Did you think we're just standing on a soapbox when we say that we believe that, "Everything we do in compensation is communication?" Well, for those of you who don't buy the "soft stuff," it's time to pay attention. It turns out this insight into our work is even more accurate than we first thought.
There's an entire field of psychological research that is helping us understand that, 'People don't interpret numbers objectively; instead they base their opinions on how numbers make them "feel."'
That's right. Perceptions influence emotions, as we all know from Psych 101. Ergo, we react to numbers similarly to the way we react to MLS Home listings -- almost impetuously. If we take just one look and the place looks run down, we're moving on, even if we know the interior looks like the Property Brothers just pulled out of the drivewy.
Here's a short take on the research, highlighted in The Daily Stat of the Harvard Business Review:
If research participants were informed that their error rate on a task was 5%, compared with an unseen other person's score of 2%, they rated their own performance more poorly than if they were told their success rate was 95% and the other person's was 98% -- even though the two statements convey exactly the same information. That's because the difference between 5 and 2 looms much larger in people's minds that the difference between 95 and 98 . . .
Anybody start wondering yet how a world of 3% merit budgets has contributed to collaboration and engagement? We perceive more extreme differentiation between smaller numbers than we do between larger numbers (say total salary, for instance). Yes, how you communicate continues to have real influence on engagement and performance.
Researchers have been studying how we perceive these issues of "justice" because, " . . . justice perceptions are crucial for determining a wide variety of outcome variables in organizational contexts." You betcha, and we all have our dazed and amazed stories to tell about employees (let alone managers) who reacted in a completely surprising way to information they were given.
As communicators know from their professional training, people don't deliberate on numbers or any other information, they react immediately and emotionally. Now for a taste of the science involved. Years of industrial-organizational research tell us about the influence of one proven psychological dimension -- people are generally self-serving. We are constantly repeating, "Mine, mine, mine" in our heads like the hilariously self-serving seagulls in "Finding Nemo." Industrial psychologists know that this always needs to be factored into their research protocols.
A short example of the takeaway lesson -- when it comes to reporting incentive results, it's more likely to be perceived as substantively positive to say that you've achieved 96% of goal that to say you missed the goal by only 4%. Unless, of course, you have critical business results to improve upon. Then you'd be better off shining a harsher light via the smaller number, in order to encourage employees to feel emotionally driven to achieve the targeted results.
If you're interested in finding out more about the why and how, I encourage you to download the research paper. It includes quite a lengthy publication reference list.
This week's word of mouth? Steve Browne of HR Net calls it " . . . the best Comp book I've seen and I recommend you get a copy." Download your copy of our popular eBook, Everything You Do (in Compensation) Is Communication, at www.everythingiscommunication.com. Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create this DIY guide to compensation leadership. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, Margaret was a Principal with Towers Watson.