In a recent post, friend and behavioral economist Dan Ariely ponders the enormous salaries a bonuses doled out in the upper echelons of the financial sector. The bankers, he explains, claim that these wages provide necessary motivation. He continues:
There is a general assumption that more money is more motivating and that we can improve job performance by simply paying people more either in terms of a base salary, or even better as a performance-based incentive – which are of course bonuses. But, is this an efficient way to compensate people and drive them to be the best that they can be?
While traditionally we have always thought of work benefits as something we receive, Dan cites a study where individuals were given prosocial incentives in the workplace. That is, given the ability to spend money on others.
In an experiment, one group of Australian bank employees was given the option to donate either $25 or $50 to a charity. The result? “Compared to people who did not receive the charity vouchers, those who donated $50 (but not $25) claimed to be happier and more satisfied with their jobs.”
In a second experiment, employees were asked to either spend money on something themselves or on others (in the form of a gift). While the gift givers experienced an increase in satisfaction, the researchers found that those individuals enjoyed additional workplace benefits: “While they were purchasing a gift for a teammate, they also became more interested in their teammate and were happier to help them further in multiple other ways.”
Whereas in the first experiment a $25 donation to charity did not do much to increase happiness, a $20 gift to a coworker did have a measurable effect. In short: giving to people you know makes you happier than giving to someone or something more distant, like a charity.
Dan’s conclusion:
…what is clear to me is that prosocial incentives, either in the form of charitable donations or team expenditures, can be an effective means of encouraging more positive behavior for the individual, their teammate and for society.
Dan gives Credit Suisse as an example of a company that has implemented a company-wide giving program. We also talk about Salesforce.com’s 1/1/1 philanthropy model in The Dragonfly Effect.
What organizations do you see harnessing the power of giving in interesting ways?