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Science Daily Week: Which is more effective: bonuses or raises?

Written by: Guy Kawasaki

Article Overview: I recently learned about Science Daily. It is a treasure chest of interesting studies that has implications on business practices. I’ve collected so much material from it that this is going to be “Science Daily Week” in my blog.

Science Daily Week: Which is more effective: bonuses or raises?

I recently learned about Science Daily. It is a treasure chest of interesting studies that has implications on business practices. I’ve collected so much material from it that this is going to be “Science Daily Week” in my blog.

For example, have you ever wondered whether giving employees a pay-for-performance bonus or a merit raise fosters greater productivity? According to this “Bonuses Boost Performance 10 Times More Than Merit Raises” in Science Daily which pointed to a Cornell study called “Using Your Pay System to Improve Employees’ Performance: How You Pay Makes a Difference” by Dr. Michael C. Sturman, a bonus yields far better results.

Obviously, compensation is more complex than this, but it’s interesting that the study found a ten to one advantage for bonuses.


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PS: While poking around the Cornell site, speaking of bonuses, I also found this very interesting study: “Sweetening the Till: The Use of Candy to Increase Restaurant Tipping.” It says that tips go up from 15.1% to 17.8% when a restaurant gives candy.

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Article Tags: blog, business practices, candy, cornell study, dr michael, michael c, performance bonus, productivity, science daily, treasure chest



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