A new study shows that the promise of a reward motivates people to work harder than threats.
The new study, which appears in The Accounting Review, challenges previous research that says the threat of a penalty is more effective, said Karen Sedatole, associate professor of accounting at Michigan State University.
“Our findings show that carrots work better than sticks — in other words, workers respond better to bonuses than penalties,” Sedatole said.
The researchers conducted a scientific experiment in which participants played the role of supervisor and employee.
Some employees were subjected to a bonus program, while others worked under a penalty system, such as cuts in pay, demotions, sanctions or other disciplinary action, such as a salesperson with lower performance getting less territory to work.
Employees in the bonus program exhibited more effort, driven by greater trust in the supervisor, said Sedatole, who added this 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,” she said.
“But those subjected to penalties tend to distrust the supervisor and, because of that, work less hard.”
Source: Michigan State University