"Time-out" is something that we've either experience or doled out, most likely both. Let's define it first—time-out is essentially social exclusion that is imposed on children as a form of behavioural modification. As the Wikipedia definition says, "It involves temporarily separating a child from an environment where unacceptable behaviour occurred. The goal is to remove the child from an enriched, enjoyable environment, and therefore lead to functional punishment or extinction of the offending behaviour."
Studies now show that time-outs affect your children in a negative manner, making them feel isolated and humiliated.
As parents we need to realize that children are born with a clean slate and they do not have right or a wrong, good or bad behaviour in their vocabulary. They have a curious mind and anything that ignites their curiosity and grabs their attention they are attracted to, not realizing whether it's the right thing to do. As parents we think it is our responsibility to keep correcting them, and when our children do something wrong we punish them by giving them a "time-out". However when our children do something right we rarely have a reward mechanism in place. We need to create a balance. Also, instead of using exclusion (time-out) we should use an inclusion policy as well, such as sitting them down and explaining to them why a certain behaviour is acceptable, or the right thing to do.
Not so long ago, parents used to physically punish their children to correct them. When more and more studies bore out that beating or hitting a child does more damage than good, psychologists suggested time out as a better way of dealing with misbehaviour. However, studies now show that time-outs also affect your children in a negative manner, making them feel isolated and humiliated. Over time this continuous association leaves a negative impact on your child.
Human beings are social beings and have an innate need to create bonds and connections. When you use the inclusion policy and children feel loved and are happy they will bond with people and on most occasions will not misbehave. However, if you use the exclusion method extensively, children feel isolated and at some point will start connecting with things or other behaviours—such as smart phones, smoking, gambling etc—because it is human nature to connect to something. We also think that when we punish children or make them suffer it will deter misbehaviour; however, the opposite is actually true. Time-outs encourage misbehaviour.
Let me add here that time-outs are always bad. They may, in fact, be useful in certain situations. However, many parents do not use time-outs correctly. If you give it some thought, in most cases of misbehaviour the child is trying to grab attention, which implies that the child may be feeling neglected; maybe you are too busy and not spending time with them. The solution is take time out and do fun things with your child, like playing board games, arts and crafts, etc. Even one hour a day is good enough to start with; you will notice that the need for time-outs will drastically go down.
Try a method called "time-in." Sit them down, have a conversation with them... include them in choosing their consequence and reward mechanism for their behaviour.
There will be times when your children will make mistakes, they will misbehave and when you face a problem with disciplining them. When this happens, try a method called "time-in." Sit them down, have a conversation with them on how their behaviour is affecting everyone, especially them, make them reflect on their actions. Give them time to think, give them reasons why this is not the right thing to do. Then mutually agree on a consequence that will be given if this behaviour is repeated. Also, come up with a mutual reward mechanism for not repeating this behaviour. When children are involved in the process, they feel like they chose this for themselves and the negativity associated to time-outs disappears.
At the risk of repeating myself, let me conclude with some suggestions. First, give time your children; "I am too busy" is not an option. Second, include your children in choosing their consequence and reward mechanism for their behaviour and make sure you sit them down and give an explanation and make them reflect on their actions. This will impact your child in a positive manner.