1. Sales & Marketing
  2. Finances
  3. Your Team
  4. Technology
  5. Social Media
  6. Security
Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.
Grow Your Business Your Team

Employees Motivated By Rewards, Not Penalties

Carrot on string Credit: Carrot on stick image via Shutterstock

The carrot, not the stick, is what that drives productivity in the workplace, according to new research.

The study by Michigan State University associate professor of accounting Karen Sedatole revealed that the promise of a reward motivates employees more than the threat of a penalty.

The study, which appears in the journal The Accounting Review, challenges previous research that says the fear of punishment is more effective for getting increased effort out of employees.

"Our findings show that carrots work better than sticks — in other words, workers respond better to bonuses than penalties," Sedatole said, adding those penalties can range from pay reductions and demotions to other disciplinary action, such as a salesperson with lower performance getting less territory to work.

[5 Things a Boss Should Never Say]

The researchers came to their conclusions after conducting scientific experiments in which participants played the roles of supervisor and employee. Some employees were subjected to a bonus program implemented by the supervisor, while others worked under a penalty system.

According to the study, employees who received the bonus exhibited more effort, which was driven by a greater trust they had in the supervisor.

"What this means for companies is that employees who receive bonuses for their efforts will work even harder, increasing productivity and potentially bolstering profits," Sedatole said. "But those subjected to penalties tend to distrust the supervisor and, because of that, work less hard."

The study, "Sticks and Carrots: The Effect of Contract Frame on Effort in Incomplete Contracts," was co-authored by Margaret Christ from the University of Georgia and Kristy Towry of Emory University.

Follow Chad Brooks on Twitter @cbrooks76or BusinessNewsDaily @BNDarticles. We're also on Facebook & Google+.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.