Punishment of employees – its causes, types, and consequences, as well as factors determining punishment for poor quality

Employees receive penalties for unsatisfactory performance, insubordination, failure to comply with instructions under existing policies, absenteeism, unethical behaviors, neglect of duties, misconduct after work, lying, falsifying data or theft (Podsakoff et al., 1982; Butterfield, et al., 1996; Cooper, 2012). According to a study conducted by Frey et al. (2023), employees are punished for poor performance, violations of workplace rules, unethical behavior or bullying, but also for actions that are generally considered beneficial, such as whistleblowing (Herrmann, Thöni, & Gächter, 2008). Sometimes, however, an employee is punished as a result of pressure exerted by a customer (Bugdol, 2018). The use of punishment is influenced by managers’ past experiences and the personality traits of both managers and employees, as well as relations between them (Fandt et al., 1990; Bellizzi & Hasty, 2000). Entire organizations, including, indirectly, their employees, are punished for acts of embezzlement (Zhang et al., 2020). The reasons mentioned above lie in the behaviors of employees and their (sometimes incorrect) appraisals made by superiors. They are determined by organizations’ internal regulations, legal systems and sometimes the pursuit of self-interest. However, it should be kept in mind that punishment may also result from an individual’s psychological traits such as sadistic tendencies (Frey et al., 2023).

The literature on the subject distinguishes formal punishments (e.g., fine, caution, or disciplinary dismissal), and informal physical punishments (e.g., physical exercise or standing still), as well as other financial or behavioral punishments. Punishment consists of not only the imposition of sanctions or the official recording of cautions in personnel documentation, but also behavioral changes such as excessive emotionality or coldness. Punishment can also be divided into conditional, unconditional, indirect (inflicted by others), direct, intentional, unintentional (due to ignorance) and contractual (e.g., for any product that is inconsistent with specifications) (Podsakoff et al., 1982; Ostaszewski, 2000; Podsakoff et al., 2006; Rubin et al., 2010; Siang, 2012). Psychology also distinguishes between prosocial punishment and proself punishment (Li, Cheng, & Hou, 2021). This distinction, however, concerns the motives and goals of punishment.

The conducted literature review indicates that punishment is responsible for a decline in satisfaction, employees’ questioning the rationality of goals, strengthening the belief that certain inappropriate behaviors may be acceptable (Podsakoff et al., 1982; Bellizzi & Hasty, 2000), and quality improvement becoming difficult (Craig & Lemon, 2008). The results of these studies are in line with earlier laboratory research which found that the intensity of punishment significantly influenced the allocation of working time. For example, the heavier the punishment was, the less time the subjects spent on the tasks for which they had been punished (Schmitt, 1969).

Sometimes researchers focus on the consequences of inappropriate punishments (as opposed to punishments that restore social order or a sense of fairness in the workplace). Such punishments undermine the authority of managers and trigger negative attitudes towards work (Wiltermuth et al., 2013). Harsh punishments may reduce criminal activities in an organization, but may also increase the effectiveness of members of criminal networks (Garoupa, 2007). Punishing employees destroys their social potential and morale (Bell, 2010). Many studies show that punishment has less impact on changes in behaviors than rewards (Tremblay et al., 2013). It has been demonstrated that changes in employee behaviors resulting from punishment are immediate but often short-lasting (Bellizzi & Hasty, 2000).

Of course, as it has already been pointed out, punishment does not always fulfil negative functions only (Chen, 2016; Earnhart, 2000; Zheng et al., 2020). Punishment fulfils a deterrent function and is aimed at preventing the delivery of poor-quality products to the market (Swathi et al., 2020). Penalties for non-compliance with established rules can prevent interpersonal deviant behaviors of employees (Zheng et al., 2020). A system of punishment for both organizations and employees is used to strive to maintain the quality of natural resources (Earnhart, 2000). Punishment may deter employers from evading legal regulations (Barrett, 2015), although the strictness of penalties does not always influence decisions regarding, for example, participation in informal economies (Williams & Bezeredi, 2018). However, an assessment of a punishment and reward system depends on employees’ perception of fairness in the workplace (Podsakoff et al., 2006).

