Journal of Organizational Bebavior Management , 30:308–324, 2010 Copyright © Taylor & Francis Group, LLC ISSN: 0160-8061 print/1540-8604 online DOI: 10.1080/01608061.2010.520144
DOUGLAS A. JOHNSON Operant-Tech Consulting, and Western Michigan University, Kalamazoo, Michigan, USA ALYCE M. DICKINSON Western Michigan University, Kalamazoo, Michigan, USA This article investigates Employee-of-the-Month as a technique for sustaining improved performance on a data entry task in two experiments. In both experiments, participants competed as mem- bers of a fabricated team for a “Check Processor of the Week” incentive. The first experiment assessed the impact of receiv- ing this incentive. In the second experiment, the incentive was enhanced to include a $50 bonus for the winner. Participants always placed between 2nd and 5th place in order to assess the impact of being an unrewarded runner-up. Overall, results sug- gest that Employee-of-the-Month programs do not sustain improved performance and may even bave detrimental effects. KEYWORDS employee-of-the-month , incentives, performance feedback, recognition, rewards Employee-of-the-Month (EOM) is one of the most popular forms of recog- nition in organizations (Daniels, 2000). A number of popular management books on motivation and retention currently recommend the practice (for examples, see Clarkson, 2006; Cook, 2004; Finne & Sivonen, 2009; Glanz, 2002; Godson, 2009; Levit, 2008; McKeown, 2002; Messmer, 2001; Pritchard, 2007; Reid & Bojanic, 2009; Solovic, 2008). The reasons given for its recom- mendation include giving credit to deserving individuals, boosting morale through symbolic rewards, and motivating excellence by providing positive examples for other employees to emulate. Despite its popularity in both press and practice, there are a num- ber of individuals who argue against the use of EOM programs. Typically EOM incentives are based on results without consideration of the behaviors that may have produced those results (Daniels, 2000). As such, employees may be engaging in undesirable behaviors to produce the results, includ- ing unethical or illegal behaviors. Furthermore, the criteria for earning EOM is often vague, resulting in employees being unclear about how to get the reward or what the reward program is about. For example, Daniels (2009) notes that during informal surveys conducted with 77 employees across var- ious businesses, not a single employee could name the specific behaviors required to earn an EOM incentive. However, the most criticized aspect of EOM programs is their "winner- take-all" design (Carlaw, Carlaw, Deming, & Friedmann, 2003; Daniels, 2000. 2009; Daniels & Daniels, 2004; Grote, 2002). As a result, many employees may end up not being rewarded, despite potentially small differences in performance. EOM programs inherently involve norm-referenced evaluation. This evaluation method often produces competition for an indivisible prize, which the organization may consider valuable for its performance boosting potential (Harbring & Irlenbusch, 2003). However, under such condi- tions, the actual competition that is produced may be unhealthy and counterproductive for the organization (Abernathy, 1996; Michael, 2004). One of the unhealthy and counterproductive aspects of this type of competition is s sabotage (Chen, 2003; Harbring & Irlenbusch, 2008). This occurs because the probability of receiving the reward is not only based on one’s merit, but the merit of others as well. Therefore, engaging in activi- ties that worsen the appearance of another employee’s merit improves one’s chance of obtaining the desired outcome. It is quite possible that talented individuals will not be rewarded simply because they weren’t as talented as their peers at sabotage. Given that sabotage would be punished by super- visors if they became aware of its presence, sabotage is usually conducted covertly. Thus, much of the damage caused by such a program would be unknown to the organization's managers and supervisors. As such, undesir- able behavior may be rewarded and desirable behavior may be neglected by these managers and supervisors. Even if sabotage behaviors don't occur, there is a high probability that desirable behaviors are being unduly neglected under an EOM program. Since the number of prizes is limited, the number of people being rewarded is also being limited. If EOM is truly based on performance, then it is likely that the same individuals will consistently win every month (Carlaw et al., 2003; Daniels, 2000; Daniels & Daniels, 2004). Thus, by design, very few employees are contacting this source of reinforcement (assuming, of course, that winning EOM is reinforcing). It is quite possible that both acceptable and good performance is being extinguished, thus reducing the future per- formance of the vast majority of an organization's workforce. Although the organization's top performers may be performing better under EOM pro- grams, the organization overall is performing worse due to the collective performance of the entire workforce. Some organizations have tried to avoid the problem of repetitive win- ners by only allowing a person to win EOM a certain number of times during a given time period (such as once per year). Unfortunately, this solu- tion may be no better. The EOM incentive loses its significance as a reward and instead becomes a "revolving gimmick" (Carlaw et al., 2003). As Daniels (2000) notes, it may be easy to accept you aren't the organization's best performer, but it is more humiliating to know you aren't even in the top ten. With this type of incentive plan, the organization has essentially resorted to calling the vast majority of its employees “losers” (Daniels, 2000; Grote, 2002). Thus, EOM may not only be extinguishing desirable performance, it may actually have a punishing effect. Proponents and opponents of EOM programs both make a number of arguments