When Bonuses Backfire: Evidence from the Workplace

Dirk Sliwka, Timo Vogelsang and Jakob Alfitian

No 16282, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Monetary incentives are widely used to align employees’ actions with the objectives of employers. We conduct a field experiment in a retail chain to evaluate whether an attendance bonus reduces employee absenteeism. The RCT assigned 346 apprentices for one year to either a monetary attendance bonus, a time-off bonus or a control group. We find that neither form of the bonus reduced absenteeism, but the monetary bonus increased absence by around 45%. This backfiring effect is persistent and driven by the most recently hired apprentices. Survey results reveal that the bonus shifted the perception of absenteeism as acceptable behavior.

Keywords: Compensation; Monetary incentives; Time-off incentive; Absenteeism; Crowding-out; Field experiment (search for similar items in EconPapers)
JEL-codes: C93 D91 J33 M52 (search for similar items in EconPapers)
Date: 2021-06
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