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    How Bonuses Get Employees to Choose Work Over Family
    Research & Ideas
    How Bonuses Get Employees to Choose Work Over Family
    29 Nov 2021Research & Ideas

    How Bonuses Get Employees to Choose Work Over Family

    by Rachel Kim Raczka
    29 Nov 2021| by Rachel Kim Raczka
    Working late again? Research by Ashley Whillans and colleagues shows how incentive pay encourages workers to think of downtime as wasted time.
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    When your boss asks you to meet with clients for last-minute drinks, are you tempted to clear your calendar, even if it means missing your child’s piano recital?

    If so, you’re among the many professionals who tend to prioritize professional relationships over personal ones in pursuit of higher pay—and that has the potential to lay the groundwork for an overworked, unhappy existence, according to research by Ashley Whillans, an assistant professor in Harvard Business School’s Negotiation, Organizations, and Markets Unit.

    The research shows that workers frequently make decisions about who they choose to spend time with—work colleagues or family—based on how their pay is structured, in particular whether they get bonuses for a job well done or earn fixed salaries regardless of performance. In fact, employees who received performance incentives spent 2 percent less time each day socializing with friends and family and 3 percent more time with customers and coworkers. Over the course of a year, that added up to eight extra days spent with clients and colleagues compared to employees who didn’t receive performance pay, Whillans’ research shows.

    "People who are constantly prioritizing work over their personal lives are less happy."

    The findings have professional and personal implications for workers at a time when many business leaders are embracing performance-based pay. About 75 percent of organizations in the United States use incentive systems to motivate workers—providing perks like bonuses, commissions, or stock options tied to hitting certain goals. But managers may not realize that these incentives could contribute to employee dissatisfaction, burnout, and personal problems at home.

    “The more our colleagues are central to our goal of making money in the workplace, the more we're likely to prioritize work interactions over personal interactions,” Whillans says. “More broadly, my research suggests that people who are constantly prioritizing work over their personal lives are less happy, less healthy, and fight more with their romantic partners.”

    The research results are outlined in a May article published in Organizational Behavior and Human Decision Processes called Are They Useful? The Effects of Performance Incentives on the Prioritization of Work Versus Personal Ties. Whillans coauthored the research with Julia Hur, assistant professor at New York University, and Alice Lee-Yoon, a doctoral candidate at the University of California, Los Angeles.

    A worrisome pattern of work, work, work

    With three experiments, a survey, and a large dataset, the research team arrived at the same conclusion: When motivated by the carrot of a performance incentive, people are often willing to spend extra time schmoozing with colleagues and less time with family and friends. Specifically, these professionals were:

    • As much as 66 percent more likely to choose time with co-workers. In one study, the researchers presented 545 participants—half paid with incentives and half paid a fixed salary—with choices such as: “Would you go to a happy hour with colleagues or go to your friend’s birthday party?” People who were paid primarily with performance incentives were up to two-thirds more likely to choose spending time with co-workers over family and friends than people paid a straight salary.
    • About 23 percent more likely to spend extra time on work projects. The researchers conducted three studies to test whether people view their colleagues as important to their success. In one study, those motivated by incentives were 16 percent more likely to find their work colleagues key to achieving their goals than were people paid a fixed salary, and they were 35 percent more likely to prioritize socializing with them at the expense of family and friends than their salaried counterparts. In another study, people who were offered incentives were 23 percent more likely to spend extra time on a project with team members than those not eligible for extra rewards.
    • Willing to give up happiness to spend time with colleagues. The research team also studied US Census time-use survey data between 2010 and 2015 to examine the daily work and social activities of 75,210 participants. Respondents shared information about how they were paid and their emotional health. Regardless of industry and income, employees paid with incentives were significantly more inclined to spend extra time with colleagues than salaried workers—even though doing so resulted in lower levels of happiness.

    The results reveal just how much these incentives propel people to prioritize work in pursuit of more money—even if doing so undermines their social interactions.

    “Our results suggest that how you start to view the world when you're paid under performance incentives is that any moment you are not working is a moment that's wasted,” says Whillans. “The negative effects of constantly choosing work over personal relationships appear to accumulate over time and in turn contribute to negative mental health outcomes.”

    Help employees find the right balance

    Whillans recognizes that performance-based incentives are integral to many workplaces and can be effective in motivating employees. But with research showing that many employees are working even longer and harder than usual during the pandemic, managers should be mindful of the psychological toll that extra hours on the job may have, she says. And since socializing with family and friends has shown to increase happiness, employers should proactively find ways to help employees restore a healthier work-life balance, Whillans says.

    Companies that don’t may suffer the consequences, says Whillans, who pointed to research by Jeffrey Pfeffer at Stanford University showing that organizations lose about a month of productivity each year due to employee health issues, including mental health struggles.

    Besides, Whillans’ previous research shows that money isn’t the only way to motivate workers; rewarding people with more free time is also effective. Employers could consider supplementing financial incentives with time-based rewards, like extra vacation time or flex days, or health perks, like gym memberships, says Whillans, author of the book Time Smart: How to Reclaim Your Time and Live a Happier Life.

    “Such rewards send a signal that, not only do you care about the time workers spend on productive tasks,” Whillans says, “but also that you care about the quality of their life outside of work.”

    About the Author

    Rachel Kim Raczka is a writer based in the Boston area.
    [Image: iStockphoto/Cecilie_Arcurs]

    What incentives does your company use to push people to work harder?

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    Ashley V. Whillans
    Ashley V. Whillans
    Assistant Professor of Business Administration
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