Besides psychological aspects (cf. Fandt et al., 1990; Bellizzi & Hasty, 2000) and the existence of a formal disciplinary system, the basic factor is the ability to assess quality, as well as the criteria and methods of quality assessments (Bugdol, 2018). In the case of industrial operations, the establishment of qualitative criteria for work appraisals is objectivized. Indeed, it is possible to link such appraisals as well as sanctions to objective indicators (Tadic et al., 2013). What counts in the case of services includes both quantitative indicators (e.g., the amount of data entered) and qualitative indicators (the correctness of performance in relation to some benchmark or checklist). The extent to which qualitative indicators are included in remuneration systems is also important. Their absence limits the possibilities of penalizing employees for the lack of quality. The literature review also shows that quality is one of the criteria for awarding bonuses (Dale, 2001).

The use of penalties in the surveyed enterprises was not related to their organizational and functional characteristics (Table 2). A stochastic relationship was found only between the fact that penalties were applied and the respondents’ job positions (χ²=16.3, p = 0.001). The impact of a job position on the application of punishment was average (W = 0.202). Production and customer service employees were punished relatively more frequently (the ratio of those who were punished to those who were not punished was about 7:1), while specialists received punishment the least frequently (1.5:1).

Among the respondents, there were statistically significant stochastic relationships between the type of imposed punishment and: the job position (χ²=17.16, p=0.01), the enterprise size (χ²=9.82, p=0.02), the enterprise type (χ²=13.29, p=0.04) and the applied management systems or concepts (χ²=15.01, p=0.04). The impact of the enterprise size and type on the type of administered punishment was low, while the impact of the job position and the applied management systems or concepts was medium. The highest percentages of specialists, managers and administrative staff were not punished or received disciplinary penalties, while in the case of production and customer service employees, disciplinary penalties dominated. The highest percentage of the employees in micro and small enterprises declared the absence of punishment or the occurrence of disciplinary and informal penalties, while for medium and large businesses, it was the absence of punishment or disciplinary penalties.

Before discussing the dominant forms of punishment, it should be stated, as previous research has shown, that punishment is used relatively rarely in organizations (Bugdol, 2018). This was confirmed in the authors’ research, as two-thirds of the respondents declared that employees were not punished in their organizations and only one-third confirmed the use of punishment. The quantitative research indicates that employees are punished mainly when some irregularities occur and are detected (someone does not respect the procedures and standards in force in a given organization). Penalties were administered as a result of inspections (32.1%), internal audits (37.4%) external audits (22.4%), and financial audits (19.8%). As far as punishment for poor quality is concerned, it is used in about one-half of the surveyed companies, especially where employees can be financially penalized for failing to meet quality objectives (39.4%) or where quality criteria dominate in the bonus system (51.1%).

The qualitative research shows that penalties are applied for several groups of reasons. The first and most numerous group includes deviations from rules and standards (for example failure to comply with the applicable rules and regulations, meet deadlines, perform duties accurately, fulfil sales quotas). One respondent stated: “I was punished for not following the customer service procedure, although, in my opinion, the procedure is bad” (female aged 18–25, service company employing over 250 people). The second group comprises behaviors related to poor customer service (especially in organizations where employees are assessed on the basis of service procedures). Below is a sample representative statement:

“In the event of direct complaints from the customer about unfulfilled procedures or product quality, a talk is held with the employee responsible for this and the regional coordinator (that is me) is asked to exercise more control over such a person” (male, service company employing from 50 to 250 people).

The third group of reasons for punishing employees includes serious misconduct and criminal incidents such as theft, working under the influence of alcohol, proven mismanagement. The fourth group covers reasons related to non-compliance with health and safety regulations.

Punishments for poor quality account for a small proportion of all penalties. In the case of small companies, such penalties were mentioned in 13 out of the 119 collected statements; in the case of medium-sized companies, penalties for poor quality were declared in 9 out of the 72 obtained statements. In the case of service organizations, irrespective of size, penalties for failure to comply with the established standards and procedures dominate, while in the case of manufacturing companies there are also indirect penalties. They are imposed if the bonus system includes quality criteria.

According to the respondents, punishments provided for in work regulations, such as cautions or reprimands, were applied the most frequently (41%). Informal punishments and financial penalties were imposed very rarely (they were declared by 14% and 11% of the respondents, respectively) (Figure 2). The prevalent informal punishments included the following: reducing remuneration – 22%, transferring the employee to another position – 18%, turning down a leave application – 15%, transferring the employee to a “worse” shift – 15%, humiliating the employee in the presence of others – 13%, ignoring the employee – 12%, taking offence – 8%, reducing working hours or increasing standards – 6%, and ridiculing – 5% (Figure 3). The vast majority of the respondents (88%) had not received any punishment in the past 12 months, while 12% had. The received penalties included a disciplinary talk – 4%, strengthened supervision – 3%, a financial penalty – 2%, a caution – 2%, and a reprimand – 1% (Figure 4).

