Instant MBA: Compensating employees

Written by Kim Shiffman

When cash isn’t king

Want to reward your team for a job well done? If you plan to compensate them all equally, then don’t give them cash — or prepare for a chorus of “No fair!” A new study suggests that when it comes to distributing performance rewards in equal portions, perceptions of the fairness of the rewards vary according to the type of reward given. If the reward has intrinsic value — such as vacation days or a bottle of wine — then people are more likely to see equal distribution of such items as fair reward for their individual contribution, say the authors of Medium of Exchange Matters: What’s Fair for Goods Is Unfair for Money. But if some form of currency is the reward — say, cash or loyalty points — then people expect to be rewarded according to their specific contribution. Why will people complain when they each get $50 but not if they each get a $50 bottle of wine? Because receiving currency “cues the norms of the marketplace, and puts it in the financial domain rather than the social domain,” says study co-author and University of Toronto professor Sanford DeVoe, who, along with Columbia University’s Sheena Iyengar, polled 446 participants to test the hypothesis.

Get more from your floor

How comfortable is the floor in your store? Here’s why the answer matters: the floor on which your customers stand while shopping, coupled with their proximity to your product, can influence their purchasing decision. So says a new study by professors from the University of British Columbia and the University of Minnesota. For Context Effects from Bodily Sensations, participants stood on either soft carpet or hard tile in a retail-store environment, and viewed products that were close by and moderately far away. The researchers found that when items were placed close to participants, “the bodily sensations elicited by flooring [were] more likely to be used as a comparison standard and prompt a contrast effect on their product assessments,” meaning that if the floor was very comfortable, the nearby product was unconsciously judged more negatively, and vice versa. But when items were placed far away from participants, and they could not clearly see the product features, their physical sensations influenced their judgment, so, if the floor was comfortable, the product was judged more positively (and vice versa).

Originally appeared on PROFITguide.com