based on assumptions. Proponents claim that being a runner- up will have a motivating effect that will cause employees to try harder in order to obtain the outcomes they see given to the winner. Opponents claim the opposite, stating that employees will become apathetic due to failing to receive the desired outcome. Of course, both arguments assume that winning EOM is a valued outcome. Ultimately, whether EOM inspires or extinguishes performance can best be answered through empir- ical means. Unfortunately, there seems to be a lack of research on EOM. The authors could find no published empirical studies on EOM, even within a variety of disciplines such as psychology, management, and economics. Fortunately, economics literature has produced a relevant line of rese- arch. There are a number of studies examining the structure of awarding promotions and the effect it has on performance. Promotions are similar to norm-referred evaluation seen with EOM in that (a) there are a number of people competing for what is assumed to be a valued prize, (b) there is only a single winner, and (c) the winner is determined by having the best perceived performance (which may or may not correspond with actual best performance). Such arrangements are referred to as "rank order tournaments” in the economics literature, with tournament being applicable to both promotions and incentives. Sabotage has been a frequently expressed concern in rank order tour- naments for promotions. Of particular interest is the question of whether or not such tournaments actually select the most able individuals (Chen, 2003; Gürtler, 2008; Harbring & Irlenbusch, 2008; Münster, 2007). Not only are individuals being selected on the basis of their merits, they are potentially being selected on the basis of their ability to sabotage their rivals. While managers and supervisors are unlikely to intentionally select an individ- ual based on his or her proficiency at sabotage, that may still be the end result, because sabotage behaviors are likely to be hidden. Promoting the employees most skilled in sabotage may not be in the best interests of the organization. The same principle would apply to EOM incentives: rewarding the employees most skilled in sabotage may not be in the best interests of the organization. Another variable studied in economics rank order tournaments is the fraction of winner prizes. Incentive studies within this research line have shown that there is a positive correlation between productivity and the fraction of prizes; that is, productivity tends to increase as the number of available prizes increases (Harbring & Irlenbusch, 2003, 2008). Similarly, when incentive studies have been arranged so that participation in a rank order tournament is voluntary (with piece rate pay being the alternative), the number of individuals participating in the rank order tournament increases as the number of prizes increases (Harbring & Irlenbusch, 2003; Vandegrift, Abdullah, Yavas, & Brown, 2007). Further, when high ability performers were included in the rank order tournaments, lesser able individuals were more likely to opt out of the rank order tournament. These outcomes would suggest that individuals would prefer to not participate in EOM incentive systems, given that EOM systems typically have a very small fraction of win- ner prizes (typically one per month). Furthermore, this effect is likely to be exacerbated if there are other high ability employees competing for the same incentive. Another interesting finding from economics is that rank order tour- naments appear to produce more variability in performance than other incentive arrangements (Bull, Schotter, & Weigelt, 1987; Harbring, 2006; Harbring & Irlenbusch, 2003). While this finding has been considered puzzling within economics literature, behavioral research can suggest an explanation. When top performers are given a desired outcome for perfor- mance, their behavior is likely to be reinforced and thus increase their future productivity. However, as the remainder of the performers continue to not receive desired outcomes, their efforts are likely to be extinguished and one would expect future productivity to decrease. As times passes, the gap between top performers and other performers is likely to widen, resulting in increased variability compared to other motivational incentive systems. However, previous studies have not separated out productivity outcomes by performer abilities, making this possibility difficult to evaluate. Given the lack of any published empirical studies on a motivational technique as popular as EOM, it is important to gather data so that recom- mendations can be guided by data instead of opinion. This article discusses two experiments designed to answer the following questions: Does receiv- ing a typical EOM incentive within a revolving EOM program (i.e., can only be won once per time period) reinforce performance? If receipt of such an incentive is reinforcing, do the effects have any permanence? When using a valued reward in a "winner-take-all" format with clear performance expec- tations, what is the effect of performing well but having a consistent gap between yourself and the first ranked employee? To study these questions, a computerized data entry task was used. Participants were assigned to teams in which all other team members were fabricated, thus preventing the possibility of sabotage. Alternative activities were made available for participants in an effort to control for inflated performance on the experimental task. That is, without alternative activi- ties participants might work on the data entry task simply because there was nothing else to do, which could mask the effects of the intervention (Matthews & Dickinson, 2000; Mawhinney, 1975). Within both studies, a "Check Processor of the Week" incentive was used and was meant to be analogous to the way EOM awards are distributed.
