Now You Know

WSB research that answers important questions

Q: Does a fear of punishment keep workers from ‘cyberloafing’?

You know you do it—check a quick news headline or your Twitter feed in between tasks at work. You know who else knows you do it? Your boss. The question is: Does that matter?

Sung Kim, Peter T. Allen Professor in the Department of Operations and Information Management, looked at what happens when an organization creates and enforces policies to thwart what’s known as “cyberloafing.” Formal controls do curb cyberloafing, and Kim’s research gives clues to how and why.

Kim and his research partners found that cyberloafing is contagious among co-workers and it’s habitual. Without sanctions for cyberloafing, workers worry very little about doing it. With the possibility of punishment, however, that changes. That means employee education and awareness of the rules are important, too.

Once a formal policy is in place, checking Facebook or online shopping at work feels like a bad idea, and seeing a colleague called out for it will make others think twice about doing the same thing. If the habit of cyberloafing is contagious, breaking the habit is, too.

Q: Do tangible or cash rewards motivate employees more?

Money can be an effective motivator for a job well done, but many employers believe rewards like gift cards or travel vouchers are even better. That’s why they spend billions each year on noncash rewards instead of cash bonuses.

Research by Willie Choi, associate professor of accounting and information systems, found that firms’ theories hold true. They stand up in part because of three differences between cash bonuses and tangible rewards.

First, employees perceive cash rewards as an extension of their salary, while seeing tangible rewards as separate. Second, employees typically spend cash rewards like their paychecks—in utilitarian ways—but spend noncash rewards on splurge items.

Finally, employees view cash rewards much like their paycheck in that they come to expect them. However, they see noncash rewards as an unexpected windfall.

Choi found that each reason in and of itself didn’t change motivation, but their combined effects did. Most importantly, the research showed that noncash rewards do indeed motivate employees to achieve goals.

That’s important information for employers as they make compensation choices. A travel voucher, a movie pass, or a gift card could be more than an employee perk; it might be a solid investment for a firm that wants to get the best out of employees.

Q: Does regulating financial advisor fees help clients?

Logic says financial advisor fees provide a conflict of interest that could harm clients, who are charged regardless of how their investments perform. Regulate those fees, the logic continues, and the advice improves and customers benefit from it.

Yet research by Briana Chang, associate professor in the Department of Finance, Investment, and Banking, suggests it’s not as simple—or logical—as that. Chang and her research partner found that other factors more significantly influence the welfare of a financial advisor’s client: the relative scarcity of advisors with valuable expertise (supply of information) versus clients who are uninformed (demand of information). Those factors play a larger role in how a customer’s portfolio might fare than do the fees an advisor is charging.

Financial literacy education moves the dial on how those factors impact the advisor’s client, and it goes beyond that. The research shows that even a small set of better-informed clients creates a ripple effect that has a positive impact on all clients.

That doesn’t mean advisor fees and the conflict of interest they create are a positive. Instead, the research shows that regulating advisors’ fees isn’t the simple solution to helping clients. In short, seeking professional financial advice is like most things in life: Knowledge is power.

Q: Does referring a friend have an effect on job performance?

Referring a friend can be a good way to bring a familiar person and a known quantity into an organization. It turns out there is another benefit: better work from the person who made the referral.

Research by Charlie Trevor, professor of management and human resources and the Ruth L. Nelson Chair in Business, offers new insights into the benefits of referral hiring programs. The programs—in which employees can recommend potential candidates for a job at their company—are common, and previous research shows that referred hires perform well.

Yet Trevor and his research partners found that the employee who made the referral fares well, too. In a two-year study at a U.S. call center, data showed that employees who made a referral were 27 percent less apt to leave the company than employees who didn’t have a co-worker they had referred. Those who made a referral also handled 5.1 percent more calls when the referral hire was present. In other words, those who make a referral see improved performance and a decreased likelihood that they’ll quit.

At work, like anywhere else, it’s always nice to have a friend. Encouraging employees to bring in a few more can help the company, too.

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