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

 

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