Time is (Not) Money : Incentive Effects of Granting Leisure Time

Employees spend a considerable amount of their working time enjoying on-the-job leisure. This demonstrates a management control problem but can also function as a novel domain for bonuses. In this study, I investigate the effect of an unconditional bonus (gift) in the form of more leisure time off-the-job. In particular, I examine how this gift of intentional reduction of working time affects employee performance compared to a cash gift. A real-effort laboratory experiment shows that a cash gift does not alter employee performance. A gift of more leisure time off-the-job, however, does increase employee performance through a reduction of on-the-job leisure time. A vignette study among human resource (HR) managers provides external validity for these results. Moreover, it displays further positive influence of leisure time gifts on several other employee outcomes