Trusting employees – experiment shows that workers who don't have someone looking over their shoulder are still efficient and productive. © PhotoDisc

In a simple experiment, the researchers observed how nearly 150 Swiss students reacted to being supervised. Acting out roles, the students were split into pairs: a ‘boss' and an ‘employee'. At the beginning of the role play, the employee was given 120 points in a virtual account, while the boss started with a 0 balance.

The employee could then ‘invest' some of the points corresponding, metaphorically, to the work done. The boss's account would then be credited with twice the amount invested by the employee, representing ‘earnings' or profit. But before the point scoring started, the boss decided whether (s)he wanted to give the employee a free hand, or to ‘dictate' a minimum workload of 10 points – ensuring the boss did not leave completely empty-handed.

Adding a real-life touch to the gaming exercise, the researchers told the players that the final amount in their accounts would later be turned into hard cash – participants were given 20 Swiss centimes per point.

A bird in the hand
Typically, economic logic should result in the boss choosing a more supervised structure, thus guaranteeing at least 10 points. “Surprisingly enough,” explains lead researcher Professor Armin Falk of Bonn University, “the amounts the employees invested dropped as soon as the boss started to supervise them.”

On average, the ‘supervised' employees gave only 17.5 points to their bosses. When they had more flexibility, this amount was a third higher, even though every point given away represented real money and many of the subjects were struggling students.

“After the game, a lot of the participants [said] that they had interpreted the insistence on a minimum amount by their boss as a lack of trust,” says Falk. The prevailing attitude was, “why should I do more than is absolutely necessary for somebody if they do not trust me?”

Meanwhile, the bosses who chose the authoritarian path admitted that they had fixed the minimum amount because they were afraid that they would otherwise go away with nothing in true ‘bird-in-hand' style. Falk calls this a classic example of self-fulfilling prophecy.

Another characteristic also shone through in the experiment. Bosses who fixed a higher minimum amount of 20 points received, on average, as many points as those giving employees a free hand. “If there has to be supervision, it should be done properly,” Falk concludes, otherwise the negative effects take over.

As the EU re-launches its Lisbon Strategy, aimed at making Europe the most powerful knowledge-based economy, research showing employers how to maximise worker efficiency through more enlightened management practices is perhaps worth noting.