Ernest Weber was a physician who did lot of research in experimental psychology. He came with concept of “Just Noticeable Difference”. He first started his experiments with weights ex. if you ask a person ( blindfolded) to hold 100 grams weight, and then start adding 1 gram weight at a time, he will not notice change till weight goes up by 3 grams i.e. just noticeable difference is 3 grams, below 3 grams he will not notice any change.
This is applicable to other things like intensity of light, volume pitch, price hike, salary hike, volume of goods etc. Small increases go unnoticed; it has to cross certain threshold to get noticed.
Gustav Fechner later converted this relationship between stimulus (ex. increase in weight) and perception (notice increase in weight) into mathematical formula, also called Weber- Fechner Law. I am not going into details of formula; those interested can get lot of material on web.
Bob Sullivan has written book called “Plateau Effect” where he has used this concept to explain career plateau. Our job/career decays slowly and we do not notice this decay till some event like layoff, your peer getting promotion which you should have got etc. makes us aware of it. Bob Sullivan feels that we should keep markers that tell us about plateauing of our career before it is too late. This is similar to boiling frog syndrome, were frog’s body keeps adjusting to small increase in temperature, this works upto a certain point, once water starts boiling, the adjustment mechanism fails and frog gets killed.
Weber- Fechner Law is also applicable to salary hike. How much should be the magnitude of hike for a person to make it just noticeable? Based on research it is found to be around 8%, so if you give a hike for say 5% he will not feel that he has got hike.
As per Weber- Fechner relationship between stimulus (i.e. % of hike) and satisfaction due to hike (perception) is logarithmic. While stimulus varies in geometric proportion, corresponding satisfaction changes in arithmetic proportion.
So in above example if 8% of hike gives 1X satisfaction, for 2X satisfaction he should get 64% hike, for 3X satisfaction he should get 512% hike! No wonder you have to give astronomical hike to CEO’s to satisfy their egos.