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Hey Managers, Want to Spike Productivity? Here’s a Hint: Give Team a Raise

moneyWant to put a little spring in your step while boosting the wallet of someone on your team? If you’re a manager, you may see the benefits of giving an unexpected salary increase.

As per Fortune, the average salary increase has been approximately three percent each year. How can the typical worker stay motivated to work hard when compensation isn’t exactly linked to performance?

Well, according to a study conducted by Harvard Business School, there’s a quick and effective way to boost productivity and morale. After you hire new employees, spike their pay!

Deepak Malhotra, Harvard business administrator professor, spoke with Fortune: ”Previous research has shown that paying people more than they expect may elicit reciprocity in the form of greater productivity.”

Keep in mind there’s a caveat – the connection between more money and additional effort is contingent upon presenting the salary increase as a gift with no strings attached. Basically, it should be viewed genuinely for the sake of being nice.

The research looked at people oDesk hired in developing countries. The 266 people at the global online network of freelancers were asked to work on a data-entry project for four hours. One group was told they were going to earn $3 each hour. The next group was told they would be paid three bucks but in actuality once they started working, bam! They were told their budget grew and they were going to get paid four dollars per hour. The third group was offered $4 each hour and they weren’t given an increase.

Here’s the kicker: Despite the second and third groups getting paid the exact amount, the second group worked harder and more productively to the tune of 20 percent more than groups one and three. They maintained their focus and demonstrated staying power, even nearing the end of their four-hour shift.

Researchers concluded that higher pay doesn’t boost productivity in itself since people from the third group who earned $4 an hour had the same output as folks in the $3 group.

We have to admit, we’re a bit skeptical. If budgets are going to increase unexpectedly, we want to know where to sign up! The researcher added the importance for managers is how reasons for the increase are presented soon after the new hire starts working. Plus, bosses will get the most bang for their buck.

Malhotra added, “If you make it clear that the pay raise is something you’re choosing to do just because you can. Our theory is that people will reciprocate. If you do something nice, they’ll do something nice back.”

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