Is it Better to be Loved or Feared? The Effects of Manager Kindness and Reward Discretion on Employee Effort

Abstract

In this paper, we address an old, but still unanswered, question: whether it is better for managers to be loved or feared. We hypothesize that the answer depends on how much discretion managers have over employee pay and on the favorability of the environment. Specifically, we predict that when managers have no discretion over employee pay, employees work harder for kinder managers. When managers do have discretion, we predict that the effect of manager kindness on employee effort depends on the favorability of the environment. Specifically, we suggest that in unfavorable environments, where employee performance may be negatively impacted by factors outside their control, employees work harder for kinder managers, whereas in favorable environments, where employee performance may be positively affected by uncontrollable factors, the relationship between manager kindness and employee effort is muted and possibly even negative. The reason is that employees expect kinder managers to be more willing to shield them from bad luck but less willing to adjust their compensation for good luck. Using data from an interactive lab experiment, we find support for our hypotheses. We discuss the study's implications for theory and practice.

Keywords: Kindness, Discretion, Performance Evaluation, Effort, Personality