Most people have a though that the award will spur employees to continue making improvement initiatives, working hard and more productive, also the penalty will limit the error that caused by employees. However, in practice, the effect of the reward - punishment sometimes go against what we believe.

In some cases, the punishment cannot make employees feel "scared" and vice versa, the reward makes employees do not want to work. Here are two related stories:

The first story took place in a nursery school in the United States. For a time, the school found that some parents picked up their child quite late, which was undesirable for the teachers because they had to spend more time to babysitting without salary.

So the school decided to give notice if the parent picked up their child late, they would be fined $ 3 each time. Unexpectedly, after this rule, the number of parents picked up their child late not only decrease but increased significantly. This could be explained as follows.

First, for many people, $3 is futile and the work they had done before they could pick their child bringing more benefit to them than that. These parents are willing to spend 3 dollars for other things.

Second, because of the fines, this couldn’t be understood as "pick up later", they still picked up on time, only the time was stepped back from the other parents; the job of the teachers were no longer considered as "public employment" but likely overtime and they were paid "wages".
With this in mind, the parents would feel less guilty about the nuisance they cause to the school from the late pick-up, and they can be satisfied with their jobs.

The story about punishing employees in a company is the same. If the fine is not admonitory enough, employees easily overlooked and ready to be punished to do what they think is more important. What will happen if the penalty that preschool in the story was not 3 dollars but 10 times more?

The second story happened in a manufacturing enterprise. The boss decided to increase the worker’s salary depending on their workload. Immediately the monthly production capacity was dramatic decline. Turns out, the workers here worked only for the purpose of earning enough money to live, they did not want to spend too much time on the job.

They wanted to have a significant amount of time for fun, partying ... Because of the increase in their salary they just worked in less time which still maintained the same income.

Through two stories above, one more time we could see that the issue of wages, bonuses, punishment, though was not new anymore but apparently still exists the angles that anyone working in administration must consider.