Massage therapists and spa owners who employ people should be aware that their employee-management process will be more effective if it focuses on rewards rather than punishments.
That’s according to a new study from Michigan State University.
The study, which appears in The Accounting Review, challenges previous research that says the threat of penalty is more effective for getting increased effort, said Karen Sedatole, associate professor of accounting in MSU’s Broad College of Business, in a university press release.
“Our findings show what carrots work better than sticks—in other words, workers respond better to bonuses than penalties,” Sedatole said.
The researchers conducted a scientific experiment in which participants played the role 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 press release.
Employees subjected to the bonus exhibited more effort and this was driven by greater trust in the supervisor. Sedatole said the study is the first to identify this trust factor.
“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.”
Examples of penalties in the business world include pay reduction, demotion and sanction or other disciplinary action, such as a salesperson with lower performance getting less territory to work.