Workers seem to react in a positive manner to the assurance of reward or a carrot, as opposed to the threat of punishment or stick, finds a new study.
"Our findings show what carrots work better than sticks - in other words, workers respond better to bonuses than penalties," said study co-author Karen Sedatole of the Michigan State University (MSU), US.
The study challenges previous research that says the threat of penalty is more effective for getting increased effort, said Sedatole, associate professor of accounting at the MSU, the journal The Accounting Review reports.
Penalties include pay cut, demotion and sanction or other disciplinary action, such as a salesperson with lower performance getting less territory to work, said Sedatole. She authored the study with Margaret Christ of the University of Georgia and Kristy Towry of Emory University, according to an MSU statement.
Researchers conducted an experiment in which participants played the role of supervisor and employee. Some employees were subjected to a bonus programme implemented by the supervisor, while others worked under a penalty system.
Employees subjected to the bonus exhibited more effort and this was driven by greater trust in the supervisor. Sedatole said the 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," the researcher added.
"But those subjected to penalties tend to distrust the supervisor and, because of that, work less hard," Sedatole said.