Figure 1.

Figure 2.

Figure 3.

Figure 4.

The qualitative research shows the dominant role of penalties that are not provided for in the Labour Code. These are mostly minor verbal cautions or reprimands (sample statement: “I was reprimanded for the fact that one customer had been fraternizing with me,” female aged 18–25, service organization employing up to 50 persons). Formal punishments are imposed mainly in public sector offices, where a formal approach to management prevails (sample statement: “What dominates is written cautions or reprimands recorded in personnel files,” female aged 40–50, public sector organization employing up to 50 people).

As a consequence of the received punishment, the respondents felt injustice (29%), a lack of motivation to work (24%), dissatisfaction (19%), unwillingness to propose improvement initiatives (8%), relief (1%), and indifference (1%) (Figure 5).

Figure 5.

Punishments are rarely applied, and this is one of the many factors causing only 11.5% of the respondents to assess the workplace atmosphere as bad. The conducted interviews show that the employees perceive the performance appraisal process as unfair if it does not take into account objective criteria and possible deviations from the accepted appraisal criteria, or it is conducted in a disrespectful manner.

Punishments are used by 44.6% of the organizations with environment, health and safety management systems, but by only 7.3% of those with an implemented Lean management system. 36.3% of the respondents representing the companies using a quality management system and following the principles of TQM declared that their employers had punishment systems (Table 2).

Table 3 shows the percentage distributions of individual punishments. Financial penalties (50%) and informal penalties (50.9%) are used in the organizations with various (quality, health and safety, environment) management systems. One of the factors that may influence the punishment of employees is the standards and criteria included in quality management systems. In standardized management systems, internal and external audits are used, which, according to the interviewees, provide information on irregularities. Such results are consistent with the reasons for punishment, or rather with the interviewees’ statements identifying the circumstances, such as internal or external audits, triggering the imposition of penalties.

The performed quantitative research provided knowledge of who was punished, but it was not known whether punishment was imposed for the lack of quality and how quality was assessed. The results of the qualitative research provided answers to these questions. On the basis of the interviews, it was established that small enterprises took quantity (of product sales and offers) into account in their assessment of quality. On the other hand, in the case of services provided for other enterprises, what matters is timeliness, lead time, fulfilment of tasks, execution of plans, and sticking to schedules. In the case of industrial enterprises, technical criteria (size and geometric characteristics) predominate.

In all industrial companies, a set of quality criteria has been developed; even individual positions have their technical specifications defining criteria for classifying products in terms of non-conformity. In the case of service organizations, criteria such as conscientiousness, efficiency, initiative, knowledge, and accuracy of performance (e.g., cleanliness) dominate.

Medium industrial enterprises primarily apply technical criteria (e.g., size, geometrical characteristics). In large production companies, quality norms and standards dominate, often as part of standardized quality management systems (ISO 9001).

In the case of large service organizations, the basic criteria are timeliness, number of cases (colloquially referred to as sorting), compliance with weekly quotas, execution of tasks without delays, working time, absence of deviations and compliance with instructions.

Another identified factor is measuring the quality of products or work itself (i.e., the process of pursuing quality). If an organization has some established standards, quotas, customer requirements, etc., it can punish its employees for failure to comply with them, but, fortunately, it is very rarely necessary.

If appraisal criteria are established, they are sometimes linked to employee appraisal and remuneration systems.

Quality is only indirectly a criterion for the allocation of additional remuneration where performance appraisal systems take into account the results of final and inter-operational inspections, technical specifications and quality standard requirements. In contrast, in the case of service organizations, additional remuneration in the form of a bonus depends on the fulfilment of standards concerning the quantity and quality of provided services (e.g., accuracy, completeness, compliance with project methodology).

When identifying the factors that determine whether employees are punished for the poor quality of products and services, it should be stated that a lot depends on what quality criteria are applied in the appraisal of performance. Objective appraisal criteria (related to functional, physical, and chemical characteristics) dominate in industrial enterprises, regardless of size. What matters in service companies is measurable punctuality and accuracy, as well as the number of executed tasks. It is important, however, if employees receive additional remuneration for their work, in which case, besides penalties included in work regulations, they can be deprived of such benefits.

