I personally play as an evil character. As such, I tolerate nothing but total complince from my settlers. When I assign a settler to a guard post I expect the settler to perform their duty until I tell them to stop. Of course they try to shirk their duties, so I came up with my punishment system.
Obviously death is the ultimate punishment. Killing a settler doesn't fix the problem of the guard post being manned and tends to lower morale. In addition, some settlers with names can't be killed. So I developed "toilet land".
My settlers who refuse to comply are forced to sleep in toilet land. Deep away from the beautiful buildings with electricity that my good settlers enjoy lies toilet land.
A dirty building with no lighting and only one door houses toilet land. Inside you will find all the toilets from santrutary hills. I personally moved them from the houses. For the sake of role playing I also required all my settlers to make a poo in each of the toilets during construction.
In the middle of the toilets lies one dirty mattress. A settler who refuses to obey will be forced to sleep in toilet land. If I have to kill any settlers I will also put their body in toilet land to add to the smell. There is only body. A merchant that I extorted and refused to do business with me in the future. My settlers didn't mind that execution.
The most recent addition is that old psychic coot. She had the selfishness to ask me to build her a chair, even after painstaking time I took to fill the place with couches and other luxuries. Her selfish request meant she will spend a great deal of time in toilet land. I did build her chair and placed it staring into the corner in toilet land. I do not allow her to sit anywhere else and if I catch her she is ordered to toilet land. Usually I find her there anyway.
Of course, I could always use more inspiration on how to rule my empire. So what about you guys? Any suggestions on punishing your settlers?