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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 behavior of an individual given their awareness of being observed. The effect suggests that workers tend to change their behavior at work due to the attention they are getting 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 study comprised several productivity studies that tested the impact of changes in lighting and working 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 could result in a temporary improvement in the worker’s productivity. An experiment carried in 2009 by the University of Chicago also revealed that the original study was 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 the earlier experiments conducted between the 1920s and the 1930s. He named the effect after the Hawthorne Works Electric Company in Hawthorne, Illinois, where the first experiment took place.

During the abovementioned period, the electrical company sponsored a study on its workers to see if their productivity would increase when the lighting was changed. The study found out that employee productivity increased when the lighting was increased or decreased. However, productivity decreased when the study ended.

Other complementary experiments such as the effect of changes in working hours and work breaks resulted in increased productivity, but worker productivity declined after the conclusion of the study. The results were surprising to the researchers, who concluded that employees were actually responding to the direct attention they were getting from the researchers as well as the supervisors, and not from the changes in the environmental variables.

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

 

Bank Wiring Room

The study was conducted by Australian social psychologist Elton Mayo and American anthropologist Lloyd Warner in the early 1930s, and 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. Unlike the initial study at the Western’s Hawthorne Works company, this study found that employee productivity decreased with increased wage incentives.

Apparently, the employee became suspicious of the unexpected wage incentive, and saw it as a strategy to fire some of the employees at a later period, or that the company would lower their base rates. The researchers were fascinated by the initial findings, and they decided to dig deeper into the main cause of the productivity decline. They found that the employees formed informal groups that set rules of conduct for its members and strategies to ensure the employees complied with them.

The informal group controlled its members and managed how they interacted with their bosses and how they responded to the experiment questions. After analyzing both the results and the existence of the informal group, the researchers concluded that employees were more responsive to the informal group than there were to the incentives provided by the 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

The study was conducted to determine if cerebellar neurostimulators could mitigate the motor dysfunction in cerebral palsy patients. Initial findings showed the existence 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.

Quantitative analysis of the study showed that there was little improvement in the motor functions of the patients. Researchers concluded that the study results were affected by the Hawthorne Effect and that the improvement in motor function was due to the increased attention that was given to the patients by the researchers and medical professionals involved.

 

University of Chicago Study (2009)

A study carried out by the University of Chicago analyzed the original Hawthorne Effect and found that the findings of the earlier study were weak, that other factors might have played a role in the worker’s productivity.

The study also revealed that some of the reported claims 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

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

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

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