Tuesday, January 7, 2014

Compensation and accumulation research

Couple of recent research studies have results that fly in the face of conventional business practices.

1.  The Big Box store theory that the can save money by spending as little as possible on employee wages isn't really saving Money.
This study looked at the big box store practice of paying employee's very little and having the minimum number of employee's.   (I read about this study a few days ago and don't recall where, so don't recall the exact methodology) but the finding was by having more employee's and being more willing to compensate them, sales went up 25%.

As one has has walked out of big box stores many times without buying anything because I couldn't find anyone to help or answer a question, or having harried employee's give me half an answer or the wrong answer, this makes perfect sense to me.

2.  Article in the Journal of Psychological Science in June of 2013 (reported in NY Times Business Section 1/5/14) claimed to demonstrate a deeply rooted instinct to earn more than we can possibly consume, even when doing so makes us unhappy.  The study was built around people sitting at computers with the choice of listening to pleasant music or obnoxious noise, but they would earn Chocolate pieces for listening to the obnoxious noise.  Some "high earners" qualified for a piece of chocolate pretty quickly, "low earners" had too tolerate more to obtain a piece of chocolate.

Both the High and Low earners were asked to estimate how many chocolate pieces they would actually eat, and were told they would forfeit chocolate they wouldn't eat.  Both high and low earners listened to about the same amount of obnoxious sounds but High earners accumulated more than twice as much chocolate as they estimated they would eat and actually ate more than they estimated but far less than they accumulated.  The low earners accumulated less than they thought they could eat.

The researchers concluded the subjects didn't measure how much unpleasantness they were willing to tolerate by what they needed, but by how much they could tolerate.  As long as they could tolerate the unpleasantness, they would continue to accumulate regardless of need.


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