Paying People More Won't Make Them Work Harder

Of all the “levers” that managers can pull when trying to get the best out of workers, none is more proverbially powerful than the almighty paycheck.

Conventional wisdom says that professionals will work harder if you pay them more and slack off if you pay them less. But conventional wisdom, as usual, gets it wrong. According to a recent article in New York magazine,

“a wealth of psychology research suggests that there’s little causal relationship, if any, between how much you pay someone and how hard they work.”

The problem is one of diminishing returns. Once a person’s salary is high enough to keep the wolf from the door (plus buy a luxury or two), more money doesn’t increase their happiness very much.

This isn’t to say that salary isn’t important. Pay people too little and they’ll jump ship, especially if they’re unhappy for other reasons. And cutting somebody’s pay while asking for the same amount of work (or more) is a recipe for horrible morale.

However, slapping a bonus onto a salary or paying people more because your company did well isn’t going to make them work any harder. They’ll accept the money, sure, but you’ll get the same amount of work out of them.

At this point, you’re probably asking: what does make people work harder? You probably won’t like the answer: 1) hunger and 2) threat of punishment.

People who are hungry (literally not figuratively) will work incredibly hard to get something to eat. That’s why slavery is so efficient: the employer can ensure that only workers who make quota will get fed.

People who are afraid of being punished also work harder. For example, telling people they’ll be fired if they don’t work harder puts noses to grindstones, especially jobs are scarce and losing a job means loss of health insurance.

The problem with using hunger and punishment–apart from the fact that only evil people even consider it–is that the people you’re trying to motivate eventually get fed up and leave. Worst case, they go postal.

All of this would depressing if it weren’t for the fact that there’s another way to look at the problem: stop trying to get your people to work harder. Instead, help them to work smarter.

That way they’ll get more done with the same amount of effort.

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Inc.com

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