Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Employees More Likely to Cheat with Bonus Incentive Programs

19.05.2010
Paying employees to perform better can enhance their productivity, but can also entice them to cheat, finds a new study by Ryerson University and University of Guelph researchers.

“The dark side of behaviour can be affected by pay-for-performance schemes,” said Fei Song, co-author of the study and a business professor at Ryerson’s Ted Rogers School of Management. “Faced with certain types of incentives, some people are tempted to make up or misrepresent their performance numbers, which can cause companies to lose revenue.”

This is the first study of its kind that compares employee cheating under different pay-for-performance compensation schemes. Bram Cadsby and Francis Tapon of the University of Guelph are the other co-authors of the study.

The researchers asked over 200 students at the University of Guelph to create as many words as they can from anagrams in one minute. Three groups of students completed this task using different pay-for-performance schemes as a financial incentive: a linear piece-rate system (employees receive a bonus for each unit they produce or sell); a tournament-based bonus system (payment is tied to an employee’s performance in relation to that of other workers); and a target-based scheme (employees only receive compensation if they achieve the company’s pre-set goal for sales or performance).

Afterwards, the students were asked to check each other’s work and were given a chance to correct any errors made by their rater before submitting their assignment to the researchers.

The researchers found that students cheated significantly more when the target-based compensation system was used compared to the other two incentive programs. In addition, the closer the participant’s actual performance was to their target goal, the more often they cheated.

“We speculate that people feel much worse if they miss a target by only a small margin rather than a large one,” said Song. “The employee knows how close they are to the target. It acts like a big apple, tempting them to cheat in order to get the bonus.”

Added Song: “Companies should be very cautious about the use of target-based bonuses.”

How can companies improve pay-for-performance systems to reduce deception in the workplace?

“To combat cheating, companies must have effective internal auditing/monitoring systems in place,” she said. “This will help to control and weed out any misrepresentation, which can occur under any payment scheme.”

The study, “Are You Paying Your Employees to Cheat? An Experimental Investigation,” was published in the 2010 issue of the B.E. Journal of Economic Analysis & Policy. The study was supported by a grant from the Social Sciences and Humanities Research Council of Canada.

Ryerson University is Canada’s leader in innovative, career-oriented education and a university clearly on the move. With a mission to serve societal need, and a long-standing commitment to engaging its community, Ryerson offers close to 100 undergraduate and graduate programs. Distinctly urban, culturally diverse and inclusive, the university is home to 28,000 students, including 2,000 master’s and PhD students, nearly 2,700 tenured and tenure-track faculty and staff, and more than 130,000 alumni worldwide. Research at Ryerson is on a trajectory of success and growth: externally funded research has doubled in the past four years. The G. Raymond Chang School of Continuing Education is Canada's leading provider of university-based adult education.

Suelan Toye | Newswise Science News
Further information:
http://www.ryerson.ca

More articles from Business and Finance:

nachricht Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: It’s All in the Mix: Jülich Researchers are Developing Fast-Charging Solid-State Batteries

There are currently great hopes for solid-state batteries. They contain no liquid parts that could leak or catch fire. For this reason, they do not require cooling and are considered to be much safer, more reliable, and longer lasting than traditional lithium-ion batteries. Jülich scientists have now introduced a new concept that allows currents up to ten times greater during charging and discharging than previously described in the literature. The improvement was achieved by a “clever” choice of materials with a focus on consistently good compatibility. All components were made from phosphate compounds, which are well matched both chemically and mechanically.

The low current is considered one of the biggest hurdles in the development of solid-state batteries. It is the reason why the batteries take a relatively long...

Im Focus: Color effects from transparent 3D-printed nanostructures

New design tool automatically creates nanostructure 3D-print templates for user-given colors
Scientists present work at prestigious SIGGRAPH conference

Most of the objects we see are colored by pigments, but using pigments has disadvantages: such colors can fade, industrial pigments are often toxic, and...

Im Focus: Unraveling the nature of 'whistlers' from space in the lab

A new study sheds light on how ultralow frequency radio waves and plasmas interact

Scientists at the University of California, Los Angeles present new research on a curious cosmic phenomenon known as "whistlers" -- very low frequency packets...

Im Focus: New interactive machine learning tool makes car designs more aerodynamic

Scientists develop first tool to use machine learning methods to compute flow around interactively designable 3D objects. Tool will be presented at this year’s prestigious SIGGRAPH conference.

When engineers or designers want to test the aerodynamic properties of the newly designed shape of a car, airplane, or other object, they would normally model...

Im Focus: Robots as 'pump attendants': TU Graz develops robot-controlled rapid charging system for e-vehicles

Researchers from TU Graz and their industry partners have unveiled a world first: the prototype of a robot-controlled, high-speed combined charging system (CCS) for electric vehicles that enables series charging of cars in various parking positions.

Global demand for electric vehicles is forecast to rise sharply: by 2025, the number of new vehicle registrations is expected to reach 25 million per year....

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

LaserForum 2018 deals with 3D production of components

17.08.2018 | Event News

Within reach of the Universe

08.08.2018 | Event News

A journey through the history of microscopy – new exhibition opens at the MDC

27.07.2018 | Event News

 
Latest News

Biosensor allows real-time oxygen monitoring for 'organs-on-a-chip'

21.08.2018 | Medical Engineering

Researchers discover link between magnetic field strength and temperature

21.08.2018 | Physics and Astronomy

IHP technology ready for space flights

21.08.2018 | Power and Electrical Engineering

VideoLinks
Science & Research
Overview of more VideoLinks >>>