Be careful what you incentivise for

24 Jan 2019 By Lauren Brown

Rewarding employees could have negative consequences, according to a new study

Employee incentives are being used too indiscriminately, according to research which has confirmed they often incentivise poor behaviour among employees. 

Virginia Tech researchers found that incentives such as bonuses – especially those offered as a reward for meeting targets – could lead to individuals acting unethically to improve results and speed up rewards.

“These unintended negative consequences can lead to dishonesty, unethical behaviour, increased risk-taking, escalation of commitment and depletion of self-control,” said Bill Becker, associate professor of management at Virginia Tech’s Pamplin College of Business.

Becker added “goal fixation” could have a significant impact on employees’ behaviour and “the damaging effects appear to be growing stronger in today’s competitive business landscape.” 

The full report, entitled Effects of Goals and Pay Structure on Managerial Reporting Dishonesty, highlighted examples of unethical behaviour in the workplace that included employees falsely altering time and expense reports.

Commenting on his findings, published in the Journal of Accounting, Ethics and Public Policy, Becker said: “Using purely monetary incentives is almost always a double-edged sword.”

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