efficiency wage

An efficiency wage is a higher-than-market-rate salary offered by employers to motivate employees to perform better. The idea is that better-paid workers are more satisfied, less likely to slack off, and more committed, leading to increased productivity and reduced turnover. By paying above the standard wage, companies aim to create a more engaged workforce, which can ultimately result in higher efficiency and profitability. This approach can also discourage workers from seeking jobs elsewhere, preserving stability within the organization.