Do People Perform Better When Paid More?

Firstly, as summer break is about at its halfway point I hope it is treating you well. I have always wondered about this question, “Do People Perform Better When Paid More”? If you were to be paid double, triple, or even quadruple of what you are making right now or if you don’t work how much do you think you are worth to pay to for your skills? Has these questions ever wondered you, what would you do with all the extra money?

The answer is simple with more money, comes more responsibility. It’s definitely always great to make more, and have more money, there’s no denying in that, but do you think you will perform better when you get paid more? Let’s find out…

Would You Perform Better if Your were Paid More?

1 Base Salary (Some Basics)

There is such a thing called “base salary” where both company leaders and HR managers decide what they can basically pay as a set minimum in that particular industry and for the position. This number is not just made up from random, this number comes from evaluation of the company, its past and future revenue, and many more other factors, especially including another major fact is knowing that whatever the pay is it has to satisfy people applying for the job because it has to sustain their life on every-day basis and simply put people will not be interested if the position does not pay well.

So, it is a whole process that you need to appreciate that company leaders do to not just attract people to the job, but also sustain current financial situation in the company.

2 Employees are Happier When They are Paid More

We are happier when we are paid more money. If the output does not affect life too much or eat up most of employees time, we tend to be happier when paid more because in this case we can afford not to just sustain our every day life, but also afford more of things that we want (not need) like better cars, vacations, accessories, bigger investment into our future, you name it…

Paying employees more may not be the biggest motivator to experienced employees, it does attract a person. By paying more to employees, it provides this sense of responsibility to employees where paying more will result on more responsibility or above average work and employees will actually be more motivated.

This particularly works well in today’s changing business world that industries need to keep up with. Starting with higher pay will encourage more people to apply or for the current workers to perform better.

3 Employees Won’t Want to Leave

A nicely compensated position I know will encourage me to stay longer at a job, would it encourage you to stay at a job? Most of the time depending on the job, it takes about 3-6 months to become good at a new job or know what you are doing. Sometimes it takes longer, depending on what job it is, so smart employers have to take that into account. But the outcome of this are happy employees that will stay for longer than just the time it takes for them to learn their job.

So the turnaround of employees is low, which means the employers don’t lose time and money on constantly rehiring people and teach them the job. Recruiting process is not cheap and the less time and money spent on recruiting candidates and training them, the better the company will do.

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4 Employees Will Focus More on the Job

I can even tell this from a personal experience before from a job I was getting paid more than enough for the position and duties I was performing. I was not just motivated to go to work every day, I even worked on the weekends for few hours (free) because I wanted to complete the project to perfection with little details and start on another one already.

Money was less of a concern to me at that point, I had few less worries and also the overall satisfaction of going to work every day which led to a higher level of productivity and a much better quality of work output.

Meanwhile, I had jobs that didn’t pay much and therefore my job output was not so good, and in reality I did not enjoy much going to work because I knew what I will make that day and it will not cover my necessities and I will have to work overtime by end of the month to cut loose ends.

5 Recruiting Will Improve by Word-of-Mouth

Have you heard people share their love for the job they do? Well, it is most likely because they are paid a good amount of money for the job and this does not just improve the happiness of employees, but also the costs that are associated with hiring by HR will only be reduced. People will want to share with their friend’s, colleagues that they should apply for the job. I mean what would be the first question you would ask your friend when somebody offered you to apply for the job? It’ll most likely be something along the lines, “How much should I expect to be paid?”

In the end, it is a win-win situation for both employees and employers because company saves money on hiring process (and trust me it is expensive), and employees are happy with their jobs taking a responsibility on hand picking their trusted friend to apply for a position.

6 Accomplishing Tasks Will Need Less Employees

Do you think accomplishing certain projects is good with more people the better or less people that are more happier and talented?

Few of the good performing workers will not only have the same performance as many more working on that same project, but also in the end will cost much less for a company. This goes back to my example about the job I was getting paid a great amount of money above. Less people on the project will cost less net salaries paid out to employees, but also keeping people that are paid more satisfied.

Example 1:  If you have 5 employees making approximately $65,000 per year resulting in $325,000 in salary for all 5.

Example 2: If you have 3 A-type employees employees making approximately $85,000 per year resulting in $255,000 in salary for all 3.

This is a $70,000 difference between the two, now imagine 5 or even 10 departments operating like this? This is a hundreds of thousands, or even millions difference in the end.

Surely, you might think that the projects might be completed faster but that’s not true if you have employees that are paid more and are happy with their pay.

Some Drawbacks, We Are Humans…

Surely, it all sounds great to be paid more, but HR need to be more careful whenever they decide to pay more to its employees, they really have to hand pick.

The problem with our human psychology is as we get paid more, we tend to buy more “wants” items which in this case is just how we operate. Eventually we will need more income and that nice income we had no longer allows us to buy a better house, a car, start a family, and many other things…

In order to keep employees happy, employer will have to find a way to not just increase their revenue, but also increase the happy employees pay to sustain them.

So, this is just one of these things that doesn’t work for every company like this and it is understandable. For that reason, I believe the yearly bonuses are a great solution today. The better employee performs, the better the return will be.

Bottom Line

After researching on this subject I can conclude that it is true that when people get paid more they perform much better resulting in better satisfaction with their jobs and a much better investment in companies. I also wanted to say that I am in no way an HR employee, nor affiliated with any. This article was done from doing research on companies and other research studies, as well as interviewing of personal friends working in the professional industries.

To conclude: Higher paid employees is not just a move to make people happier, but also a great investment into quality work and performance of the job.

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