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Guy Kawasaki's world-class How to Change the World blog picked up on an interesting study showing that bonuses are much more effective than merit raises in encouraging better employee performance. The study, conducted by the Cornell School of Hotel Administration, concluded that a one percent merit raise increases employee performance by about two percent. But a bonus of the same dollar amount improves performance by almost 20 percent.
Same buck, more bang.
Michael Sturman, a professor at the school, wrote the report, which you can download here. Guy's post is here. The study was reported on in Science Daily here.
