypto Payments Faster, PYMNTS, https://www.pymnts.com/news/payment-methods/2018/paypal-cryptocurrency-patent-application/, Mar. 5, 2018.

PayPal’s Patent Aims To Quicken Crypto Payments | PYMNTS.com
CoinDesk, citing an application with the U.S. Patent and Trademark Office titled “Expedited Virtual Currency…

[9] Aaron Hankin, What you need to know about the Bitcoin Cash ‘hard fork’, MarketWatch, https://www.marketwatch.com/story/what-you-need-to-know-about-the-bitcoin-cash-hard-fork-2018-11-13, Nov 15, 2018 8:00 AM ET.

What you need to know about the Bitcoin Cash ‘hard fork’
On Thursday, Bitcoin Cash, perhaps, the most famous hard fork of bitcoin and the fourth-largest cryptocurrency, will…

[10] Steve Olenski, Top 10 payment processing companies in the world, Marketing Land, https://marketingland.com/top-10-payment-processing-companies-world-175913, May 26, 2016, 10:09 AM.

Top 10 payment processing companies in the world — Marketing Land
In the simplest terms, a payment processor is a company that handles transactions between two parties, such as a…

[11] Bonusly, Types of Employee Recognition and Rewards., https://bonus.ly/employee-recognition-guide/types-of-employee-recognition.

Types of Employee Recognition and Rewards — Bonusly
There are many ways employers recognize staff contributions, but there are two main divisions between employee…

[12] Bonusly, How Do I Build a Successful Employee Recognition Program?, https://bonus.ly/employee-recognition-guide/successful-employee-recognition-programs.

How Do I Build a Successful Employee Recognition Program? - Bonusly
Learn the key elements and strategies you need to build a strong employee recognition program.

Originally published on 2018-12-24 on Medium.