EXPERIMENT 1
Method
P P R T I C I P A N T S  AN  D  S ETTING Participants were six male and female college students recruited from classes at a midwestern university. Participants were paid $5.25 for each session attended and received extra credit for their courses. Sessions were con- ducted in a laboratory room containing four desktop computers, keyboards, mice, chairs, and tables. Computers were partitioned from one another by cubicle walls preventing observation of the participant's screen by both the experimenter and adjacent participants.
Apparatus
The experimental task was a computerized data entry task modeled after the job of a check processor in a bank. Simulated bank checks with values ranging from $10.00 to $999.99 were presented on the screen. Participants entered the displayed values in a box at the bottom of the screen using the computer's numeric keyboard. After the participants entered the value, they pressed the enter key to proceed to the next value. The computer automatically recorded the number of checks completed correctly. In addition to the experimental task, there were six computer games available on the computer for play, accessible at any point during the ses- sion (FreeCell, Solitaire, Spider Solitaire, Hearts, Minesweeper, and Pinball). Participants could play these games by minimizing the check program and could return to the check program at any time.
D EPENDENT VARIABLE
The dependent variable was the number of checks completed correctly prior to and following the receipt of the Check Processor of the Week.
E XPERIMENTAL DESIGN
A within-subject concurrent multiple baseline across pairs of participants design was used. At t eh beginning of the fourth session, two of the partic- ipants with stable performance were exposed to the independent variable of being informed they were the Check Processor of the Week (described in more detail in the Experimental Procedures section). At the beginning of the fifth session, two additional participants with stable performance were exposed to the independent variable. Performance was considered stable if the cumulative number of checks processed correctly did not increase or decrease by more than 10% for three consecutive sessions. At the beginning of the seventh session, the remaining two participants were exposed to the independent variable, even though the performance of one was not stable. This was done due to time constraints.
E XPERIMENTAL PROCEDURES
Participants attended one 45-minute experimental session per week for 10 weeks. At the beginning of the study, participants were informed they could win the Check Processor of the Week incentive only once during the study. At the beginning of every experimental session, the following script related to the criteria for winning Check Processor of the Week was read to participants: I want to remind you that you will earn $5.25 for this session and al the remaining sessions, and I will pay you in cash at the end of the study. If you have a cell phone or pager, please turn it off during the session. Also I want to remind you that we will award "Check Processor of the Week" for one member of your team next week. This recognition will be provided for: ● Improving performance ● Going the extra mile ● Positively embracing the values of passion, trust, and commitment ● Making an outstanding contribution to the team ● And other deserving accomplishments You may take a break whenever you like for as long as you like. You may play one of the computer games as a break, or you may also just stretch and relax. After I start the check task, I will be available on the other side of the cubicle wall. If you need anything during the session, just come get me. Do you have any questions? The stated criteria for winning the Check Processor of the Week incen- tive were kept purposely vague, as is often the case with EOM incentives in business and industry (Daniels, 2009). Participants were shown a sheet of paper for their "team" listing 20 names (19 fabricated names plus their name), with their name listed at the top of the sheet identifying them as Check Processor of the Week. In addition, participants were told the fol- lowing when they "won" the award: "Here's the listing of team members on your team. As you can see, you were named Check Processor of the Week for last week, so congratulations!" For the preceding and remaining weeks when the participant was not given the award, he or she was told the following: "Here's the listing of team members on your team. As you can see, (insert team member name) was named Check Processor of the Week." The first experimental session was the only exception, given that a previous week's winner was not plausible at t the beginning of the experiment. After being read the instructional scripts, participants were then seated in front of the computer workstation allowing them to work on the exper- imental task. The experimenter then left the view of the participant, only returning 45 minutes later to inform the participant of the session's end. Baseline consisted of the sessions before participants received the Check Processor of the Week award. Sessions after receipt of the award comprised the intervention phase. Participants were deceived in two ways with respect to experimental procedures. First, they were told that they were members of a 20-person team when, in fact, such a team did not exist. Rather, the names of the other team members were fabricated. Second, it was implied that winning the Check Processor of the Week was related to the performance of the individual team members, when in reality it was dictated by the experimental design.
