INCENTIVES, MOTIVATION AND WORKPLACE PERFORMANCE
Harold D. Stolovitch, Richard E. Clark and Steven J. Condly
Controversy and uncertainty have characterized the issue of using incentives to improve workplace performance. Organizations in the United States spend an estimated $117 billion annually on work-related incentives programs. Researchers such as Deci (1971; 1972) and Lepper, Greene and Nesbitt (1973) claim that tangible incentives destroy personal interest in work. Eisenberger, Rhoades and Cameron (1999) state that incentives should not be given for performance that would normally be achieved without them. However, in specific cases, they assert that well-targeted incentives can have dramatic impact on workplace performance.
Because of confusion in the research and a lack of systematically documented incentive workplace practices, organizations tend to implement incentive systems without a clear understanding of the factors that increase the positive effects and eliminate negative consequences.
Our research team set out to cut through the confusion and create a clear, accurate set of conclusions about incentives that is supported by research and best practice. The questions that guided our study were:
We conducted the one-year study (September 2000 - October 2001) as follows:
Two Major Myth-Breaking Findings
Myth 1: Incentives destroy personal, intrinsic interest in work.
Research findings: To the contrary, incentives appear to increase the value people assign to work goals. Rewarding people for exceeding targets causes them to spend more time on the incentivized task which leads to heightened interest and satisfaction. It also appears to strengthen self-confidence and employee loyalty.
Myth 2: Incentives only lead to paying for the result you would have had anyway.
Research findings: Well-designed and implemented incentive systems increase performance dramatically. Only eight percent of workers surveyed in our study said they would have achieved their results without incentives.
Study Findings with Respect to the Research Questions
Returning to the four research questions, here are the key study findings:
This model offers a diagnostic/prescriptive tool for incentive system selection and implementation. It helps identify critical questions and issues requiring attention and provides guidance through step-by-step procedures. It also assists decision-makers to troubleshoot and improve the incentive system.
This study makes a significant contribution towards addressing many of the myths, uncertainties and controversies surrounding the relationship between incentives, motivation and workplace performance. Both research studies and field practice demonstrate convincingly that incentives work. Incentives positively and strongly influence workplace performance (quantity and quality), the value workers attribute to goal achievement and emotional commitment to reach goals and increase performance. They also appear to enhance loyalty to the organization.
However, you must select incentives only when there is a motivation gap and only for challenging goals. It is essential to involve targeted recipients in the selection of incentives and to ensure equity and fairness. To achieve incentive system success, focus on implementation and communication. Monitor the incentive system continuously.
A great deal of research is still required to uncover details in the links between incentives, motivation and workplace performance. This study contributes greatly to our understanding and practice of incentive use. It offers an initial comprehensive and research-based approach for developing your own unique, effective incentive system.
Clark, R. E. (1998) Motivating performance: Part 1 - Diagnosing and solving motivation problems. Performance Improvement, 37(8), 39-46.
Deci, E. L. (1971). Effects of externally mediated rewards on intrinsic motivation. Journal of Personality and Social Psychology, 18, 105-115.
Deci, E. L. (1972). The effects of contingent and non-contingent rewards and controls on intrinsic motivation. Organizational Behavior and Human Performance, 8, 217-229.
Eisenberger, R., Rhoades, L, & Cameron, J. (1999). Does pay for performance increase or decrease perceived self-determination and intrinsic motivation? Journal of Personality and Social Psychology, 77(5), 1026-1040.
Lepper, M. R., Greene, D., & Nesbitt, R. E. (1973). Undermining children's intrinsic interest with extrinsic rewards: A test of the over justification hypothesis. Journal of Personality and Social Psychology, 23, 129-137.
© 2002 Harold D. Stolovitch
© 2000 - 2015 Harold D. Stolovitch & Erica J. Keeps