You would have to be asleep not to notice that pay is changing in the…
By John Borrowman, CPC
Borrowman Baker, LLC, BV Staffing + Consulting
There is no escaping the fact that employees are motivated by money. You might think the higher the wage increase, the greater the job satisfaction. A pair of economists say maybe not.
A study reported in the Journal of Economic Behavior & Organization confirmed that job satisfaction is positively influenced by wage increases. (Not like you didn’t know that.) But, money isn’t the only thing. It turns out that job satisfaction is also higher if your wage increases are a little bit better than your peers’. More surprisingly, satisfaction seemed to be driven by the mere expectation of a raise.
What goes up must come down. And, sure enough, the boost in job satisfaction was found to be only temporary. (Again, maybe you’ve seen this at your practice?) The reason, the researchers suggest, is that people do not evaluate their income in absolute terms, but rather in relation to their previous income. On top of that, people adapt to a new wage level over time. So, a higher salary becomes the new reference point for future comparisons.
The lesson, the economists say, is that wage increases can be a motivational tool under carefully designed conditions: implemented regularly and accompanied by promotions. Their study reinforces the idea that wage increases in small, but regular increments—rather than less frequent by higher increases that add up to an equivalent amount—are the most effective way to motivate employees in the long run.