Results and Discussion
Figure 1 displays the number of checks completed correctly for each par- ticipant across all ten sessions. The data for Carla seems to indicate a slight increase in performance after the receipt of "Check Processor of the Week." However, these performance gains did not sustain across sessions. The per- formances of Bob and Greg did not seem to change following the receipt of “Check Processor of the Week.” The performance of Frances began to slightly decrease following the provision of "Check Processor of the Week." There were large decreases in performance for Deb and Helen after they were awarded "Check Processor of the Week." Overall, being awarded Check Processor of the Week did not appear to improve subsequent per- formance. These data suggest that revolving EOM awards are unlikely to boost the subsequent performance of the award winners. While the above results suggest that revolving EOM programs with vague performance criteria do not enhance or sustain performance, EOM programs are not all the same and there are several possibilities why an EOM award program may not be effective, including: 1. The revolving nature of the award suppresses performance (i.e., one knows they can just wait their turn to get the award and there is no incentive to continue working hard after the award is received); 2. The award isn't valuable (i.e., just seeing one's name on a plaque or piece of paper isn’t desired); 3. The award is valuable, but the performance expectations are unclear (i.e., the criteria are so vague that one does not know how to get the award); 4. The award is valuable, but the "winner-take-all" format doesn't encourage performance (i.e., the award is desirable, but one does not believe they can outperform all their fellow employees). To better test the last and perhaps most germane (or most common) feature of EOM programs, a second experiment was conducted. Specifically, this study examined the effects of an EOM program on employees who per- form relatively well under clear performance expectations but still are not the top performers in their organization and, as such, do not receive the valued EOM incentive. The second experiment differed from the first exper- iment in that the Check Processor of the Week incentive was enhanced to increase the probability that participants would value it. This is akin to EOM awards where an employee gets additional incentives besides the recog- nition itself, such as monetary bonuses, free meals, or improved parking spaces (Daniels, 2009; Reid & Bojanic, 2009). Also, the delivery was non- revolving (i.e., participants were told they could earn the award multiple times) and the performance expectations were clear.
EXPERIMENT 2
Method
P P R T I C I P A N T S , S E T I N G , A N D APPARATUS Participants were six male and female college students who did not partici- pate in experiment 1. As with experiment 1, they were paid $5.25 per session and could also receive extra credit in their courses. The experimental setting and task were the same as experiment 1.
D EPENDENT VARIABLES
The dependent variables were the number of checks processed correctly and participant responses to a poststudy questionnaire.
E XPERIMENTAL DESIGN
A within-subject concurrent multiple baseline across participants design was used. At t he beginning of the fourth session, one of the participants with stable performance was exposed to the independent variable (described in more detail in the Experimental Procedures section). At the beginning of the fifth and sixth sessions, two additional participants with stable performance were exposed to the independent variable. At t he beginning of the seventh session, the remaining participant was exposed to the independent variable. Performance was considered stable if the cumulative number of checks pro- cessed correctly did not increase or decrease by more than 10% for three consecutive sessions. The performance of all participants met this criterion.
