Workers respond better to fines than bonuses says study

Image caption, Top City workers can get more than £1m in bonuses

Threatening workers with fines rather than just offering bonuses - such as bankers get - makes people work harder, according to a study.

Researchers at the University of Nottingham carried out a series of tests on more than 100 volunteers.

The study found those facing fines did more work than those on bonuses. They also earned more for themselves, and their employers.

The big banks are expected to pay out more than £6bn in bonuses this year.

Dr Daniele Nosenzo, of Nottingham's Centre for Decision Research and Experimental Economics, said he wanted to find out how people could be encouraged to act a certain way: "We set up a novel experiment - the first of its kind, as far as we're aware - to compare positive and negative influences."

Volunteers were randomly paired as workers and managers during a series of tests. The worker could choose whether to put in "high effort" and the manager decided whether or not to inspect the employee.

Sometimes the pair received bonuses, sometimes fines.

"We found paying bonuses didn't encourage more effort," says Dr Nosenzo. "Employers tended to make fewer inspections when they knew they would have to pay a bonus for high effort.

"The workers shirked slightly more often when bonuses were present. On the other hand, introducing harsher fines encouraged working. So it's fines, not bonuses, that enhance efficiency."

'More than one carrot'

Although there is broad agreement that the threat of losing something does sharpen the mind, not everyone agrees that the stick is better than the carrot.

Howard Grosvenor is a chartered occupational psychologist at the talent management company SHL, which has thousands of mainly corporate clients.

"If you want to teach someone to operate a nuclear reactor, then negative methods can be quite effective. But if you want to change behaviour, you need a more balanced approach, a mix of reward and punishment.

"A good motivator is something that encourages the outcome you want," he says. "That might not be making more money, but also going the extra mile to help a customer."

He added: "There's more than one kind of carrot, and more than one kind of stick."

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