Getting your colleagues, subordinates, and partners to do their best is an age-old issue. You know that great performance will help you and your organization reach your goals, but how do you get there?
One way you might build relationships for this kind of mutual benefit is through reciprocity. For example, a colleague pitches in to help you meet a deadline and you buy him a bottle of wine or make sure to volunteer when he needs a hand. Our relationships are built, to a great extent, on our willingness to do things for each other and respond to niceties in kind.
But it turns out that not all generous gestures are created equal. What if there was a way to ensure the maximum impact from your generosity?
The importance of the bonus
In a study of freelancer wages, a team of researchers wanted to find out if offering a higher wage than what a person requested would be perceived in the same way as offering a bonus.
The amounts were no different on surface: one group of workers was offered a $4/hour wage from the outset of the project, while another was offered $3. Right before the project began, the second group was given a $1 bonus per hour due to "extra money in the budget." (there was also a control group, which was paid $3 per hour)
So who was most productive?
The workers in the second group were 20% more productive than those in the first group. With the same wages!
Giving a good bonus
The bonus had two defining characteristics: first, it was unexpected, and second, it was explicitly described as a bonus. In other words, the bonus wasn't wrapped into a larger salary, nor was it part of the original agreement.
So, next time you have to pay for something -- maybe a service, a new employee for your business, or a contractor -- consider paying a little less and adding the rest as a bonus. Make it a surprise by sharing the information shortly before the work begins: this keeps the bonus more salient as the work begins.
Secondly, make sure to keep the bonus as a separate line item. Explicitly say that it's extra compensation on top of the normal fee instead of just offering more from the outset. This also adds to the influence of the bonus by helping the other person keep track of all the "extra" money that they're earning.
Finally, keep in mind that the more experience someone has in how business is "usually" done, the more likely they are to appreciate the bonus. The researchers found that the productivity effect was the largest for the most experienced freelancers, probably because they saw just how unusual the bonus structure was.
You can utilize this lesson too: if you're working with someone more experienced, remember that offering a bonus is likely to be even more appreciated -- and rewarded.
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