E XPERIMENTAL PROCEDURES
General. There were two phases to the study, followed by a poststudy questionnaire. Participants completed one 45-minute session per week for 12 weeks. Baseline. At the beginning of every session during this phase partic- ipants were told that they would earn $5.25 for the sessions, that they were members of a team with 20 members, and that they could take breaks whenever they liked. Intervention.  During this phase, participants were exposed to the inde- pendent variable of the "Enhanced Check Processor of the Week" (Enhanced CPW). At the beginning of the first session during this phase, participants were told that there would be a change in the experiment for the rest of the study, namely that they could earn recognition and a $50 prize if they had the top ranked performance. The following script was then read to the participants (and was also read at t the beginning of all their remaining sessions): I want to remind you that you will earn $5.25 for this session and al the remaining sessions, and I will pay you in cash at the end of the study. If you have a cell phone or pager, please turn it off during the session. Also I want to remind you that we will award "Check Processor of the Week” for one member of your team next week. This award will include both recognition and a $50 bonus. There are 20 members in your team, including yourself. This recognition will be provided for the team member accurately processing the highest number of checks each week. You may take a break whenever you like for as long as you like. You may play one of the computer games as a break, or you may also just stretch and relax. After I start the check task, I will be available on the other side of the cubicle wall. If you need anything during the session, just come get me. Do you have any questions? At the beginning of every session during this phase, participants were shown a sheet of paper that listed (a) the names of the members of their team (19 fabricated names plus their own), (b) the team member who was top ranked (i.e., was named Check Processor of the Week), (c) the number of checks correctly completed by the top ranked team member, (d) how many checks they correctly completed, and (e) how they ranked relative to the other team members. After being read the instructional script, participants were seated in front of the computer workstation to begin working on the experimental task. The experimenter left the view of the participant, only returning 45 minutes later to inform the participant of the session’s end. Both recognition and the monetary incentive were included to ensure that participants did indeed value the award. If the award was simply recog- nition alone, as in experiment 1, and the results indicated that this did not improve performance, it would be difficult to assess whether the reason for a lack of performance gains was due to the reward not being consid- ered valuable by participants or if the "winner-take-all" nature of the contest discouraged performance. Part of the deception in this experiment included participants being told that winning the Check Processor of the Week was related to the per- formance of the individual team members, when in reality it was arranged so that the same fabricated participant won every time. Participants were always ranked between 2nd and 5th in a randomly determined order. Therefore, from the participants' perspective, they were always perform- ing well, although never well enough to outperform the fabricated first place winner. The first place winner's fabricated performance was always 15%–30% above the actual participant's highest performance during the sec- ond phase, thus the gap between the top performer and the participant was consistently large. This value was selected by taking the participant's data and multiplying it by a number selected from a finite set of values (possible values: 1.15, 1.17, 1.19, 1.21, 1.23, 1.24, 1.26, 1.28, 1.30). These numbers were randomly selected without replacement. This was done to simulate a workplace environment where one employee is clearly more skilled than other employees and consistently takes all the rewards and recognition. It is important to note that none of the actual participants were placed on the same fabricated team. Poststudy questionnaire. The questionnaire, administered at t he end of the study, asked participants to describe how valuable they considered the $50 bonus on a 1-9 scale (1 = not at all valuable, 9 = extremely valuable). Participants were also asked to circle a statement that best sum- marized their performance for both the beginning and end of the Enhanced CPW phase. The statement options were (a) "I was trying to compete with other team members for the $50 bonus," (b) "I was trying to compete with myself to beat my own performance,” and (c) “I wasn’t trying to compete at all."
RESULTS AND DISCUSSION
Figure 2 depicts the number of checks processed correctly across sessions for each participant. Table 1 displays participants' responses to the question- naire. Overall, participants did consider the $50 bonus given as part of the Check Processor of the Week award to be valuable, with an average rating of 7.17 (1 = not at all valuable, 9 = extremely valuable). Most of the participants displayed slight to moderate increases in per- formance following the introduction of Check Processor of the Week. This corresponds with the questionnaire data, in which most participants indi- cated they were trying to compete with their teammates to earn the $50 bonus when it was first introduced (see Table 1). However, the performance gains were not maintained by all par- ticipants. In particular, Andrea and Gina demonstrated clear drops in performance prior to the conclusion of the study. This corresponds with their questionnaire responses, in which they indicated that they had stopped trying to compete by the conclusion of the study. Both Barb and Chuck indicated they were still trying to compete with teammates at the conclusion of the study. However, neither of these partic- ipants demonstrated performance improvements following the introduction of the Check Processor of the Week award. Chuck's performance may even show a slight decrease by the last few sessions. Both Erin and Dawn showed moderate increases in performance fol- lowing the introduction of "Check Processor of the Week," which lasted throughout the Enhanced CPW phase (with a possible decrease in Dawn's final session). Self-report data, however, indicates that the maintenance of these performance gains may not be due to the availability of the monetary incentive, but rather performance feedback. Both participants reported that by the end of the study, they were competing with themselves to beat their own performance, not to win the $50 prize (see Table 1).
