The conventional wisdom is that the more a person is paid, the better he performs – productivity is proportional to salary. But in 2013, the Harvard Business School decided to find out exactly how the level of earnings affects productivity. The results were surprising.
The researchers posted a job on a freelance exchange. Applicants were asked to process captchas for four hours – enter as much data as possible, making as few mistakes as possible.
Those who responded to the job were divided into groups:
$3 an hour was the wage for newcomers with no experience;
Four dollars an hour – the rate for those who had previously performed similar tasks.
The trick was that the three-dollar workers were soon announced that the project budget had been increased, and their wages were raised to four dollars an hour. The scientists could not have imagined the effect this would have on productivity.
Both groups performed similarly tricky work. But, contrary to popular belief, higher pay does not guarantee greater productivity.
People who initially did the job for $4 an hour, despite their experience, did so less intensively and with less quality than those who worked for $3 an hour with a subsequent raise.
Related: Uncovering the Psychologists’ Theories of Motivation: What Drives Human Behavior?
It is important how the cash increase will be presented
It is crucial how the gratuity is given. It should be a gift with no strings attached. “We’ll raise your salary, but you’ll have to do twice as much” – you must agree that such a “reward” is unlikely to cause employees to dedicate themselves.
If you increase your salary simply because you can do it, you will increase productivity. Such a gesture of goodwill is bound to be reciprocated. If you treat people kindly, they will return.
But why buy something expensive when you can get the same thing for less? There will always be people who are willing to work for a pittance. You can use the pay stub template copy and paste all information, and the generator will do everything itself. Saving resources is competent for business. But for recruiting, it’s a losing strategy, and here’s why.
You get what you pay for
People are not robots. They value not only the financial but also the moral satisfaction of their work. They appreciate their employer’s generosity. After all, a raise is not just extra money in the family budget. It is first and foremost an indicator of an employee’s value to the company.
People want to get the highest possible pay for their work, and companies want to get results at the lowest possible labor cost. It all makes sense. But when employees see that the company uses the cheapest labor, a well-known principle comes into their minds: “They pretend to pay us a salary, and we pretend to work.” According to Richard Thaler’s nudge theory, Homo economicus is evolving into Homo sapiens. In the future, economics will take more account of human behavior. But so far, the opposite is true: business counts money without thinking about psychology and motivation.
