Bonus Pay Leads to Increased Motivation

pay and motivation An unexpected bonus will help boost motivation among employees. A new study shows that employees respond better to higher compensation when they aren't expecting it.

The study, by Harvard's Deepak Malhotra, Duncan Gilchrist and Michael Luca, placed volunteers who were of equal qualification in three groups. They were each hired to perform a one-time task for oDesk. One group was paid $3/hour, the second was paid $4/hour, the third group was told they would get paid $3/hour but might get paid $4/hour if room was found in the budget. The increased pay was proposed as "a surprise gift."

Researchers found that the first two groups were on par with each other in terms of the work they produced. However, the third group showed a higher level (20%) of productivity.

"We attribute this to the salience of the gift: It was obvious to them that we didn't have to give this additional compensation, but that we had chosen to," Malhotra said.

What the study concluded is that "$3 + $1 is more than $4." This means it might be beneficial to cite lower pay salaries on job postings, surprising the winning candidate with a larger salary. The same is true for bonuses -- perhaps give the impression that employees are getting less than they actually are to give them a little boost in motivation.