Featured Research

from universities, journals, and other organizations

Bonuses Boost Performance 10 Times More Than Merit Raises

Date:
December 11, 2006
Source:
Cornell University
Summary:
Giving a 1 percent raise boosts performance by roughly 2 percent, but offering that same money instead in the form of a bonus for a job well done should improve job performance by almost 20 percent, finds a new Cornell study.

Giving a 1 percent raise boosts employee job performance by roughly 2 percent, but offering that same money in the form of a bonus that is strongly linked to a job well done can improve job performance by almost 20 percent, finds a new Cornell study on the relationship between pay and performance.

"I looked at both how much people are paid and also how pay increases and bonuses are given," said Michael Sturman, associate professor at Cornell's School of Hotel Administration, who conducted the study. He found that "by changing the strength of the pay-for-performance relationship [awarding bonuses], you can improve performance by up to 19 percent."

When Sturman looked at the experience of a diversified services company, he found that an across-the-board raise in one year meant better performance in the following year and that paying above the market also produced higher performance.

"While both across-the-board raises and bonuses improved performance, bonuses stood out when pay was linked solidly to performance," he said.

Sturman noted that he studied only one company that had almost 700 employees working in the United States. "The point is, pay methods can be used strategically to improve performance," he concluded. "The payroll is not merely an expense to be reduced, but an investment that can be used strategically."

The study, "Using Your Pay System to Improve Employees' Performance: How You Pay Makes a Difference," is available at no charge from the Cornell Center for Hospitality Research, at http://www.hotelschool.cornell.edu/chr/research/centerreports.html.


Story Source:

The above story is based on materials provided by Cornell University. Note: Materials may be edited for content and length.


Cite This Page:

Cornell University. "Bonuses Boost Performance 10 Times More Than Merit Raises." ScienceDaily. ScienceDaily, 11 December 2006. <www.sciencedaily.com/releases/2006/12/061211124329.htm>.
Cornell University. (2006, December 11). Bonuses Boost Performance 10 Times More Than Merit Raises. ScienceDaily. Retrieved April 17, 2014 from www.sciencedaily.com/releases/2006/12/061211124329.htm
Cornell University. "Bonuses Boost Performance 10 Times More Than Merit Raises." ScienceDaily. www.sciencedaily.com/releases/2006/12/061211124329.htm (accessed April 17, 2014).

Share This



More Mind & Brain News

Thursday, April 17, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Is Apathy A Sign Of A Shrinking Brain?

Is Apathy A Sign Of A Shrinking Brain?

Newsy (Apr. 17, 2014) A recent study links apathetic feelings to a smaller brain. Researchers say the results indicate a need for apathy screening for at-risk seniors. Video provided by Newsy
Powered by NewsLook.com
Are School Dress Codes Too Strict?

Are School Dress Codes Too Strict?

AP (Apr. 16, 2014) Pushing the limits on style and self-expression is a rite of passage for teens and even younger kids. How far should schools go with their dress codes? The courts have sided with schools in an era when school safety is paramount. (April 16) Video provided by AP
Powered by NewsLook.com
Could Even Casual Marijuana Use Alter Your Brain?

Could Even Casual Marijuana Use Alter Your Brain?

Newsy (Apr. 16, 2014) A new study conducted by researchers at Northwestern and Harvard suggests even casual marijuana use can alter your brain. Video provided by Newsy
Powered by NewsLook.com
Couples Who Sleep Less Than An Inch Apart Might Be Happiest

Couples Who Sleep Less Than An Inch Apart Might Be Happiest

Newsy (Apr. 16, 2014) A new study by British researchers suggests couples' sleeping positions might reflect their happiness. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins