Behavioral Economics for Leaders

CHAPTER 33Why It’s Important to Explain Difficult Employee Decisions: Treating One Employee Unfairly Hurts Everyone’s Productivity

The productivity of employees is a key factor for the success of companies. Wage systems often aim at increasing productivity by means of bonus systems or wage increases. It is often overlooked that productivity also depends on how employees are treated. This oversight can be an expensive mistake for a company to make.

Suzanne sits at her desk, a seemingly endless list of phone numbers in front of her and the phone pressed to her ear. She’s trying to convince a person on the other end to give an interview. The work in the call center isn’t exactly exciting, but at least it pays decently. Suzanne gets a fixed amount, regardless of how many interviews she conducts. That’s a good thing because it reduces the work pressure. The working hours are flexible, and the offices are centrally located. Suzanne would have liked to prolong the call center job because she can earn a little money while she is studying. Unfortunately, it will last only for another two days because the interviews will be completed by then.

In a recent research project, I—together with Matthias Heinz, Sabrina Jeworrek, Vanessa Mertins, and Heiner Schumacher—actually leased a call center, hired about 200 people for two half‐days, and had them conduct telephone interviews. The study focused on factors that influence the work productivity of employees. Specifically, we were interested ...