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Want to motivate staff better? Give them more frequent pay raises

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Nobody would say no to a a higher salary but apparently quantity beats quality when it comes to getting a raise.

Although staff receive the same wage increase, they perform substantially better if that pay raise took place in two steps rather than one, according to a recent research by by Dirk Sliwka an economics professor at the University of Cologne.

Studying the paying patterns of library workers at the university, the professor stated that while it’s commonly established that pay raise boosts employees’ performance, the positive effects that come with it don’t last long.

“It doesn’t matter as much how big the increase is. What was generous yesterday seems normal today. By splitting up raises, there are more times that an employee will appreciate the increase, even if the total annual amount is the same,” Sliwka told the Wall Street Journal.

Another interesting finding from the survey was that with a higher frequncy of in pay raise workers end up being more honest and are more willing to do voluntary extra work, when compared to a traditional, expected increase.

ALSO READ: Two in five Hong Kong employers planning for pay raises below 5% in 2016

Despite these benefits, Sliwka isn’t expecting many big companies to adopt twice-yearly raises because doing so increases administrative hassles.

His view was echoed by Alison Chang, managing director at Core Seach Group.  “It is not smart for companies to commit to two pay raises every year.  In case the company ran into financial difficulties, and had to return to giving pay raise once a year, the employees are certainly not going to appreciate it,” she told Sky Post.

She thinks pay raise twice a year will get employee’s hope up too high the more realistic way to reward staff provide bonus if the staff hit his or her three months or six month target.

Another veteran HR consultant, Frankie Lam King Sun, said it is common for financial institutes and research centres in Hong Kong to offer pay raise twice a year to retain staff because these sectors has keen competition for talent.

But he noted that for this is not a common trend because of the high administrative cost involved.

 

Image: Shutterstock

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