Each week, Daniels is featuring a researcher who conducts meaningful research that impacts their field and the wider community. Learn more about their work in Q&As with Melissa Archpru Akaka, associate dean for faculty research. Email Melissa to nominate yourself or a colleague for a future Q&A.
Nathan Waddoups is an assistant professor in the School of Accountancy who has been with Daniels since 2018. He followed his curiosity for human motivations and behavior into a specialized research area of managerial accounting. He studies how different employee incentives lead to creativity and performance and shares his findings with students through in-class thought experiments. His ongoing research also incorporates the use of technology through robotic process automation through augmented and virtual reality and aims to better understand how these technologies can influence employee performance. Nathan will be presenting his research along with Sung Soo Kim at the Faculty Research Colloquium from noon-2 p.m. on Friday, Nov. 3, in DCB 200.
Nathan Waddoups
Can you tell me about your professional background?
Prior to working at DU, I started my own internet marketing company focused on search engine optimization (SEO). I ran the SEO company for about five years, then sold it and thought about what else I wanted to do. I had always wanted to be a business owner and a teacher, so I went to the University of South Carolina, got my PhD in accounting, and I’ve been teaching here at DU ever since.
Prior to working at DU, I started my own internet marketing company focused on search engine optimization (SEO). I ran the SEO company for about five years, then sold it and thought about what else I wanted to do. I had always wanted to be a business owner and a teacher, so I went to the University of South Carolina, got my PhD in accounting, and I’ve been teaching here at DU ever since.
Can you tell me about your area of research?
I’ve always been intrigued by human motivation, and what leads to creativity and high performance. I look at how these behavioral drivers and outcomes tie into accounting. I’ll look at factors like reward frequency, feedback frequency, tangible rewards like gifts vs. conditional performance or contingent rewards. Then I examine how those things influence all sorts of employee behaviors like how hard employees work, how engaged they are, how creative they are and whether they’re willing to look for efficiencies.
I’ve always been intrigued by human motivation, and what leads to creativity and high performance. I look at how these behavioral drivers and outcomes tie into accounting. I’ll look at factors like reward frequency, feedback frequency, tangible rewards like gifts vs. conditional performance or contingent rewards. Then I examine how those things influence all sorts of employee behaviors like how hard employees work, how engaged they are, how creative they are and whether they’re willing to look for efficiencies.
How do these kinds of behavioral studies tie in specifically to the accounting field?
Accountants are in charge of collecting information at the business level. We believe that we have some say in how feedback is provided, and accountants are also involved in how the incentive systems will be implemented at organizations. I am heavily focused on what we call managerial accounting. Most of my colleagues are financial accountants, so they’re looking at financial accounting statements that are more traditional, whereas managerial accounting has a management flair to flavor it.
Accountants are in charge of collecting information at the business level. We believe that we have some say in how feedback is provided, and accountants are also involved in how the incentive systems will be implemented at organizations. I am heavily focused on what we call managerial accounting. Most of my colleagues are financial accountants, so they’re looking at financial accounting statements that are more traditional, whereas managerial accounting has a management flair to flavor it.
How do you think your research is relevant for practitioners and managers?
I try to answer questions that managers will have, like how often should I provide rewards to my employees? Or what types of rewards should I provide? What type of feedback should be provided? Experiments are limited on what they can test, but they can provide insights that can help managers decide what they should do to incentivize employees in their organizations.
I try to answer questions that managers will have, like how often should I provide rewards to my employees? Or what types of rewards should I provide? What type of feedback should be provided? Experiments are limited on what they can test, but they can provide insights that can help managers decide what they should do to incentivize employees in their organizations.
You say that you study questions managers care about. Where do you get those questions?
I often think about my own experiences and how I’m being managed as well as my own past experiences. Other times, they come from reading related research, or relevant periodicals like the Wall Street Journal or the Harvard Business Review. But my favorite questions are usually the ones that are personal to me, stuff I’ve experienced throughout my working career. Then I generalize those questions to the greater organization and the profession.
