Incentives like employee of the month can actually reduce motivation on the job, report researchers.
The new study finds that even simple awards programs can have much broader and complex implications for employee behavior.
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The researchers used field data from an attendance award program implemented at one of five industrial laundry plants. They found that awards programs could induce unintended consequences that can reduce the net value of the program.
The researchers show that two types of unintended consequences limit gains from the reward program. First, employees game the program, improving timeliness only when eligible for the award, and strategically calling in sick to retain eligibility.
Second, employees with perfect pre-program attendance or high productivity suffered a 6 percent to 8 percent productivity decrease after program introduction, suggesting that awards for good behavior they already exhibited de-motivated them.
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Overall, the results suggest the award program decreased plant productivity by 1.4 percent, and that positive effects from awards are accompanied by more complex employee responses that limit program effectiveness.
While awards programs can be powerful tools for motivating employees, companies must think carefully about the unintended consequences that can cripple their efficacy.
Lamar Pierce, associate professor of strategy at the Washington University in St. Louis Olin School of Business is an author of the study, as are Olin doctoral student Timothy Gubler and Ian Larkin, assistant professor at Harvard University.
This article originally appeared in Futurity.org. Source: Washington University in St. Louis.
