Who doesn’t like to be noticed by their company for going above and beyond the call at work, especially if there’s bonus pay? Yet, subjective performance evaluations can lead to feelings of unfairness when they’re not in an employee’s favor.
October 18, 2022
Who doesn’t like to be noticed by their company for going above and beyond the call at work, especially if there’s bonus pay? Yet, subjective performance evaluations can lead to feelings of unfairness when they’re not in an employee’s favor.
That’s partly why managers need to tread carefully when deciding how to incentivize worker performance, says new research from a professor at the University of Toronto’s Rotman School of Management. The study of a Chinese manufacturer showed that pay bonuses handed out based on managers‘ assessments of employee’s work led to performance improvements the next month. When workers lost pay on the same basis though, subsequent performance dropped.
„Penalties can have disciplining effects, that’s why they’re there in the first place,“ said Jee-Eun Shin, an assistant professor of accounting, who co-authored the research. „But we also see negative performance associated with them and a subjective decision has a potentially demotivating effect.“
Most research around incentivization has examined performance outcomes when employees are aware of potential rewards and penalties but haven’t yet received them.
