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April 27, 2009
When Do Wage Increases Best Motivate Employees?
New research, conducted by an NYU Stern professor and his colleagues, provides insight to employers for how they can best motivate employees in a down economy. Compensation is part of the equation, according to their research--but isn’t an effective motivator in all circumstances.

NYU Stern Professor Steve Blader and his colleagues conducted two recent studies among nearly 1,000 employees. Their research identified the following employee motivators:

  • Treating employees with respect
  • Making decisions that affect them in a fair way
  • Providing them with good wages and benefits

The studies found that “an increase in wages and benefits has the most beneficial impact on employee performance when it makes employees feel valued.” Their research implies that “an increase in pay will not likely incentivize a worker in cases where he/she receives the increase after threatening to leave or when his/her contract stipulates when and how much raises will be.”

“A key influencer of employee performance is the employee’s sense of being included in the social fabric of the organization,” Professor Blader said in a press release announcing the study results. “And this holds true in bear markets.”

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