EVALUATING EMPLOYEES’ RESPONSES TO INTERNAL CONTROLS

Abstract

This study explores employees’ responses to internal controls that are put in place by management in a workplace. This study investigates if employee performance is affected by either being given a performance based bonus or penalty and whether monitoring progress during the task versus monitoring progress after a task is completed. By having participants perform word searches to simulate an everyday work task under different conditions I was able to analyze their performance to see how employees were affected by two internal controls. Using a 2x2 between-subjects based study, I manipulated the framing of the economic outcome as a penalty vs a bonus and I manipulated the timing of progress checks (intermittently throughout the task or only at the end of the task) The dependent variable was the number of words correctly found in a word search. The results of the experiment showed that the participants performed better in the bonus condition versus the penalty condition. Likewise, the participants performed better when their supervisors checked on them intermittently compared to participants who were not checked by their supervisor until the end of the task. These results allow employers to have a more comprehensive understanding of how employees are affected by internal controls in a workplace.