In many companies, performance goals are used to focus resources and motivate employees. However, a company can also be run without any performance targets, as the example in this article shows.
Flat hierarchies and personal responsibility – that's the motto at Trivago.
Trivago is a hotel metasearch engine that compares hotel prices. According to Trivago, it compares over 200 online booking sites for 1.3 million hotels in more than 190 countries. Profits are generated via pay-per-click. Founded in 2005, the Düsseldorf-based company employs almost 1,000 people.
The company's employees work in largely independent teams where there is the greatest possible transparency – everyone knows about everything. Decisions are made bottom-up and should be made as close as possible to the information base. The empowerment of employees forms the cornerstone of intrinsic motivation, which for co-founder Rolf Schrömgens is the top priority in employee management.
Intrinsic motivation has already been confirmed several times in research as an important lever for promoting corporate performance. In addition to overall performance, a high level of intrinsic motivation also has a positive influence on creative processes and the ability to innovate. [1]
Accordingly, there are no specific performance goals at Trivago, unlimited vacation, four days of partying with colleagues and one month per year you are allowed to work from Mallorca. Due to the lack of performance goals, employees are measured solely by Trivago values (trust, genuineness, entrepreneurial passion, power of arguments, clear focus, and learning). The bonus payments are also not tied to targets. Situational ad hoc bonuses are paid spontaneously, but are not transparent.
Communication as a success factor – is also the biggest challenge
For Schrömgens, the exchange of information is the most critical success factor of a company, which is usually contained by hierarchies. At Trivago, executives don't have titles or offices of their own to counteract "status asymmetries" and enable barrier-free communication. The resulting empowerment of employees has been shown to have a beneficial effect on intrinsic motivation [1] and is considered a prerequisite for the success of consensus in decision-making.
One challenge at Trivago is non-hierarchical communication. Critical opinions of rating portals address a deficient flow of information across hierarchies. In addition, barrier-free communication with direct, cross-departmental access does not yet make any statement about the speed and quality of decisions.
Another stumbling block is the lack of concrete goals. As enshrined in the so-called goal-setting theory [2], motivation and performance are significantly influenced by specific goals (performance targets) and feedback on the achievement of goals. Trivago counters this doctrine with the image of its own company as a learning organization that constantly improves through rapid learning and is and remains successful overall.
In the end, the question of culture also remains a question of fit: The model is not suitable for everyone – the more previous experience an employee has from more classic organizational settings, the more difficult it is for him or her to find his way in an organization without performance goals. This is probably also the reason for the rather lower average age of the employees of 29 years. However, the approximately 50,000 applications to Trivago per year also speak for the great popularity of the model.
What else does Trivago do?
Another aspect that is intended to promote flatter hierarchies is the 360-degree feedback that takes place twice a year, in which colleagues evaluate each other. Employee satisfaction is recorded weekly by employees reporting this by means of a smiley face. A peer bonus system is also being worked on. Everyone should receive a budget for bonuses that they can distribute to colleagues in other teams as they wish.
[1] Zhang, X. & Bartol, K. M. (2010). Linking empowering leadership and employee creativity: The influence of psychological empowerment, intrinsic motivation, and creative process engagement. Academy of Management Journal, 53(1), 107-128.
[2] Locke, E.A. & Latham, G.P. (1990). A Theory of Goal-Setting and Task Performance. (Englewood Cliffs, NJ: Prentice Hall)
Christoph Herzog
Editor: Haufe Talent
Christoph Herzog is interested in people and how they can work better together in the digital age. He is an editor at the Haufe Group, father of a daughter and likes to walk on narrow paths.
