The Daily Item, Sunbury, PA

Business

April 30, 2013

When workplace rewards don’t motivate, the cost can be high

— If you’ve been working long enough, you’ve probably lived through a few employee-motivation programs. Perhaps you’ve even won a prize for cutting costs, improving quality or just showing up on time.

Academic economists are fascinated by these programs, and there’s a good deal of literature about how they can improve productivity without costing employers too much money.

But rewards can backfire, too, as the academics could learn by talking to a few cynical workers. Here at the St. Louis Post-Dispatch, we once had a cost-cutting effort that became known as the “screw your buddy for a flashlight“ contest.

A couple of researchers at Washington University in St. Louis, along with a co-author from Harvard University, recently took a close look at such a program gone wrong.

They studied an industrial laundry where, to combat tardiness, the manager began a monthly drawing for employees with a perfect on-time record. The prize was a $75 gift card.

Instead of motivating employees, the program seemed to demotivate them. Productivity declined for workers who had been the most productive - and most punctual - before the contest.

It’s a cautionary tale, said co-author Lamar Pierce, an associate professor of strategy in Washington University’s Olin School of Business. He did the research with Timothy Gubler, a doctoral student, and Ian Larkin of Harvard.

“There’s this idea in some circles that you can just throw an award out there and see what happens,“ Pierce said. “You have to be concerned about whether employees see it as fair, and whether you are motivating the right kind of behavior.“

Employees who had always been punctual, Pierce said, were offended when their less conscientious colleagues began winning gift cards. Those workers could game the system by, for example, calling in sick rather than showing up late. (An illness was counted as an excused absence.)

Pierce, who once worked at Boeing, said co-workers are keenly aware of one another’s work habits, and have a strong sense of fairness. The resentment over the gift cards was not quite on the level of a 4-year-old crying over an unequal distribution of candy, but it was close.

Pierce said the company could have addressed employees’ concerns by offering an initial award to people who had always displayed the desired behavior.

The attendance awards still would have had unintended consequences, though. Habitually tardy employees still tended to show up late, but usually were within the 5-minute grace period that the program allowed. And once they were disqualified for the month, workers reverted to their old bad habits.

The plant manager had expected to motivate workers for the cost of a $75 gift card, but instead the researchers calculate that lost productivity cost the plant $1,500 a month.

Pierce wants to emphasize that he’s not against employee rewards programs, which are big business for consulting firms like Fenton, Mo.-based Maritz Inc.

“They can be incredibly motivational if done right,“ he said. “The lesson is that a poorly designed program can be a lot more costly than people think. That’s why companies like Maritz end up being valuable. They think carefully about the science behind this sort of thing.“

Pierce isn’t identifying the laundry company, other than to say it’s a well-run Midwestern business.

To its credit, the company killed the rewards after nine months, even before it understood how costly the program had become. Company executives just decided they shouldn’t reward people for something they ought to be doing anyway. Isn’t it nice when academic research can confirm such common-sense wisdom?

David Nicklaus: dnicklauspost-dispatch.com

 

1
Text Only
Business
  • How to become a leader

    QUESTION: I’ve just been promoted into a leadership role. I’m excited, but also kind of overwhelmed. What do I need to do to be good at my new job?

    July 24, 2014

  • Balancing Act: How much is your time worth? Consider outsourcing some tasks

    Todd Paton has a booming business getting customers noticed on the Web. One tool he uses is generating online press releases to build brand awareness and create links that will send traffic to a customer’s website. But Paton, owner of Paton Internet Marketing, acknowledges that writing the releases is not his strong suit. Rather than spend his time doing it, he hires out the task.

    July 23, 2014

  • The Color of Money: No easy way to get out of debt

    Many people who are deeply in debt are desperate for a quick fix. They ask the question: What can I do to get out of debt?

    July 21, 2014

  • Watercooler: When to speak up if you see problems down the line

    Q: Our organization has hired a new director. I am one of a number of division heads; above us, there's the associate director, and above him is the director. The associate director is feared and disliked for his duplicity and dictatorial nature, though few have come forward because of his vindictiveness.

    July 18, 2014

  • Career Coach: Bringing a purpose-driven spirit to work

    Increasingly, religious beliefs and practices of employees are becoming more evident in the workplace. Religious diversity and concepts of spirituality are more prevalent in organizational settings.

    July 18, 2014

  • Ask the Mompreneur: It’s best to farm out your payroll

    When my husband and I hired our first employee at our Web development company, we had it easy when it came to doing payroll.

    July 17, 2014

  • Protecting against unnecessary losses

    QUESTION: I run a small bar and grill which is open 7 days a week and have to rely on others for some of the shifts. How can I ensure employees have not become my partners?

    July 17, 2014

  • A checklist for keeping you focused at work

    A quick check of Facebook and next thing you know, a half-hour’s passed. Start chatting with a co-worker and suddenly 20 minutes is gone and the report you were supposed to finish by lunch is late.
    Workplace distractions are everywhere, especially in an age of social media and open-plan offices. In the face of so much temptation, accomplishing what you’re paid to do can be tough.

    July 16, 2014

  • It could be time for a career coach

    Need a little help figuring out your next career move?
    If you’re putting in the hours and still not seeing the rewards, feeling undervalued or simply striving to be more successful, it may be time to hire a career coach.

    July 16, 2014

  • Your Office Coach: Turn to boss for help with disgruntled underling

    QUESTION: When I joined this company a few weeks ago, I discovered that the person who previously held my position is now working for me. “Sarah” obviously resents my presence and frequently says I don’t have the authority to manage her, even though I clearly do. Her negativity has made my job much more difficult.

    July 15, 2014

Business Video
Stocks