Monetary incentives are widely used to align employee actions with employer objectives. Timo Vogelsang, assistant professor from Frankfurt School, and colleagues from the University of Cologne investigated the impact of an attendance bonus on employee absenteeism.
Apprentices from 232 retail stores were assigned to a group with no bonus or one of two treatment groups that received a monthly bonus point if they had no absences for the whole month. Bonus points were converted into rewards at the end of the year-long experiment, either €60 (monetary bonus) or an additional vacation day (time-off bonus) for every three bonus points.
They found that neither type of attendance bonus led to a reduction in absenteeism. The monetary attendance bonus substantially increased absenteeism by around 45% on average: more than five additional days of absence per year per employee. The time-off bonus had no effect at all.
Professor Vogelsang said: ‘Post-experimental survey results find that apprentices with the money bonus felt less guilty about being absent, despite not being sick, and felt less obliged by their contract always to come to work. The monetary bonus led to absenteeism being perceived as a more acceptable behaviour as monetary incentives were being provided for behaviour previously considered normal.’
This backfiring effect of an attendance bonus also persisted among more recently hired apprentices, even six months after the bonus was removed. This shows how incentives can shape social norms and how the effects can persist. Managers are advised to examine prevailing social norms before introducing monetary incentives.
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