1. Business Ideas
  2. Business Plans
  3. Startup Basics
  4. Startup Funding
  5. Franchising
  6. Success Stories
  7. Entrepreneurs
  1. Sales & Marketing
  2. Finances
  3. Your Team
  4. Technology
  5. Social Media
  6. Security
  1. Get the Job
  2. Get Ahead
  3. Office Life
  4. Work-Life Balance
  5. Home Office
  1. Leadership
  2. Women in Business
  3. Managing
  4. Strategy
  5. Personal Growth
  1. HR Solutions
  2. Financial Solutions
  3. Marketing Solutions
  4. Security Solutions
  5. Retail Solutions
  6. SMB Solutions
Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.
Lead Your Team Strategy

Are Employee-Recognition Programs Bad for Productivity?

Are Employee-Recognition Programs Bad for Productivity?
Credit: Yuriy Rudyy/Shutterstock

You want to motivate your workers, so you institute an employee-of-the-month program. It sounds sensible enough; by recognizing good work, you are incentivizing everyone to try harder, right?

Unfortunately, that might not be the case.

Research into employee recognition programs, even those that are purely symbolic, suggests that there is more complexity at play, and these programs could be negatively impacting productivity and morale.

While workers who were previously unmotivated might strive harder with the introduction of new potential rewards, other employees who have always been intrinsically motivated might lose heart, according to a study recently accepted for publication in the journal Organization Science.

"The common knowledge is that non-monetary awards can subtly motivate people in ways that are fundamentally different from financial reward programs, such as by increasing organizational loyalty, encouraging friendly competition or increasing employees' self-esteem," said Timothy Gubler, one of the study's authors and an assistant professor at the University of California, Riverside's School of Business Administration.

The main drawback to implementing employee recognition programs lies in how they influence perceptions of fairness and equality in the workplace. Employees who have always shown up on time and worked hard often feel alienated by the fact that their previously unrewarded behavior is now being recognized in newly motivated employees. Moreover, employees initially motivated by the implementation of recognition programs tend to return to old habits once their eligibility for rewards lapses.

For the study, researchers examined field data from an attendance-award program used at one of five industrial laundry plants. The program recognized all employees who came to work on time and didn't have any unexcused absences each month, with one person receiving a $75 gift card through a random draw. [See Related Story: Lunch Is Served! Workplace Meals Improve Productivity.]

The researchers analyzed data from all five plants both before and after the award was implemented, exploring the award's effects on individual performance and plant productivity. They discovered that while reward-motivated employees initially responded positively to the award by cutting down on their tardiness, they reverted to their old behavior by showing up late and missing work once they lost eligibility for the award each month.

The study's authors said the awards decreased motivation and productivity for internally motivated workers who were already showing up on time and not missing work before the program started. They found that these workers started showing up late and were absent more, leading to an 8 percent decline in their efficiency in completing tasks.

Overall, the award program cost the plant 1.4 percent of its daily productivity, mainly because of the productivity lost by internally motivated employees.

"Conscientious, internally motivated employees who were performing well before the award program was introduced felt the program was unfair, as it upset the balance of what was perceived as equitable or fair in the organization," Gubler said. "So, their performance suffered – not just in terms of their attendance but also through a motivational spillover that affected other areas of their work – including productivity."

The study's authors say the research shows that organizations need to realize that while some award programs may seem innocuous or even highly beneficial, they can cause the same issues as a monetary bonus.

"Employees value workplace fairness, and they care about how they're perceived relative to others in the organization," Gubler said. "To be effective, companies offering award programs need to consider not only the group they are targeting, such as those that are coming late to work, but also those that are already doing the right thing, as there is a possibility of demotivating some of their best employees."

The study was co-authored by Ian Larkin, an assistant professor at the University of California, Los Angeles, and Lamar Pierce, an associate professor at Washington University in St. Louis.

Chad Brooks contributed to the reporting and writing in this story. Some source interviews were conducted for previous versions of this article.

Adam C. Uzialko

Adam received his Bachelor's degree in Political Science and Journalism & Media Studies at Rutgers University. He worked for a local newspaper and freelanced for several publications after graduating college. He can be reached by email, or follow him on Twitter.