We all want bosses who appreciate us. But we also want ones who put their money where their mouth is. A recent study from the University of Cologne in Germany has some good news for upper management: It doesn’t always matter how much money we get, so long as we’re frequently rewarded.
Scientists hired students as lab subjects, divided them into three different groups, and changed the way they distributed pay to each one. One group of students earned a flat rate throughout the experiment, while another received a wage increase halfway through — the last group received eight smaller wage increases. Everyone in the experiment took home the same sum of money in the end.
None of the students knew what the scientists had planned for them — any raise was essentially a surprise.
“We were asking ourselves, ‘How can we increase productivity?’” said Dirk Sliwka, a professor of management at the University of Cologne and part of the study. “This is a key focus in economic research — how we can motivate people.”
Their data showed that students receiving the eight sporadic, small pay hikes were 15 percent more productive than others, though they never earned more cold brews or streetside tacos for their work. In other experiments where they showed the pay schedule to lab subjects ahead of time, productivity wasn’t increased at all.
“It doesn’t matter how big the wage increase is. It matters whether you get one,” Sliwka said. “Emotions are deeply ingrained in our psychology. If someone treats us kindly, we want to reciprocate.”
It’s a lesson learned from the “hedonic treadmill,” a psychological theory that says humans tend to revert back to one consistent level of happiness, even after little bursts of joy that come with a raise. Basically, the more we get, the more we expect — if we know we’re scheduled to get a dollar more per hour next month, we might not be as grateful because we damn well deserve that dollar.
“Reference levels also change. If you give someone a $2,000 bonus once and then a $500 bonus later, they’re going to be disappointed,” said Uri Gneezy, a professor of behavioral economics at the University of California, San Diego’s Rady School of Management. “If you increase the pay that you give me, I’m going to be very grateful in the beginning, but that’s going to disappear with time.”
Turns out, the American tradition of an annual review might not be good enough — and the most productive workplaces can stretch their budget and make us happier by mastering the art of a good surprise.
Kelly Kasulis is a freelance journalist. Follow her on Twitter: @KasulisK.