To motivate workers, carrot beats stick
MICHIGAN STATE (US) — To motivate workers and boost productivity, the promise of reward wins out over the threat of penalty.
A new study, which appears in The Accounting Review, challenges previous research that says threats are more effective for getting increased effort, says Karen Sedatole, associate professor of accounting in Michigan State University’s Broad College of Business.
“Our findings show that carrots work better than sticks—in other words—workers respond better to bonuses than penalties.”
Sedatole and co-authors Kristy Towry of Emory University and Margaret Christ of the University of Georgia conducted a scientific experiment in which participants played the role of supervisor and employee. Some employees were subjected to a bonus program implemented by the supervisor, while others worked under a penalty system.
Employees subjected to the bonus exhibited more effort, driven by greater trust in the supervisor. Sedatole says the study is the first to identify this trust factor.
“What this means for companies is that employees who receive bonuses for their efforts will work even harder, increasing productivity and potentially bolstering profits,” Sedatole says. “But those subjected to penalties tend to distrust the supervisor and, because of that, work less hard.”
Examples of penalties in the business world include pay reduction, demotion and sanction or other disciplinary action, such as a salesperson with lower performance getting less territory to work.
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