Want to Reduce Absenteeism? Money Talks
How effective are financial bonuses in motivating employees and reducing absenteeism? To find out, two Dutch researchers, Wolter H.J. Hassink (Utrecht School of Economics) and Pierre Koning (CPB Netherlands Bureau for Economic Policy Analysis), analyzed the effectiveness of a monthly lottery incentive system established by a large Dutch manufacturer to boost attendance.
This is how the lottery worked. At the beginning of each month, the firm identified workers who had taken no sick leave in the previous three months. From this group, seven winners were selected at random. Each lottery winner received a coupon gift with a value of 75 Euros, and their names were publicized company-wide. One other feature: winners were excluded from future lotteries.
The researchers looked at the personnel and absence records of 481 workers over the two years of the program. They found that, relative to the employees’ absence records before the lottery, the monthly incidence of sickness absence decreased by 4.3 percentage points in the lottery’s first seven months and by 1 percentage point in its subsequent seven months. These effects correspond to reductions in the rate of absence of 2.4 and 1.1 percentage points, respectively. In the period in which the lottery was held, the incidence and the rate of absence were 14.8 percent and 4.8 percent, respectively.
“We speculate that the impact on absence rates declined either because workers initially overestimated their odds of winning or because they eventually realized that they were going to win one of the future lotteries anyway,” they write.
Hassink and Koning also found that among workers who won the lottery, absence rates that had declined before they won rose afterward. “Indeed, the estimates suggest a post-win increase in absence.”
On balance, the lottery was beneficial for the firm although its impact tailed off dramatically after several months.
Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery, by Wolter H.J. Hassink and Pierre Koning; Industrial and Labor Relations Review (Vol. 62, No. 3, April 2009)
Email me for a copy of this paper: Alan [at] AlanMorantz.com
