Article 2024

When Bonuses Backfire: Evidence from the Workplace

Management Science
Journal · Vol. 70 · Issue 9 · pp. 6395-6414
Abstract

Monetary incentives are widely used to align employee actions with employer objectives. We conducted a field experiment in a retail chain to evaluate whether an attendance bonus could reduce employee absenteeism. Apprentices in 232 stores were randomly assigned to a control group or one of two treatment groups in which a monetary or time-off attendance bonus was introduced for one year. We find that neither variant of the attendance bonus led to a systematic reduction in absenteeism. On the contrary, the monetary attendance bonus increased absenteeism substantially by around 50% on average, which corresponds to more than five additional days absent per employee and year. This effect was driven by the most recently hired apprentices. Survey results reveal that the monetary attendance bonus shifted the perception of absenteeism as acceptable behavior. The backfiring effect persisted beyond the end of the experiment, indicating a lasting erosion of social norms. ©: © 2023 INFORMS.

Keywords

Author Keywords

Field experiment Social norms absenteeism compensation crowding out monetary incentives

Index Keywords

Apprentices compensation Control groups social norm Inflation Compensation (personnel) % reductions Absenteeism Crowding out Field experiment Monetary incentive Retail chains Treatment group
Author Affiliations
Wirtschafts- und Sozialwissenschaftliche Fakultät der Universität zu Köln, Koln, Nordrhein-Westfalen, Germany
Frankfurt School of Finance and Management, Frankfurt am Main, Germany
Funding & Acknowledgements
Universität zu Köln, UoC
Funding text 1: Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1-390838866] is gratefully acknowledged. The authors thank Robert Dur, Matthias Heinz, Stephan Kramer, Eva Labro, Sofia Louren\u00E7o, Frank Moers, Christoph Schottm\u00FCller, Kathryn Shaw, Matthias Sutter, Elien Voermans, and Michael Williamson as well as participants of the 22nd Colloquium on Personnel Economics, the Workshop of the Center for Social and Economic Behavior, the Workshop on Natural Experiments and Controlled Field Studies, the Cologne Seminar in Applied Microeconomics, the Cedefop, the Eurofound and IZA Conference on Workplace and Management Practices, the 2020 Workshop of the Committee for Organizational Economics, the 2020 Advances with Field Experiments Conference, the European Network for Experimental Accounting Research Seminar Series, the 7th Empirical Management Conference, the Field Days 9th edition, the 11th Conference on Performance Measurement and Management Control, and the Rotterdam Accounting Workshop for helpful comments. Katharina Arnhold, Sidney Block, Julia Bohne, Leon Leuters, Franziska Irmgartz, Nico Koch, Lukas Schilling, Julia Schmitz, Florian Wagner, and Caro Wegener provided excellent research assistance. The authors are grateful for the company's support. No funding was received from the company, and no author had a financial relationship with the company. The University of Cologne did not have an institutional review board (IRB) at the time the experiment was carried out, but the company's works council approved all aspects of the experimental design. The study was preregistered in the American Economic Association's registry for randomized controlled trials and the unique identifying number is: AEARCTR-0002863 (Alfitian et al. 2018). Any errors and all opinions are the authors' own.; Funding text 2: History:Accepted by Marie Claire Villeval, behavioral economics and decision analysis. Funding:Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1\u2013390838866] is gratefully acknowledged. Supplemental Material:The data files and online appendix are available at https:/ /doi.org/10.1287/mnsc. 2022.00484.
Deutsche Forschungsgemeinschaft, DFG
Grant: EXC 2126/1–390838866
Funding text 1: Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1-390838866] is gratefully acknowledged. The authors thank Robert Dur, Matthias Heinz, Stephan Kramer, Eva Labro, Sofia Louren\u00E7o, Frank Moers, Christoph Schottm\u00FCller, Kathryn Shaw, Matthias Sutter, Elien Voermans, and Michael Williamson as well as participants of the 22nd Colloquium on Personnel Economics, the Workshop of the Center for Social and Economic Behavior, the Workshop on Natural Experiments and Controlled Field Studies, the Cologne Seminar in Applied Microeconomics, the Cedefop, the Eurofound and IZA Conference on Workplace and Management Practices, the 2020 Workshop of the Committee for Organizational Economics, the 2020 Advances with Field Experiments Conference, the European Network for Experimental Accounting Research Seminar Series, the 7th Empirical Management Conference, the Field Days 9th edition, the 11th Conference on Performance Measurement and Management Control, and the Rotterdam Accounting Workshop for helpful comments. Katharina Arnhold, Sidney Block, Julia Bohne, Leon Leuters, Franziska Irmgartz, Nico Koch, Lukas Schilling, Julia Schmitz, Florian Wagner, and Caro Wegener provided excellent research assistance. The authors are grateful for the company's support. No funding was received from the company, and no author had a financial relationship with the company. The University of Cologne did not have an institutional review board (IRB) at the time the experiment was carried out, but the company's works council approved all aspects of the experimental design. The study was preregistered in the American Economic Association's registry for randomized controlled trials and the unique identifying number is: AEARCTR-0002863 (Alfitian et al. 2018). Any errors and all opinions are the authors' own.; Funding text 2: History:Accepted by Marie Claire Villeval, behavioral economics and decision analysis. Funding:Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1\u2013390838866] is gratefully acknowledged. Supplemental Material:The data files and online appendix are available at https:/ /doi.org/10.1287/mnsc. 2022.00484.
American Economic Association, AEA
Grant: AEARCTR-0002863
Funding text 1: Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1-390838866] is gratefully acknowledged. The authors thank Robert Dur, Matthias Heinz, Stephan Kramer, Eva Labro, Sofia Louren\u00E7o, Frank Moers, Christoph Schottm\u00FCller, Kathryn Shaw, Matthias Sutter, Elien Voermans, and Michael Williamson as well as participants of the 22nd Colloquium on Personnel Economics, the Workshop of the Center for Social and Economic Behavior, the Workshop on Natural Experiments and Controlled Field Studies, the Cologne Seminar in Applied Microeconomics, the Cedefop, the Eurofound and IZA Conference on Workplace and Management Practices, the 2020 Workshop of the Committee for Organizational Economics, the 2020 Advances with Field Experiments Conference, the European Network for Experimental Accounting Research Seminar Series, the 7th Empirical Management Conference, the Field Days 9th edition, the 11th Conference on Performance Measurement and Management Control, and the Rotterdam Accounting Workshop for helpful comments. Katharina Arnhold, Sidney Block, Julia Bohne, Leon Leuters, Franziska Irmgartz, Nico Koch, Lukas Schilling, Julia Schmitz, Florian Wagner, and Caro Wegener provided excellent research assistance. The authors are grateful for the company's support. No funding was received from the company, and no author had a financial relationship with the company. The University of Cologne did not have an institutional review board (IRB) at the time the experiment was carried out, but the company's works council approved all aspects of the experimental design. The study was preregistered in the American Economic Association's registry for randomized controlled trials and the unique identifying number is: AEARCTR-0002863 (Alfitian et al. 2018). Any errors and all opinions are the authors' own.; Funding text 2: History:Accepted by Marie Claire Villeval, behavioral economics and decision analysis. Funding:Funding by the Deutsche Forschungsgemeinschaft (DFG; German Research Foundation) [Grant EXC 2126/1\u2013390838866] is gratefully acknowledged. Supplemental Material:The data files and online appendix are available at https:/ /doi.org/10.1287/mnsc. 2022.00484.
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