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When Bonuses Backfire: Evidence from the Workplace

Author

Listed:
  • Jakob Alfitian

    (Faculty of Management, Economics, and Social Sciences, University of Cologne, 50923 Cologne, Germany)

  • Dirk Sliwka

    (Faculty of Management, Economics, and Social Sciences, University of Cologne, 50923 Cologne, Germany)

  • Timo Vogelsang

    (Frankfurt School of Finance & Management, 60322 Frankfurt, Germany)

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.

Suggested Citation

  • Jakob Alfitian & Dirk Sliwka & Timo Vogelsang, 2024. "When Bonuses Backfire: Evidence from the Workplace," Management Science, INFORMS, vol. 70(9), pages 6395-6414, September.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:9:p:6395-6414
    DOI: 10.1287/mnsc.2022.00484
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