It was found that 69.8% of the surveyed organizations included the results of customer satisfaction measurements in their employee remuneration systems and about half of them (51.2%) used quality as a criterion for granting bonuses. More than half of the respondents (54.2%) declared receiving some form of additional remuneration for meeting quality objectives.

The factors influencing the punishment of employees are related to not only used measurements, but also management systems. It appears that the basis for punishing employees for variously defined poor quality is mainly the results of financial audits (19.9%) supplier audits (7.2%), internal (37.6%) and external (22.5%) audits, and inspections (32.2%).

An analysis of the obtained research results indicates that punishments are administered rarely because, firstly, there is no reason to punish employees and, secondly, punishment involves emotional and organizational costs. Managers know that punishments are not effective. One of the respondents, a company director, put it like this: “Why would you punish employees and tire yourself? It is better to let them go...” (male, technical director, aged 49–59, 250 employees). In contrast, another manager participating in the survey stated: “In the previous company, financial penalties were often imposed by taking bonuses away from those employees who caused the production of rejects. After some time it turned out that as much as 20% of all products were being returned to the plant with various complaints. We weren’t able to figure out why, despite inter-operational control and self-control, there were so many faulty products. It turned out that the employees were hiding their mistakes for fear of financial punishment. Nowadays my company follows another principle—no more financial punishment. When a quality mistake occurs, the responsible employee notifies me of such an event, which has no impact on their wages. We try to talk to the employees and deal with quality problems together.” (male, manager, aged 39–45, 250 employees). Employees experience injustice because it is the consequence of punishment. One important reason is the amount of potential reward hidden in complicated bonus awarding systems. Employees are also unaware of whether a bonus depends on the results of team effort (80.3%) or their own individual commitment. Quality is only one of the criteria for bonus allocation. Perceived injustice, on the other hand, is the cause of the break of trust and this value, as is well known, is of colossal importance for productivity.

On the basis of the performed literature review, the authors formulated research problems concerning the reasons for punishing employees, the dominant forms of punishment, the consequences of punishment, and the factors influencing punishment for poor product quality. They established the existence of a certain regularity relating to previous research findings.

Employees are punished mainly for non-compliance with procedures or work standards and for non-acceptable behaviors. Punishment for poor quality is rarely administered because in many cases it is not perceived as something important (what counts is task performance deadlines that may be regarded as elements of the category of work quality). Contrary to the authors’ preliminary assumptions, no significant differences among the surveyed organizations were identified, which may have resulted from the character of product realization processes. It is possible that the existence of procedures and data allows for the administration of penalties, but the verification of this thesis would require extending the scope of the research to include psychosocial aspects. Nevertheless, what dominates in many situations is subjective assessment of employees’ actions, the scope of supervision over them and other factors.

Penalties stemming from work discipline systems, such as caution or disciplinary dismissal are rarely used (Butterfield et al., 1996; Siang, 2012; Bugdol, 2018). They are complemented by various informal punishments (reduction in salary, transfer to another job position). Informal forms of punishment (e.g., verbal reprimands) dominate in the case of poor product and service quality. In contrast, where quality can be measured, financial penalties dominate. The results of the conducted research confirmed the authors’ hypotheses only in the part concerning the frequency of punishment. In the case of the quantitative research, the predominant view was that punishments provided for in work regulations, such as cautions or reprimands, were applied the most frequently (41%). Informal punishments and financial penalties were imposed very rarely.

However, it was the qualitative research that confirmed the authors’ belief that informal punishments (as defined for the interviewers) were the most frequently applied. Formal punishments require some effort on the part of those imposing them. This is because such punishments are recorded in official personnel documentation and must be administered in accordance with the applicable legal regulations.

An indirect conclusion is that employees have little knowledge of the existing normative regulations. This is indicated by the fact that admonishments, verbal skirmishes and other similar behaviors of superiors were classified as formal punishments. The Labour Code, which applies to all organizations participating in the survey, provides for only cautions, reprimands, and disciplinary dismissals.

As a consequence of the received punishment, the respondents felt injustice (29%), a lack of motivation to work (24%), dissatisfaction (19%), unwillingness to propose improvement initiatives (8%), relief (1%), and indifference (1%).

