I’m Working Hard, but It’s Hardly Working: The Consequences of Motivating Employee Effort That Fails to Achieve Performance Targets

ABSTRACT Managers often encourage employee effort by incentivizing employees to achieve performance targets. This paper examines the effect of employee effort on counterproductive work behaviors when those employees ultimately fail to meet specified performance targets. We conduct an experiment in which participants receive a bonus for meeting a challenging performance target in a real-effort task. We find that for individuals who fail to meet the performance target, greater effort is correlated with both an increased propensity toward noncompliant behavior and an increase in misreporting. Our results identify potential drawbacks of incentivizing employee effort when that effort may not translate into greater performance outcomes. Data Availability: Data available upon request. JEL Classifications: M40; M41.