Experimental Evidence on Group-based Attendance Bonuses in Team Production

Abstract

We test the effectiveness of a group-based attendance bonus in a field experiment in a factory in Pakistan, where workers manufacture electric fans in stages using batch-production methods. We find that the group-based attendance bonus increased by more than a quarter the average number of days that the team’s attendance target was met. This effect was larger for junior and mid-level workers as compared to senior workers. We find that the bonus incentivized better coordination among workers, especially in the latter part of the month, rather than through higher average attendance. Our experiment’s results suggest that temporary incentive programmes may help workers in the transition period to new ways of organizing production and may prove to be a valuable tool for change management. Group-based bonuses offer an alternative to individual or tournament-based incentives based on one’s own or relative performance, which may have deleterious effects on intrinsic motivation and pro-social behaviour.