Since there are direct relationships among organizational values, it is reasonable to believe that a lack of fairness may be the cause of reduced trust, motivation and, above all, commitment to quality improvement. The statistical analysis shows that punishments are imposed mainly on employees at lower organizational levels, which may further reinforce their perceived injustice.

The obtained results are largely in line with the findings of other studies concluding that punishment causes dissatisfaction, which further hinders quality improvement (Craig and Lemon, 2008). There is a decline in motivation and a lack of interest in improving quality.

The factors influencing punishment for poor quality are the following: –

the existence of standardized quality management systems,

However, it cannot be concluded that these factors alone are the main reasons for punishing employees. It is also clear that the interviewees were confused by different types of audits, as it is only financial audits that are restrictive in character.

The possibilities for imposing punishments do not result exclusively from formal codes and regulations. They are determined by whether an organization has implemented a standardized quality management system, as well as formal employee assessment and reward systems with quality criteria. If only managers are rewarded for quality, then there is a tendency towards hiding all deficiencies and irregularities, which was also a conclusion reached in one of the authors’ earlier studies.

Much may depend on the nature of supervision and the quality of interaction among employees. Informal and formal penalties can be based on both objective and subjective criteria. Objectivization is more likely in manufacturing enterprises if they possess data reflecting the course of processes (but the problem may be the assignment of responsibility to employees). If punishment is not accepted because it is perceived to be unfair, it leads to a breakdown of trust. After all, fairness is the basis of trust. Such a state of affairs leads to the collapse of quality improvement activities. Of course, in this description, personality, situational and relational factors are ignored (see the Figure 6 below).

Figure 6.

When formulating recommendations for management practice, it is important to remember that all sanctions and penalties fulfil only a disciplinary and deterrent function. As Deming stated, punishment for a lack of quality makes no sense because most quality problems are systemic in character.

Based on the conducted research, the following recommendations can be formulated: a)

Firstly, any job appraisal system or remuneration system should include qualitative goals in addition to typically quantitative goals. This formulation draws on the views of Deming, who argued that cash incentives are counterproductive because it is impossible to accurately measure employees’ performance under the influence of factors that are beyond their control (Deming, 2012). The performance of individuals in an organization cannot be measured in a short period of time. Therefore, the structure of short-term performance compensation can have a negative impact on the organization (Petit, 2009). However, when considering quality objectives, it is imperative to bear in mind that setting quality criteria and objectives is a difficult task, especially in the case of variable processes (Tadic et al., 2013). In services, too, the goal cannot be one or another level of customer satisfaction. Satisfaction is something important but difficult to measure and therefore key factors influencing satisfaction should rather be taken into account.

It is difficult to disagree with the proponents of TQM, according to whom punishment, combined with an inappropriate treatment of standardization (as something that is not subject to change or discussion), increases the fear of breaking the rules (Liao et al., 2010). In TQM, a sense of fairness plays an important role, and it is rewards that are supposed to motivate employees to commit themselves to quality improvement (Zeitz et al., 1997). If punishment causes a sense of injustice, then any TQM programme will fail as employees become resentful and disappointed (Brooks & Zeitz, 1999).

In TQM, it is rightly assumed that penalties are administered by the market and customers (Oakland, 2011). However, this is not always apparent in the short term. Therefore, TQM recommends rewarding employees for quality.

Firstly, the adopted methods are not a perfect way to obtain information. The surveyed organizations were moderately diverse in terms of business sector and rather homogeneous in terms of culture.

Secondly, the narrow spatial and temporal scope of the conducted research should be considered as its main limitation. The research was of a partial character, so it is difficult to speak of its representativeness. The maturity of the systems implemented in particular enterprises was not examined, nor were relationships among the factors of various social or organizational systems. Thirdly, it is important to remember the limitations inherent in qualitative research. The interpretation of data obtained through interviews depends on the structure of the interviews, the knowledge and skills of the researchers, and their ability to avoid bias (Easterby-Smith et al., 2015).

Fourthly, the research did not consider the reasons for punishment that may lie in the individual attitudes and behaviors of superiors themselves.

Possible further research should focus on the following issues: –

the influence of psychosocial factors on the administration of punishment,

Previous studies have found that the fear of punishment reduces the tendency to improve quality (Bugdol & Bortniczuk, 2018). It would therefore be necessary to determine what managerial and psychosocial factors trigger such behaviors.