I often think about my own experiences and how I’m being managed as well as my own past experiences. Other times, they come from reading related research, or relevant periodicals like the Wall Street Journal or the Harvard Business Review. But my favorite questions are usually the ones that are personal to me, stuff I’ve experienced throughout my working career. Then I generalize those questions to the greater organization and the profession.
How do you go about integrating your research into the classroom?
I teach managerial accounting and do thought experiments with my students. One of my papers looks at how penalty contracts versus bonus contracts influence employee behaviors. I’ll ask my students: Would you prefer a $100,000 salary with a $20,000 penalty if you don’t reach a certain level of performance? Or would you prefer an $80,000 salary with a $20,000 bonus? They almost always say they prefer the bonus. It seems more fair, and they don’t like being constricted by the penalty. I actually ran an experiment and found, again, that people prefer the bonus. However, in the end, what we found is that people actually work harder under the penalty contract because people don’t like being penalized. So just using some psychological theory and prospect theory, that losses are more painful than gains, explains these behaviors even when the total compensation is the same amount.
I teach managerial accounting and do thought experiments with my students. One of my papers looks at how penalty contracts versus bonus contracts influence employee behaviors. I’ll ask my students: Would you prefer a $100,000 salary with a $20,000 penalty if you don’t reach a certain level of performance? Or would you prefer an $80,000 salary with a $20,000 bonus? They almost always say they prefer the bonus. It seems more fair, and they don’t like being constricted by the penalty. I actually ran an experiment and found, again, that people prefer the bonus. However, in the end, what we found is that people actually work harder under the penalty contract because people don’t like being penalized. So just using some psychological theory and prospect theory, that losses are more painful than gains, explains these behaviors even when the total compensation is the same amount.
It’s interesting that you study creativity in accounting, where do you see the intersection between the accounting field and creativity?
From a managerial accounting lens, I’m really interested in the incentives that drive creativity among employees. Again, I do a thought experiment with my students where I tell them to imagine that they’re managing people and you want them to be creative. What type of incentive system are you going to put in place? They almost always tell me that they’ll pay their employees for their creative ideas. Those students are always surprised to find that we’ve run several studies on this subject and found that you can’t really pay people for creativity, because you can’t necessarily force creativity. It’s more of a process that people have to experience. What we’ve found is whether you pay them a flat wage or you pay them based on their creativity, the amount of their creativity is the same. When it’s a flat wage, they don’t feel pressured into it, and it allows them to be more intrinsically motivated and creative.
From a managerial accounting lens, I’m really interested in the incentives that drive creativity among employees. Again, I do a thought experiment with my students where I tell them to imagine that they’re managing people and you want them to be creative. What type of incentive system are you going to put in place? They almost always tell me that they’ll pay their employees for their creative ideas. Those students are always surprised to find that we’ve run several studies on this subject and found that you can’t really pay people for creativity, because you can’t necessarily force creativity. It’s more of a process that people have to experience. What we’ve found is whether you pay them a flat wage or you pay them based on their creativity, the amount of their creativity is the same. When it’s a flat wage, they don’t feel pressured into it, and it allows them to be more intrinsically motivated and creative.
What are you working on now, and where do you see your research going in the future?
I’m going to continue working on learning how feedback and incentives influence employees, but one area that I want to get into is emerging technologies. I already have two publications on emerging technologies like robotic process automation and—this is where I’m really interested—augmented and virtual reality, which I think are a little bit farther away. But I do think that, in 5-10 years, augmented reality might play a really big role in how we go about our work. I’m really interested in seeing how that would affect employee performance and how to bring that back into the managerial accounting world.
I’m going to continue working on learning how feedback and incentives influence employees, but one area that I want to get into is emerging technologies. I already have two publications on emerging technologies like robotic process automation and—this is where I’m really interested—augmented and virtual reality, which I think are a little bit farther away. But I do think that, in 5-10 years, augmented reality might play a really big role in how we go about our work. I’m really interested in seeing how that would affect employee performance and how to bring that back into the managerial accounting world.