“Surprise, You Are Getting a Raise!”

If your boss called you or came up to you right now to tell you, “Hey, surprise! We got an unexpected increase in our budget and are giving you a raise,” would that somehow incentivize you to work a little harder? A study by the Harvard Business School shows that surprise raises could be more effective at encouraging people to be more productive:

The study used oDesk, a global online network of freelancers, to hire 266 people to do data entry work for the experiment. Because oDesk gave the researchers information about past work history and what freelancers had been paid for previous assignments, they had a sense of how the workers might respond to various levels of pay. It hired workers for whom a $3 and $4 per hour wage represented an improvement on what they’d made in the past. While that may sound unbelievably low, keep in mind the workers they recruited came from a global pool of candidates. (And of course, that the size of academic research budgets is not the same as a corporate balance sheet.)

It divided the job offers into three types. One group was told they’d be paid $3 an hour. Another group was initially offered $3 an hour, but before the work began, they got some good news: The budget had unexpectedly been increased and they would now get $4 an hour. The final group was offered $4 an hour from the start. What they found was that the second group worked harder than the third, even though the two were ultimately paid the same. The results showed a roughly 20 percent higher productivity rate for the group that got the surprise bonus than the two that were paid either $3 or $4 from the start.

I generally look at these studies as just that—interesting case studies—but I thought about whether a surprise raise would somehow make me more productive at all the jobs I’ve had before. And perhaps the positive feelings from receiving a surprise raise would show up in my work. So maybe it’s not only what we’re paid that matters, but also how we’re paid.

It reminds me of a story a friend told me at the bar a few weeks ago: Her boss had come up to her and said, “Surprise, we are giving you a small raise!” and her response was: “Well, yes, it’s in my contract that I get a pay increase every year to keep up with inflation—is the raise more than what’s in my contract?” The response: “Sorry, no, this is all that we can offer you right now.”

Photo: Bart Everson

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