GENERAL DISCUSSION
Overall, the results of these studies suggest that typical Employee-of-the- Month programs do not improve performance. Furthermore, even when EOM is supplemented with additional incentives, it is unlikely to sustain improved performance for the majority of employees. As such, EOM appears to be an ineffective motivational tool that may even have some detrimental effects, such as sabotage and other forms of unhealthy competition. Of the few performance gains seen in this study, some of them can probably be attributed to performance feedback, suggesting that organizations would be better off implementing a good performance feedback system rather than an EOM program. It is important to note that the second experiment involved a version of EOM that was enhanced beyond typical applied implementations. For example, as mentioned earlier, in most EOM programs, the criteria for earning the award are often vague (Daniels, 2009) as they were in our first
experiment; the criterion for earning the award was very specific in our second experiment (i.e., participants were informed that the team member who processed the highest number of checks would receive the award). Additionally, the "losers" are not typically acknowledged as relatively good performers, as were our participants in the second experiment. Even under these circumstances performance gains were not sustained. One possible future research direction might be to investigate versions of EOM in which participants are not ranked as relatively good performers to see the effect on performance. The Check Processor of the Week rewards used in the current experi- ments do contain some flaws that should be addressed in future research. It is questionable whether or not a weekly Check Processor of the Week incentive is sufficiently similar to a monthly EOM incentive. Furthermore, the incentive that was meant to be analogous to a typical EOM incentive con- tained some differences from the implementation seen in actual workplace settings, which may or may not be important in motivating performance. In the first study, the participants believed that their teammates would see their name listed as the top ranked team member. In actual workplaces, the top ranked employees often have their names displayed not only to their fellow employees, but customers as well. Furthermore, it is often more than just their name; a picture is often included as well. It is possible that this more visible form of recognition may be more valued and have a stronger influence on performance. The results of the second study still argue against this practice due to the effect on the majority of the workers (i.e., everyone except the winner). However, it is unknown what effect this more visible recognition would have on the winners themselves. Another possible weakness was the use of fabricated teams. None of the participants indicated that they knew that the teams were fabricated for either study, as indicated by informal questioning during debriefing sessions. However, the question of plausibility should always remain a concern. If par- ticipants did not believe that their recognition would be observed by fellow workers, this would likely reduce the positive function of recognition. While the current study used fabricated teams to better control the delivery of the independent variable, future studies may wish to consider actual teams of participants. Doing so would also allow future researchers to study another potential aspect of EOM, namely sabotage of fellow team members. The cur- rent study did not analyze the detrimental effects of EOM, which would be valuable for future studies to investigate. It is quite possible that by pitting participants against one another for a valued prize, the sabotage behaviors will be evoked. Future studies may wish to utilize experimental arrange- ments whereby participants must report the performance of their fellow teammates to see if reporting is accurate or distorted. Alternately, an exper- imental arrangement could be designed so that participants are expected to help one another with some task to see if they actually help or hinder the progress of one another. Clearly, some form of unobtrusive monitoring would need to take place without the knowledge of the participants. If a valued EOM incentive causes organizational members to hinder each other and distort the performance of other members, this should be of critical importance to organizations. The current study used typical EOM in a revolving format with vague expectations and an enhanced EOM in a nonrevolving format with clear expectations. Different combinations of typical/enhanced, revolving/non- revolving, and vague/clear expectations could be utilized in future studies. For example, one could look at the effect of a typical EOM in a nonrevolving format on the recipient. What is the effect of repeatedly getting public recog- nition every single time? Will it improve or sustain performance or does the top ranked employee take it for granted (or some form of satiation)? Finally, these types of studies should be conducted in applied settings to see if the experimental outcomes generalize to those settings. Ultimately, these studies represent an important first step toward an empirical understanding of one of the most common workplace prac- tices. Hopefully more studies will be conducted in this line so that recommendations can be guided by actual data, not assumptions.