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Hawthorne Effect

The changing of behaviour due to an awareness of being observed

What is the Hawthorne Effect?

The Hawthorne Effect is used to describe a change in the behavior of an individual that results from their awareness of being observed. The effect suggests that workers tend to change their behavior at work in response to the attention they receive from their supervisor.

The Hawthorne Effect derives its name from industrial experiments that were carried out in the Hawthorne suburb (now called Cicero) of Chicago in the 1920s and 1930s. The research comprised several productivity studies that tested the impact of changes in lighting and work structures, such as break times and working hours, on employee productivity.

 

 

Hawthorne Effect - A Conceptual business illustration with the words hawthorne effect

 

Later interpretations by different researchers revealed that being the subjects of a study and getting increased attention from researchers can result in a temporary improvement in worker productivity. However, a 2009 experiment by the University of Chicago revealed that the results of the original study were likely overstated.

 

Learn about other psychological topics with CFI’s Behavioural Finance Course.

 

History of the Hawthorne Effect

Lighting Experiment at Hawthorne Works

The term “Hawthorne Effect” was coined by researcher Henry A. Landsberger in 1958 when he was conducting an analysis of earlier experiments conducted in the 1920s and 1930s. He named the effect he discovered after the Hawthorne Works Electric Company in Hawthorne, Illinois, where the first experiment took place.

The electrical company sponsored a study of its workers to see if their productivity would increase when the lighting was changed. During the study, employee productivity increased both when the lighting was increased and when it was decreased. However, productivity decreased when the study ended.

Other complementary experiments such as the effect of changes in working hours and work breaks also resulted in increased productivity, but again, worker productivity declined after the conclusion of the study. Ultimately, the researchers concluded that employees were actually responding to the direct attention they were getting from the researchers and supervisors during the study, rather than to any changes in the environmental variables.

When he coined the term, “Hawthorne Effect,” Landsberger defined the term as a temporary improvement in employee productivity resulting from being observed while working.

 

Bank Wiring Room

A study was conducted by Australian social psychologist Elton Mayo and American anthropologist Lloyd Warner in the early 1930s. Its purpose was to find out the effect of payment incentives on employee productivity. The study involved fourteen male employees whose normal work routine involved assembling telephone switching equipment. The employees were compensated based on their individual productivity. To the surprise of both the researchers and the company, the study found that employee productivity decreased with increased wage incentives.

Apparently, the employees became suspicious of the unexpected wage incentive. They saw it as part of a strategy to either fire some employees or cut wages at some point in the future. The researchers were fascinated by the initial findings, and decided to dig deeper into the cause of the productivity decline. They found that the employees had formed informal groups that set rules of conduct and devised strategies to ensure that the employees complied with the rules. The rules were designed to ensure that productivity remained relatively stable, regardless of any changes or inducements introduced.

The informal group controlled its members, managing how they interacted with their bosses and how they responded to the experimenters’ questions. The researchers concluded that employees were more responsive to the informal group than they were to incentives offered by management.

 

Modern Research on the Hawthorne Effect

Several studies have been conducted in recent years to further analyze the Hawthorne Effect. Some of the studies include:

 

Cerebellar Neurostimulators Study of 1978

This study was conducted to determine if cerebellar neurostimulators could mitigate motor dysfunction in cerebral palsy patients. Initial findings showed the operation of the Hawthorne Effect during the study. The test results showed that patients reported an improvement in their motor functions due to the use of cerebellar neurostimulators during the period of the study. However, quantitative analysis of the study showed that there was little lasting improvement in patients’ motor functions. Researchers concluded that study results were impacted by the Hawthorne Effect. Temporary motor function improvement in motor function was due to the increased attention given to the patients by the researchers and medical professionals involved in the study.

 

University of Chicago Study (2009)

A study carried out by the University of Chicago analyzed the original Hawthorne Effect and concluded that the findings of the earlier study were weak. The Hawthorne Effect might not have played as significant a role as the original researchers believe. The 2009 researchers ultimately came to believe that other factors might have played a role in the change in worker productivity.

The 2009 study also revealed that some of the reported claims from earlier studies were not supported by the research data. However, they did not completely rule out the possibility that the Hawthorne Effect occurred in the experiment.

 

More Resources

Thank you for reading CFI’s explanation of the Hawthorne Effect. CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend these additional resources:

  • Appraisal
  • Employee Morale
  • Labor Force KPIs
  • Random Variable

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