Is It Better to Give or Take Away?
Much of compensation theory for the past few years has centered on motivating employees by focusing them on the pot of gold at the end of the rainbow. Compensation programs–particularly in the last decade–faced with flat merit increase budgets have enticed employees with the possibility of a big bonus if they attain or exceed the company’s expectations.
Now, however, two professors–Kelly Goldsmith of the Kellog School of Management and Ravi Dhar of Yale University–are possibly turning this notion on its head.
Arguing that the prospect of losing something is far more motivating than the possibility of gaining something, they propose that managers consider using incentives framed negatively rather than positively. For example saying to the employee if you complete a particular task you will receive a bonus (positive framing) is less effective than warning an employee that an expected bonus will be cut if the task is not accomplished (negative framing).
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