When Bonuses Backfire: How Incentivizing Attendance Increases Absenteeism in the Workplace

Jakob Alfitian (University of Cologne)
Dirk Sliwka (University of Cologne)
Timo Vogelsang (University of Cologne)

Abstract : Absenteeism in the workplace entails economic consequences of considerable magnitude. Yet, evidence regarding the effectiveness of potential instruments that firms may employ in order to curb excessive absenteeism is scarce. We conduct a firm level field experiment (RCT) in collaboration with a retail chain and introduce two variants of an attendance bonus, which we randomly assign among the firm’s apprentices. While one group of apprentices receives a monetary bonus, another group receives a time-off bonus in the form of additional days of vacation. A third group serves as the control group. Our analyses reveal that neither of the two bonus variants serves to reduce absenteeism. Instead, we find that the monetary attendance bonus even tends to increase the probability of absence, notably for the cohort of first year apprentices. The time-off bonus, on the other hand, does not appear to systematically affect attendance behavior at all. The results of a comprehensive survey suggest that the monetary attendance bonus relaxes the apprentices' psychological costs of absence.

Supply and Demand Effects of Financial Incentives: Evidence from Branchless Banking Agents in Indonesia

Erika Deserranno (Northwestern University)
Gianmarco Leon-Ciliotta (Universitat Pompeu Fabra & Barcelona GSE)
Firman Witoelar (Australian National University)

Abstract : We study the effects of higher monetary incentives paid to frontline service providers and their impact on the take up of a new savings technology. The context is one of a large bank that hires local branchless banking agents to introduce a new savings account in a rural and largely unbanked area of Indonesia. These agents are (a) randomized into receiving a high vs. low piece rate for recruiting new customers, and (b) randomized into whether or not the piece rate is revealed to the community. We shed light on the supply- and demand-side effects of monetary incentives. we find that they are effective in increasing take-up only in settings where the information about the agent’s compensation is kept private. On the other hand, when these high incentives are public information, they convey a negative signal about the quality of the product, the agent, or the bank to potential clients, reducing the demand for the product. The effect is of the same magnitude as the supply side effect.

Corporate Governance and Social Impact of Non-profits: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo

Anicet Fangwa (HEC Paris)
Caroline Flammer (Boston University)
Marieke Huysentruyt (HEC Paris)
Bertrand Quelin (HEC Paris)

Abstract : How can non-profit organizations improve their governance to increase their social impact? This study examines the effectiveness of a bundle of governance mechanisms (consisting of pro-social incentives and auditing) in the context of a randomized governance program conducted in the Democratic Republic of Congo’s healthcare sector. Within the program, a set of health centers were randomly assigned to a governance treatment while others were not. We find that the governance treatment leads to i) higher operating efficiency and ii) improvements in social performance (measured by a reduction in the occurrence of stillbirths and neonatal deaths). Furthermore, we find that funding is not a substitute for governance—health centers that only receive funding increase their scale, but do not show improvements in operating efficiency nor social performance. Overall, our results suggest that corporate governance plays an important role in achieving the non-profits’ objectives and increasing the social impact of the funds invested.

Fostering Innovation Through Empowered Workers - Experimental Evidence from the Bangladeshi Garment Industry

Vanessa Schreiber (University of Oxford)

Abstract : Informational constraints are often a crucial barrier to adopt surplus-enhancing innovations in firms in developing countries. How can the culture in firms be changed to overcome this barrier and to increase upward flows of ideas as an important source of innovation? We conduct a randomized controlled trial in one Bangladeshi garment factory to test the efficacy of voice-enhancing interventions. The first intervention aims to reduce upward communication costs at the worker-level by randomly assigning workers to participate at lunch sessions with co-workers to think about ideas. The second intervention aims to reduce upward communication costs at the supervisor-level by randomly assigning supervisors to participate at a training program on how to increase workers' voices. Interim findings suggest that workers are better off as a result of a reduction in upward communication costs at the worker-level. I find evidence of positive effects on firm- and worker-related outcomes, i.e. higher job satisfaction, lower absenteeism and working time. A reduction in upward communication costs at the supervisor-level, through guidance from supervisors, shifts up the quality distribution of ideas and encourages workers to submit more meaningful ideas. However, it steers workers away from critical topics they would raise without any guidance, such as their supervisors’ misbehavior. As potential channels, I consider higher perceived efficacy and more confidence into upward communication of treated workers and supervisors.