Friday, May 10, 2013

Employee Award Programs

The Dirty Laundry of Employee Award Programs: Evidence from the Field 

Timothy Gubler, Ian Larkin & Lamar Pierce
Harvard Working Paper, February 2013

 Abstract: Many scholars and practitioners have recently argued that corporate awards are a "free" way to motivate employees. We use field data from an attendance award program implemented at one of five industrial laundry plants to show that awards can carry significant spillover costs and may be less effective at motivating employees than the literature suggests. Our quasi-experimental setting shows that two types of unintended consequences limit gains from the reward program. First, employees strategically game the program, improving timeliness only when eligible for the award, and call in sick to retain eligibility. Second, employees with perfect pre-program attendance or high productivity suffered a 6-8% productivity decrease after program introduction, suggesting they were demotivated by awards for good behavior they already exhibited. Overall, our results suggest the award program decreased plant productivity by 1.4%, and that positive effects from awards are accompanied by more complex employee responses that limit program effectiveness.

1 comment:

Thomas W said...

This reminds me of a editorial in the magazine EE Times (an electrical engineering trade magazine) 20 odd years ago. It was entitled "The Engineering Hero". It described the hero who rescued the project which was late and in trouble through long hours and heroic effort and received a lot of recognition. Not recognized was the fact that the hero was the one who got the project into trouble in the first place by being marginally competent to do the work.

Meanwhile, the engineer who quietly does good work, is on time, is never noticed and never works long heroic hours is not noticed by upper management and never considered a "hero" or "essential" to the organization.

I've seen examples of both (and fit both roles at times).

Back to the article on awards in them main post, the defect in the attendance award is that it apparently rewards improved attendance rather than good attendance in general. Thus employees realize they have to mess up in order to be eligible for the award. Better would be a simple "perfect attendance" award.

Even then, the award could be a problem. You don't want the truly sick person at work getting everybody else sick. Better than an award is a supervisor who can motivate employees and make the job more interesting. I've known people who have done this, but they are rare and are sometimes shut down by upper management (which only sees some workplace rule like "no talking" being flouted).