Management · Motivation · Quotes
Fines and kindergarten
Original article: http://eduardk.livejournal.com/294267.html
Original scientific work: Uri Gneezy en Aldo Rustichini, ‘A Fine Is A Price’, Journal of Legal Studies, Vol. 29, Issue 1 (2000).
Full text.
Abstract The deterrence hypothesis predicts that introducing a penalty that leaves everything else unchanged will reduce the likelihood of the behaviour being penalised. We present the result of a field study in a group of kindergartens that contradicts this prediction. Parents were regularly late picking up their children, forcing the teacher to stay after closing time. We introduced a monetary fine for late parents. As a result, the number of late parents increased significantly. After the fine was removed, there was no decrease. We argue that fines are usually introduced into an incomplete contract, social or private. They can change the information agents have, and therefore the effect on behaviour may be the opposite of the expected one. If that is so, the deterrence hypothesis loses its predictive power, since the condition “everything else remains unchanged” may prove difficult to satisfy.
The behavior of parents, depending on whether or not the kindergarten imposed a fine for being late, is a typical example of the existence and adherence to psychological, informal, and formal contracts by individuals.
Before the introduction of fines, teachers and parents operated within a psychological contract, where social norms were used to address issues of tardiness. When parents were late—which we know happens to everyone—they felt guilty and made an effort to pick up their children from daycare on time in the future. However, by implementing fines, the daycare replaced the psychological contract with a formal one, and social norms with market norms. Now, parents could decide for themselves whether to be late or not, and often chose to be late. It goes without saying that the daycare had a completely different goal in mind.
But then the garden canceled the fines and returned to social norms. What about the parents? Did they come back? Did they regain their sense of guilt for being late? No! They continued to pick up their children late. Moreover, there was even a noticeable increase in the number of late pickups.
This experiment clearly shows that when social norms clash with market forces, they can leave our relationships for a long time, and it’s difficult to restore them. Love has faded, the tomatoes have withered…
Now imagine thousands of companies where management easily imposes monetary fines for various actions of employees, where companies readily apply penalties to their clients for minor infractions. They may have forgotten (or already have forgotten) about the loyalty of their consumers and employees. And no subsequent attempts to win them back can quickly restore their trust. This results in lost investments in marketing and personnel management. The most significant loss of trust from employees occurred during the last crisis: a pervasive and obsessive pursuit of short-term profits, inappropriate use of outsourcing, and draconian cost-cutting measures…