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The Dirty Laundry of Employee Award Programs: Evidence from the Field

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Many scholars and practitioners in human resource management have recently argued that awards and other forms of on-the-job recognition provide a "free" way to motivate employees. But are there unintended, negative effects of such awards? In this paper, the authors simultaneously examine the costs and benefits of an attendance award program that was implemented in an industrial laundry plant. The award used in the study was effective in that it reduced the average rate of tardiness among employees. However, it also led to a host of potential spillover effects that the plant manager readily admits were not considered when designing the program, and that reduced overall plant productivity. Overall, findings demonstrate that an award program that appears to be effective may also induce unintended consequences severely reducing the net value of the program. These results highlight the impact such a program can have on the overall performance of the firm and suggest caution when designing and implementing such programs. Key concepts include:

Even simple awards programs can have much broader and complex implications for employee behavior.
In the study, two highly valued employee groups - the most productive workers and the most consistently punctual workers - suffered a 6-8% decrease in productivity after the award was instituted. This finding is remarkable because it suggests that awards for one type of behavior have the potential to "crowd out" positive behavior in a completely different realm.
This research suggests that non-monetary but extrinsic rewards such as corporate awards act more like monetary rewards than they do intrinsic motivators such as love for the job or empowerment through autonomy.
Award programs with a low likelihood of winning may be ineffective because employees do not habituate good behavior, and instead lead to a highly strategic response from employees.

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