Would You Like Your Bonus in Cash or Cake?
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Organizations Leadership Jun 3, 2013

Would You Like Your Bonus in Cash or Cake?

Less count­able rewards can be more satisfying

Based on the research of

Jingjing Ma

Neal J. Roese

Listening: Neal Roese on the Countability Effect

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In the pop­u­lar ABC tele­vi­sion dra­ma Nashville,” a young coun­try music artist is dis­cov­ered by a famous pro­duc­er and offered a sign­ing bonus. But the bonus is not cash — instead, it is a gor­geous­ly restored, clas­sic con­vert­ible sports car. The musi­cian hap­pi­ly accepts this gleam­ing prize over the protes­ta­tions of his man­ag­er, who reminds him that the car is worth much less than stan­dard sign­ing bonus­es. But the advice falls on deaf ears. The young musi­cian jumps behind the wheel of the con­vert­ible and speeds bliss­ful­ly away, his hair blow­ing in the wind.

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Why would some­one be sat­is­fied — hap­py even — with an obvi­ous­ly infe­ri­or reward? Accord­ing to Neal J. Roese, a pro­fes­sor of mar­ket­ing at the Kel­logg School of Man­age­ment, and Jingjing Ma, a doc­tor­al stu­dent at Kel­logg, it all comes down to how count­able” the reward is. The two argue that pre­sent­ing rewards or bonus­es in less quan­tifi­able terms decreas­es the like­li­hood that recip­i­ents will com­pare rewards, which in turn increas­es their satisfaction.

Accen­tu­ate the Pos­i­tive

Ma first not­ed the count­abil­i­ty effect” as a col­lege stu­dent research­ing rur­al minor­i­ty eth­nic groups in her native Chi­na. I noticed peo­ple in these com­mu­ni­ties are not like­ly to com­pare what they get to peo­ple who receive more than them,” Ma says. They focus on what they have — even if it’s less than what oth­ers have. I belong to a minor­i­ty group in Chi­na myself, and notic­ing this behav­ior pat­tern moti­vat­ed me to study how unhap­py feel­ings might be mit­i­gat­ed in unfair reward distributions.”

Ma teamed up with Roese, whose own research has focused on the emo­tion of regret and how peo­ple make spon­ta­neous com­par­isons,” he says. Does it mat­ter how you present rewards? Peo­ple are usu­al­ly upset if they’re on the short end of the stick. But we found that when things are less eas­i­ly quan­ti­fied into nice whole num­bers, peo­ple are much less sen­si­tive to dif­fer­ences in fairness.”

The researchers built upon a frame­work called Gen­er­al Evalu­a­bil­i­ty The­o­ry, which iden­ti­fies three basic ways in which peo­ple com­pare items in order to extract infor­ma­tion about their sub­jec­tive worth. We may use our own built-in expe­ri­ence of the world — such as our inher­ent knowl­edge that 150-degree weath­er is too hot, but 70 degrees Fahren­heit is pleas­ant — to judge the desir­abil­i­ty of an item. We may also rely on spe­cial­ized exper­tise, as a jew­el­er does when exam­in­ing a dia­mond. Or we may sim­ply com­pare two items side by side, such as tast­ing two dif­fer­ent fla­vors of pota­to chip,” Roese explains. When we noticed this addi­tion­al pat­tern of count­abil­i­ty’ anec­do­tal­ly, we won­dered how we could con­nect it up with this exist­ing the­o­ry of how peo­ple eval­u­ate things.”

Uncount­able Unfair­ness

The authors began by design­ing a sim­ple exper­i­ment to test whether mak­ing unequal rewards less count­able would reduce dis­sat­is­fac­tion. They ran­dom­ly assigned 120 Chi­nese uni­ver­si­ty stu­dents to two groups: mem­bers of the over­ben­e­fit” group would receive 60% of a fixed reward, while mem­bers of an under­ben­e­fit” group would only receive 40%. Each of these groups was divid­ed again: some peo­ple would receive a count­able” reward in the form of cash (either six or four ¥1 bills, from a total of ten), while the oth­ers would receive an uncount­able” reward of a slice of cake (rep­re­sent­ing 60% or 40% of the whole cake).

Under­ben­e­fit­ed par­tic­i­pants — those who received four ¥1 bills or a small­er slice of cake — report­ed less sat­is­fac­tion than their over­ben­e­fit­ed peers. But those who received the cake were much less dis­sat­is­fied in gen­er­al: on a sev­en-point scale, their aver­age sat­is­fac­tion rat­ing was a 5. The aver­age sat­is­fac­tion of those who received the small­er amount of cash, mean­while, was only 2. The dif­fer­ence between over­ben­e­fit­ted and under­ben­e­fit­ted cake-eaters’ sat­is­fac­tion was also much small­er: over­ben­e­fit­ed par­tic­i­pants, who received a larg­er slice, report­ed an aver­age sat­is­fac­tion rat­ing of 6 — just one point” high­er than their under­ben­e­fit­ed peers.

