What Psychological Factors Can Induce Employees to Improve their Job Performance?

1. What Psychological Factors Can Induce Employees to Improve their Job Performance? James Potepa

2. Motivation • While working in the accounting department of a large company, I noticed that the company had employees sign accounting reports. • Signatures are undoubtedly useful in tracing errors and fraud but I wondered if they could have a psychological impact as well • This lead to a larger question: How can a company motivate employees to produce accurate reports apart from simply adjusting monetary compensation? • For this experiment, you each completed 8 tasks which had either • High or low payoffs (though ratio of payoff to punishment was the same) • Required signatures or not • Specified that the report was important or not

3. The Experiment Instructions • You will be paid $2 per report completed (assuming your supervisor does not notice an error). As explained on the first page, the amount of time you spend completing the report will determine how many reports you can finish in an hour. • You will be fined $30 and receive no compensation for putting together the reports if your supervisor notices an error. Your supervisor may or may not catch an error. • Please remember to input the time remaining as soon as you finish typing your answers into lines 1 through 4. Then click the “ok” button. • You have an initial endowment of $320. • Given the data presented in the table below; • Sum the prices of the model names that include the letter C and type this into line 1. • Sum the prices of the model names that include the letter M and type this into line 2. • Sum the prices of the model names that include the letter Q and type this into line 3. • Sum the prices of the model names that include the letters C, M, or Q and type this into line 4.

4. Accuracy:

5. Relative Inaccuracy

6. Average Time Spent on a Task Analysis of the median time reaches the same conclusions

7. Surveys • Surveys overwhelmingly support the idea that signatures and importance play no role in the time or effort given to a task • More than half of the surveys directly state this: • “I didn’t care about “important”, 2 vs. 1, 30 vs. 15, or signing” • 2 of 22 surveys mention they put more time and effort into tasks that they needed to sign or were labeled as important • “The signature was intimidating and so was the “important” so I tried to do those, otherwise I just filled it out as fast as possible” • A few tried to take advantage of the chance of not getting caught by inputting random numbers • 2 of 6 of those subject ended up with profits close to the bottom and the other 4 had profits very close to the top • Person who earned the highest profits gamed the system once

8. Limitations • Probability of detecting an error did not depend on relative accuracy • This may be an unrealistic construct since a human would clearly notice all zeros or random small numbers • Those putting together reports might compensate for this by just providing rough estimates of the addition, however, this was not tested in this experiment • Repetitive instructions could have lead to: • A learning curve since the tasks were similar (despite the change in prices and model names in each round) • This did not seem to be an issue given the increased time to complete the reports as the experiment went on as well as the absence of trends in the accuracy measurements • An insufficient distinction between high and low payoffs, important and unimportant tasks • Given the similarity of tasks, it was possible for people to ignore some of the instructions • Might not be an issue since a few subjects mentioned these factors in their surveys.

9. Conclusions • Signatures will not increase the time spent on a task or accuracy of output • though signatures may be useful in terms of accountability in settings that differ from this experiment • Indicating the importance of a certain task does not increase the time or effort spent on it • Increasing compensation (while keeping relative punishment levels constant) does not induce increased accuracy or effort

10. Recommendations • Managers should focus on optimal contracts and possibly other psychological factors to motivate the people they supervise • Compensation based on whether or not the report is completely accurate leads to problems • Implementing rewards and punishment based on a relative measure of accuracy • Some subjects mentioned frustration at not being able to get exactly the right answers and this drove them to just put down anything in hopes their errors would not be caught