A New Model for Bonuses: Shift that bonus from self to others!
(All the rights of this illustration belong to our talented lab member M.R.Trower)
Before writing personal bonus checks to your employees this December, have a look at our paper — hot off the press! If you are hoping that a bonus would allow them to buy whatever they wish and as a result be happier at work and more productive, we have a better idea! Rather than giving your employees more personal bonuses, make a minor adjustment and offer them prosocial bonuses, a novel type of bonus to be spent on others.
Across three field experiments, we tested the efficacy of prosocial bonuses against the standard model of personal bonuses. We found that when companies gave their employees money to spend on charities or on their colleagues (as opposed to themselves), employees 1) reported increased job satisfaction and 2) performed notably better.
In one experiment, an Australian Bank gave some of their employees a charity voucher and encouraged them to spend it on a cause they personally cared about. Compared to their coworkers who didn’t receive a charity vouchers, bankers who redeemed the prosocial bonuses reported increased job satisfaction and were happier overall.
Next, we examined whether prosocial bonuses were still effective if they were spent on others people personally knew rather than on charities. We ran experiments in two very different settings – one with recreational dodge ball teams in Canada and another one with pharmaceutical sales teams in Belgium – where we encouraged spending on co-workers and teammates. In both cases, we gave cash to some members of each team to either spend on themselves (personal bonuses) or spend on their teammates (prosocial bonuses). We found that teams that received prosocial bonuses performed better than teams that received money to spend on themselves.
It is difficult to measure the return on investment of corporate social responsibility. With prosocial bonuses, however, we were able to measure the dollar impact on the bottom line. On sports teams, every $10 spent prosocially led to an 11% increase in winning percentage, whereas it led to a 2% decrease in winning when team members received personal bonuses. For the sales teams, every $10 spent prosocially earned an extra $52 for the firm.
Our results come at an important time. Job satisfaction is at a 20-year low in the U.S., and people are spending more and more time at work. If you do what you have always done, you will get what you have always gotten. So, we suggest that you try something new this year: Shift the focus of the bonuses from the self to others and create a more altruistic, satisfying and productive workplace!
P.S. If you are interested in testing prosocial bonuses, please feel free to send a gift to firstname.lastname@example.org