Spending Bonus Money On Others Can Improve Employee Happiness

Managers used to believe that giving an employee a bonus for their hard work would make that employee happier. Today’s best managers know that employees typically are not happier when they spend their bonus money on themselves. However, employees tend to feel happier when they spend part of their bonus money on others. Even as little as five dollars spent on someone else can boost an employee’s happiness levels. Today’s best managers can help improve employee happiness by helping their employees give back and spend money to benefit others, rather than themselves.

Source: Norton, M. I., & Dunn, E. W. 2008, July-August. Help employees give away some of that bonus. Harvard Business Review, 27.

Individually Negotiated Employee Deals May Help Improve Organizational Outcomes

As organizations become more flexible and adaptable, it may become more possible for employees to negotiate individualized work arrangements with their managers. Some employees may make individual deals for unique work arrangements or shape their job to meet their individual needs and wants from the company. Today’s best managers know that individually bargained deals may help reduce work-family conflict and unpaid overtime, and can improve work attitudes and performance. Additionally, personalized deals made with managers have resulted in higher levels of organizational commitment and employee productivity.

Source: Hornung, S., Rousseau, D. M., & Glaser, J. 2008. Creating flexible work arrangements through idiosyncratic deals. Journal of Applied Psychology, 93, 655-664.

Employee Support Programs Can Improve Employee Commitment For Those Who Give Or Receive

Today’s best managers know that building employee commitment to the organization is vital. One way that managers can help build employee commitment is by establishing formal programs in which employees can contribute to an employee financial support program or foundation. The program should enable employees to give as well as receive funds. Tell employees how they can contribute to the program and show them the rules that are used to distribute funds to needy employees. The process of giving to help other employees can improve the commitment that employees have to their organization.

Source: Grant, A., M., Dutton, J. E., & Rosso, B. D. 2008. Giving commitment: Employee support programs and the prosocial sensemaking process. Academy of Management Journal, 51, 898-918.

Help Employees Express Their Needs Then Help Them Fill Those Needs

Today’s best managers know that successful organizations meet the psychological needs of their employees. Companies that encourage their employees to express their needs and help them find ways to meet those needs will be more successful than companies that don’t. Examples of employee psychological needs include: feeling included, being appreciated and recognized, being challenged to achieve, feeling trusted, being able to grow, and having meaning and purpose. Help employees to express their needs and take responsibility for meeting their own needs. Specifically hire employees who are needs-intelligent, and celebrate when employees meet their psychological needs.

Source: Glaser, J. E., & Jones, C. 2008. Meeting people’s needs: You can create a needs-intelligent workplace. Leadership Excellence, 25/3, pp. 13-14.

Compensation Is Still Important For Motivating and Satisfying Employees

Today’s best managers know that compensation is important, but that money is not the most important motivator for employees. Financial security is also important to employees. Employees tend to care about: their base rate of pay, getting pay that is competitive in their local marketplace, having opportunities for variable pay based on performance and merit, and getting stock options to supplement their income. Interesting, variable pay is often seen as more enticing and motivating to younger employees with less seniority in their companies compared to older employees.

Source: HRfocus. 2008, August. What do employees value in compensation? Page 4.

Employees Who Are Passionate About Their Job Would Take A Pay Cut

Today’s best managers know that the best job performance comes from employees who are passionate about the work that they do. Most employees in the United States and around the world, about 80%, say that they would take a pay cut if they could pursue their dream job. More and more employees are willing to forego pay in order to have more fulfilling and meaningful careers, instead of getting higher pay. This is especially interesting in that even with a struggling economy, employees are willing to get paid less in order to have a job that they are really passionate about.

Source: Many workers would take pay cut for the ‘dream job’. HRfocus. 2008, July. Page 9.

Pay Satisfaction Can Be Low For Employees Who Compare Themselves to the Highest Paid Employees

Employees tend to compare their pay levels to other individuals in order to decide whether they are satisfied with their pay or not. Employees tend to be dissatisfied when they are paid less than the highest paid individuals in their same field with the same level of skill and experience. Interestingly, employees also tend to be dissatisfied when they are paid more than the lowest paid individuals in their same line of work who have similar skills and experience. However, the level of pay dissatisfaction was much lower when compared to the lowest paid employees versus comparison to the highest paid employees.

Source: Harris, M. M., & Anseel, F., & Lievens, F. 2008. Keeping up with the Joneses: A field study of the relationships among upward, lateral, and downward comparisons and pay level satisfaction. Journal of Applied Psychology, 93, 665-673.

Pay Arrangements Tend To Influence Employee Productivity

Today’s best managers know that how employees are paid can influence their productivity levels. Employees in payment arrangements where pay is a function of worker productivity tend to earn more and be more productive than when employees are not in such arrangements. An example of this is a piece rate system where employees make more money when they produce more pieces of product. Unfortunately, this trend tends not to hold for executives or for profit-sharing plans. In general, employees paid on a piece rate basis tend to make more money than those on a fixed rate pay plan.

Source: Pekkarinen, T., & Riddell, C. 2008, April. Performance pay and earnings: Evidence from personnel records. Industrial and Labor Relations Review, 61, 297-319.

High Employee Job Performance Over Time Can Be Motivated By Internal and External Sources

Managers want employee job performance to be high and to stay high over time. Today’s best managers know that the motivation to perform a job well can come from both inside and outside of an employee. Internal motivation for employees comes from setting goals and seeing that they have the ability to reach those goals. When employees get feedback that they are reaching their goals, then their internal motivation to perform may continue. External motivation for employees can come in the form of other employees wanting to help them, and in receiving money and benefits from the organization.

Source: Zyphur, M. J., Chaturvedi, S., & Arvey, R. D. 2008. Job performance over time is a function of latent trajectories and previous performance. Journal of Applied Psychology, 93, 217-224.