Reduce annual bonuses for CEOs and raise them for employees doing mechanical work
from The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely
How to Apply This
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Offer your employees quarterly rather than annual bonuses.
Pay your employees smaller quarterly performance bonuses rather than a large bonus at the end of the year. Small but frequent bonuses cause less stress because even if an employee doesn’t perform well this quarter, they can make up for it in the next one. -
Offer employees a large bonus payment at the end of every five years.
Offer employees a big financial incentive averaged over a longer period, for example, 5 years. Therefore, employees in their 5th year already know that they’ve bagged 80% of the bonus and won’t be too stressed about performing well in their final year. -
Offer low to moderate performance-based bonuses for cognitive tasks.
High-level employees such as CEOs and managers who perform a lot of cognitive tasks can be paid a moderate rather than a big annual bonus. -
Pay higher bonuses to employees who perform mechanical work.
Workers such as bricklayers, typists, and receptionists can be paid much higher bonuses to inspire them to learn faster, work harder and improve their output.
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