If You Want to Be Happy, Spend Your Bonus On Your Coworkers

We’re getting closer to the end of the year and for many firms and organizations that means it’s time to think about bonuses. Many people rely on these bonuses to get them through the holidays with all the extra spending (gifts, kids, travel, etc.). How would you react if your company made a slight change to your bonuses this year. Instead of receiving your usual 1% or 10% bonus, depending on your industry, what if your boss said you had to donate that money to a charity or that you had to spend that money on your fellow coworkers?

I’d imagine that you probably wouldn’t be too happy, am I right? That bonus you were looking forward to at the end of the year is “yours” and you should get to spend it on you and your family. Except, research shows that’s not the case. In fact, the research indicates that spending the money on someone other than yourself actually leads to greater happiness. More than that, it can lead to your improved performance at work.

In the first experiment, researchers gave charity vouchers to the experimental groups and instructed them to donate to a charity. The control group received nothing. The results:

Participants who received a $50 USD charity voucher reported being significantly happier, whereas happiness levels were unchanged for those in the control and $25 USD conditions.

In the second experiment, researchers gave members of a sports team money with which to spend on a teammate. They also gave money to the team members (of a different team) and told them to spend it on themselves. The results [Emphasis added]:

Prosocial bonus teams performed better than personal bonus teams. . . In the prosocial bonuses condition, sports teams showed a large, but statistically marginally significant increase in performance. Meanwhile, in the personal bonuses condition, there was no evidence for improved performance.

Another way to demonstrate the effectiveness of these interventions is to calculate the return on investment for prosocial and personal bonuses. On sports teams, every $10 people spent on themselves led to a two percent decrease in winning percentage, whereas every $10 spent prosocially led to an 11% increase in winning percentage.

In the third experiment, the researchers used sales teams at a pharmaceutical company. Sales teams were split up into two conditions: spending money on themselves or spending money on a coworker. The results [Emphasis added]:

Prosocial bonus teams performed better than personal bonus teams. In the prosocial bonuses condition, sales teams showed a large and significant increase in performance. Meanwhile, in the personal bonuses condition, there was no evidence for a performance improvement.

Once again, it is possible to conceptualize the effectiveness of these interventions by calculating the return on investment for prosocial and personal bonuses. On sales teams, for every $10 USD given to a team member to spend on herself, the firm gets just $3 USD back – a net loss; because sales do not increase with personal bonuses, personal bonuses are wasted money. In sharp contrast, for every $10 USD given to a team member to spend prosocially, the firm reaps $52 USD.

The research, while not extensive, adds to the growing body of evidence that prosocial behaviour can reap positive results for those who engage in it. As the researchers wrote in the discussion section, future research is needed, but this study does give managers another tool with which to improve the performance of their teams and increase the well-being (i.e. happiness) of their employees.

Anik L, Aknin LB, Norton MI, Dunn EW, & Quoidbach J (2013). Prosocial Bonuses Increase Employee Satisfaction and Team Performance. PLOS ONE DOI: 10.1371/journal.pone.0075509