Punishment as a Price to Pay

Abstract

Management meted out punishment to enforce rules and encourage adherence. However, the effectiveness depended on how the employees perceive and interpret the policy. Therefore, it was uncertain how to best achieve the target. The paper tested employees' behavioral responses in two conditions, 1) when employees had to pay fines to employer and 2) when employees had to pay fines to co-workers. Condition one was a typical deterrence policy implemented to punish misconduct in an organization, and condition two tested the behavioral responses to distributive outcomes. Questionnaire was distributed to these employees to investigate perception. The experimental results indicated that employees responded differently to the two conditions, misconduct was significantly reduced in condition two but not in condition one. While employees agreed that the implementation was fair in the two conditions, they did not agree on the punishment outcomes in condition two. The employees perceived paying fines to employer was more acceptable than paying fines to co-workers. Accounting for social norms in the implementation was more successful than formal deterrence. IntroductionOrganizations enforce rules and regulations to align the interest of the employees and the organization.While there is no question that adherence is critical to the smooth functioning of an organization (Bell et al., 2002;Tyler & Blader, 2005), the strategies an organization uses to best achieve the target is always very elusive. The present paper compares two strategies to achieve adherence; the command and control approach and self-regulatory approach.In command and control approach, organizations enforce rules through incentives to encourage adherence and sanctions to discourage misbehavior (GomezMejia & Balkin, 1992;Lauver et al., 2009;Ames et al., 2000). It is based on the view that rule-following is a function of cost and benefits. However, its efficacy has been questioned and it has consistently been found to have only minor influence on adherence (Markell, 2000;MacCoun, 1993). The self-regulatory approach represents an alternative approach that focuses on employee's intrinsic motivations (Tyler & Blader, 2005).It is based on the employees' intrinsic desire to follow organizational rules. Such desire is linked to the em- There is lack of direct field evidence of the relation be- Punishment as a Price to PayReceived:Accepted : 2011 2012 09 03 20 22 ABSTRACT C93, D03, J33, L23

The impact of Positive Reinforcement on Employees’ Performance in Organizations

“…The percentage of employees who are late dropped 66% and 55% of them actually reported to work earlier. It demonstrated that employees who paid fines to their colleague are more successful than paying to their employer in improving their punctuality [23].…”

Moral Hazard, Monitoring and Punishment: Evidence from a Field Experiment

“…Also, it is established in the literature that some people consider the imposition of fine like a price, hence it is likely that the students remain careless even after monetary punishment [Gneezy and Rustichini (2000); Siang (2012)]. For instance, according to Gneezy and Rustichini (2000), when parents are fined for picking up kids late from a day care center; the parents further delayed the arrival time instead of coming on time.…”

“…For instance, according to Gneezy and Rustichini (2000), when parents are fined for picking up kids late from a day care center; the parents further delayed the arrival time instead of coming on time. Likewise, Siang (2012) shows that imposing fine on employees does not improve the attendance rate as employees consider paying fine like a price for their late coming. Based on this discussion the third hypothesis of the study is:…”