Employee Happiness – Throw cash at them right?

Employee Happiness – Throw cash at them right?

Recently I’ve been reading some of the work by psychologist Amos Tversky. Tversky was a cognitive and mathematical psychologist and pioneer in the study of systematic human cognitive bias and how we as humans handle risk. The following scenario is based on research originally completed by him.

Imagine you were offered two jobs. They are the same in terms of working hours, duties location and career prospects – in fact Job A is exactly identical to Job B in every way – except one, the difference between your salary and that of your colleagues. In Job A your annual pay will be £50,000 and your colleagues will earn £30,000. In Job B your annual pay will be £60,000 and your fellow employees will be on £80,000.

Which would you prefer?

Then, which would make you happiest?

Surprisingly when Tversky posed these two questions he got different answers. We’d all prefer to earn more money, but when happiness was introduced respondents felt that this had more to do with their perceived value to the organisation – even to the extent of being paid less at a perceived higher value. This is an interesting problem for those people currently in the job marketplace or in salary negotiation with a prospective employer.

What did you answer to each of the questions? Did you change your mind for happiness?