From Dollars to Sense: Placing a Monetary Value on Non-Cash Compensation Encourages Employees to Value Time over Money

Ashley V. Whillans; Ryan  Dwyer; Jaewon  Yoon; Allan  Schweyer

Working Paper | HBS Working Paper Series | 2019

From Dollars to Sense: Placing a Monetary Value on Non-Cash Compensation Encourages Employees to Value Time over Money

by Ashley V. Whillans, Ryan Dwyer, Jaewon Yoon and Allan Schweyer

Abstract

When deciding where to work, employees may focus too much on salary and not enough on non-cash benefits such as paid time-off, potentially undermining their long-term happiness. We propose a simple solution to encourage employees to recognize the value of non-cash benefits: list the financial value of non-cash compensation. Results from one archival data set (n = 42,271) and eight studies (n = 3,190) provide evidence for these ideas. First, as expected, employees who receive non-cash compensation are happier than employees who do not. Yet, prospective employees underestimate the happiness benefit of non-cash benefits. Second, and most critically, prospective employees are more likely to choose jobs with greater non-cash benefits and lower salaries when the cash value of these non-cash benefits are listed. Providing a mechanism for our results: organizations that list the cash value of non-cash benefits are perceived as caring more about their employees and about work-life balance. We document a boundary condition: listing the cash value of non-cash rewards effectively shifts employment preferences only when the starting salary of the job is sufficiently high. These findings provide the first evidence that listing the cash value of non-cash rewards increases the attractiveness of non-cash compensation.

Keywords: non-cash compensation; Salary; benefits; time; money; Compensation and Benefits; Wages; Work-Life Balance; Perception; Decision Making; Happiness;

Language: English

Format: Print

68 pages

Read Now

Citation:

Whillans, Ashley V., Ryan Dwyer, Jaewon Yoon, and Allan Schweyer. "From Dollars to Sense: Placing a Monetary Value on Non-Cash Compensation Encourages Employees to Value Time over Money." Harvard Business School Working Paper, No. 18-059, January 2018. (Updated January 2019.)

When it comes to our to-do lists, many of us prioritize checking off tasks that are easiest to complete or are due first, regardless of importance – a phenomenon that scholars describe as the “mere urgency” effect. This tendency becomes stronger the busier we are. But constantly prioritizing urgent tasks means that important tasks that have no urgent deadline (such as updating your resume or doing creative work) get pushed aside for later and later. Some just never get done. When we fail to do what’s important, often what matters most to us, we feel stressed, overwhelmed, and unmotivated— and firms are less productive. Research suggests managers can help employees combat the tendency to put off for tomorrow what isn’t due today: have employees set aside proactive time for work that is important but not urgent.

Over the last two decades, global wealth has risen. Yet, material affluence has not translated into time affluence. Instead, most people today report feeling persistently “time poor”—like they have too many things to do and not enough time to do them. This is critical because time poverty is linked to lower well-being, physical health, and productivity. For example, in our analysis of 2.5 million Americans, subjective feelings of time poverty had a stronger negative effect on well-being than being unemployed. However, individuals, organisations, and policymakers often overlook the pernicious effects of time poverty. Billions of dollars are spent each year to alleviate material poverty, while time poverty is often ignored or exacerbated. In this Perspective, we discuss the organisational, institutional, and psychological factors that explain why time poverty is often under appreciated. We argue that scientists, policymakers, and organisational leaders need to devote more attention and resources toward understanding and reducing time poverty to promote psychological and economic well-being.

Conventional wisdom says you should ask your colleagues for feedback. However, research suggests that feedback often has no (or even a negative) impact on our performance. This is because the feedback we receive is often too vague—it fails to highlight what we can improve on or how to improve. New research suggests a better approach. Across four experiments—including a field experiment conducted in an executive education classroom—researchers found that people received more effective input when they asked for advice rather than feedback.

Faculty & Research

From Dollars to Sense: Placing a Monetary Value on Non-Cash Compensation Encourages Employees to Value Time over Money

Abstract

Citation:

About the Authors

More from these Authors