Less count­able pro­mo­tion­al strate­gies, like upsiz­ing, will result in more cus­tomer sat­is­fac­tion overall.

Accord­ing to Ma, offer­ing cake encour­aged the recip­i­ents to focus on the expe­ri­en­tial aspect of their reward — oh, this cake is deli­cious,” she says — instead of think­ing about how they received less than the oth­er guy.” She and Roese con­duct­ed eight addi­tion­al exper­i­ments designed to test the lim­its of this effect. We did it with kids and adults, Amer­i­cans and Chi­nese, oth­er goods like cook­ing oil — try­ing to gen­er­al­ize it out­wards,” Roese explains. The con­sis­ten­cy of the results — that uncount­able rewards leave peo­ple less dis­sat­is­fied even when they’re unequal — was impres­sive and intriguing.”

Upsiz­ing” Sat­is­fac­tion

The results have clear appli­ca­tions for mar­ket­ing pro­mo­tions, which can cre­ate feel­ings of dis­sat­is­fac­tion in con­sumers who miss out on the deal (either because the pro­mo­tion ends or because sup­plies run out). Ma and Roese cre­at­ed an exper­i­ment in which a count­able” pro­mo­tion­al reward, such as buy one get one free,” was con­trast­ed with an uncount­able reward (in the form of upsiz­ing” a prod­uct or offer­ing 50% more sham­poo in a con­tain­er, for exam­ple). The effects on sat­is­fac­tion still held. You feel hap­py if you get the reward, whether it’s buy one get one free’ or upsiz­ing,” says Ma. How­ev­er, if you miss out on it, you feel more upset when it’s buy one get one free,’ which is more countable.”

The authors say that their results sug­gest that less count­able pro­mo­tion­al strate­gies, like upsiz­ing, will result in more cus­tomer sat­is­fac­tion over­all. Ma and Roese are cur­rent­ly study­ing how the count­abil­i­ty effect func­tions in cred­it card rewards pro­grams, which often offer num­ber-based bonus­es such as extra points” or miles.” Instead of these offer­ings, rewards could be pre­sent­ed in expe­ri­en­tial pack­ages” such as vaca­tions, trips, or goods.

Cul­tures of Count­ing

If high­light­ing expe­ri­ences over quan­ti­ties increas­es sat­is­fac­tion, should com­pa­nies start pay­ing bonus­es to their employ­ees in cars instead of cash, as the record pro­duc­er in Nashville” did? Not nec­es­sar­i­ly, cau­tions Ma. Offer­ing expe­ri­en­tial rewards may reduce dis­sat­is­fac­tion when the rewards are unequal­ly dis­trib­uted, but uncount­abil­i­ty can also be cost­ly,” she says. You need to pur­chase real goods and dis­trib­ute them, and you also need to fig­ure out what peo­ple real­ly like or need. That’s a lot more work than just issu­ing cash.”

Fur­ther­more, cul­tur­al expec­ta­tions can com­pli­cate mat­ters. Accord­ing to Ma, Chi­na has a decades-long tra­di­tion of issu­ing employ­ee rewards in the form of real goods. Chi­nese com­pa­nies sur­vey their employ­ees reg­u­lar­ly so they know what to do,” she says. Even in recent years, we still use a com­bi­na­tion of real goods and mon­ey. But in the U.S., where this prac­tice is less com­mon, an employ­ee might think, I don’t real­ly need a trip to New York, why did you give me this?’ Or, I don’t need a cof­fee mak­er, I already have one.’ ”

Fur­ther study to deter­mine these bound­ary con­di­tions,” as Roese calls them, will be nec­es­sary to put the count­abil­i­ty effect and its poten­tial appli­ca­tions into prop­er con­text. It’s nat­ur­al to draw com­par­isons and also to think about ideals,” he says. What’s the best I can get? What’s the opti­mal way to behave? But these are things we’re think­ing about at the cost of appre­ci­at­ing what’s right in front of us.”

Featured Faculty

Neal J. Roese

John L. and Helen Kellogg Professor of Marketing, and Professor of Psychology, Weinberg College of Arts & Sciences

About the Writer

John Pavlus is a writer and filmmaker focusing on science, technology, and design topics. He lives in Portland, Oregon.

About the Research

Ma, Jingjing, and Neal J. Roese. 2013. “The Countability Effect: Comparative Versus Experiential Reactions to Reward Distributions.” Journal of Consumer Research. 39: 1219–1233.

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