The Effects of Incentives on Workplace Performance: A Meta-analytic Review of Research Studies 1
Corresponding Author
Steven J. Condly
University of Central Florida
*The research reported in this article was partly funded by a grant from the Society of Incentive and Travel Executives (SITE) Research Foundation and sponsored by the International Society for Performance Improvement (ISPI). The opinions expressed in the review are the authors and do not necessarily reflect those of SITE or ISPI. A description of the complete study is titled Incentives, Motivation and Workplace Performance: Research and Best Practice and is available from ISPI at their web site (http:www.ispi.org). The complete study contains a report of a large scale survey of organizations who use incentive systems as well as the meta-analysis described in this article. The authors also wish to thank the three anonymous reviewers for their helpful comments and suggestions* an Assistant Professor of Educational Psychology at the University of Central Florida. Dr. Condly's research interests include the cognitive psychology of human motivation, the interaction of intelligence and motivation in human learning, and the development of support technologies for improvedlearning and performance.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorCorresponding Author
Richard E. Clark
University of Southern California
a Professor of Educational Psychology and Technology at the University of Southern California. Dr. Clark's research applies cognitive learning and motivation theory to the development of performance improvement. His primary interest is in the design, delivery, management and evaluation of performance systems at work.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorCorresponding Author
Harold D. Stolovitch Ph.D
HSA Learning & Performance Solutions, LLC
Emeritus Professor of Instructional and Performance Technology at Université de Montreal and Clinical Professor of Human Performance at Work, University of Southern California. He is also the Principal partner of HSA Learning & Performance Solutions, LLC. Dr. Stolovitch's primary research focus is on the design of learning and human performance support systems that result in accomplishments valued by all stakeholders.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorCorresponding Author
Steven J. Condly
University of Central Florida
*The research reported in this article was partly funded by a grant from the Society of Incentive and Travel Executives (SITE) Research Foundation and sponsored by the International Society for Performance Improvement (ISPI). The opinions expressed in the review are the authors and do not necessarily reflect those of SITE or ISPI. A description of the complete study is titled Incentives, Motivation and Workplace Performance: Research and Best Practice and is available from ISPI at their web site (http:www.ispi.org). The complete study contains a report of a large scale survey of organizations who use incentive systems as well as the meta-analysis described in this article. The authors also wish to thank the three anonymous reviewers for their helpful comments and suggestions* an Assistant Professor of Educational Psychology at the University of Central Florida. Dr. Condly's research interests include the cognitive psychology of human motivation, the interaction of intelligence and motivation in human learning, and the development of support technologies for improvedlearning and performance.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorCorresponding Author
Richard E. Clark
University of Southern California
a Professor of Educational Psychology and Technology at the University of Southern California. Dr. Clark's research applies cognitive learning and motivation theory to the development of performance improvement. His primary interest is in the design, delivery, management and evaluation of performance systems at work.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorCorresponding Author
Harold D. Stolovitch Ph.D
HSA Learning & Performance Solutions, LLC
Emeritus Professor of Instructional and Performance Technology at Université de Montreal and Clinical Professor of Human Performance at Work, University of Southern California. He is also the Principal partner of HSA Learning & Performance Solutions, LLC. Dr. Stolovitch's primary research focus is on the design of learning and human performance support systems that result in accomplishments valued by all stakeholders.
Educational Studies Department, College of Education, University of Central Florida, Orlando, FL 32816–1250. E-mail:[email protected]
Department of Learning and Instruction, Rossier School of Education, University of Southern California, Los Angeles, CA 90089. E-mail:[email protected]
HSA Learning & Performance Solutions, LLC, 1520 S. Beverly Glen Blvd., #305, Los Angeles, CA 90024. E-mail:[email protected]
Search for more papers by this authorABSTRACT
A meta-analytic review of all adequately designed field and laboratory research on the use of incentives to motivate performance is reported. Of approximately 600 studies, 45 qualified. The overall average effect of all incentive programs in all work settings and on all work tasks was a 22% gain in performance. Team-directed incentives had a markedly superior effect on performance compared to individually-directed incentives. This effect was not influenced by the location of the study (business, government, or school), the competitive structure of the incentive system (programs where only the highest performers get incentives versus programs where everyone who increased performance receives incentives), the type of study (whether the study was a laboratory experiment or a field study), or the performance outcome (quality, quantity, or both). In these studies, money was found to result in higher performance gains than non-monetary, tangible incentives (gifts, travel). More research is needed on the relative cost-benefit of cash and gift incentives, and the way different types of tangible incentives are selected. Long-term programs led to greater performance gains than shorter-term programs did, and somewhat greater performance gains were realized for manual than for cognitive work. Explanations based on cognitive psychological principles accompany each of the analyses.
References
- *Allison, D.B., Silverstein, J.M., & Galante, V. (1992). Relative effectiveness and cost-effectiveness of cooperative, competitive, and independent monetary incentive systems. Journal of Organizational Behavior Management, 13 (1), 85–112.
10.1300/J075v13n01_06 Google Scholar
- Bandura, A. (1997). Self-efficacy: The exercise of control. New York: W.H. Freeman and Company.
- *Berger, C.J., Cummings, L.L., & Hene-man, H.G., III. (1975). Expectancy theory and operant conditioning predictions of performance under variable ratio and continuous schedules of reinforcement. Organizational Behavior and Human Performance, 14, 227–243.
- *Campbell, D.J. (1984). The effects of goal-contingent payment on the performance of complex tasks. Personnel Psychology, 37, 23–40.
- *Cialdini, R.B., Eisenberg, N., Rhoads, K., & Bator, R. (1998). Undermining the undermining effect of reward on sustained interest. Journal of Applied Social Psychology, 28 (3), 249–263.
- Clark, R.E., & Estes, F. (2002). Turning research into results: A guide to selecting the right performance solutions. Atlanta: CEP Press.
- Deci, E.L. (1981). When trying to win: Competition and intrinsic motivation. Personality & Social Psychology Bulletin, 7 (1), 79–83.
- *Doerr, K.H., Mitchell, T.R., Klastorin, T.D., & Brown, K.A. (1996). Impact of material flow policies and goals on job outcomes. Journal of Applied Psychology, 81 (2), 142–152.
- *Evans, K.M., Kienast, P., & Mitchell, T.R. (1992). The effects of lottery incentive programs on performance. Journal of Organizational Behavior Management, 12(1), 113–135.
- *Everett, S.A., Price, J.H., Bedell, A.W., & Telljohann, S.K. (1997). The effect of a monetary incentive in increasing the return rate of a survey to family physicians. Evaluation & the Health Professions, 20 (2), 207–214.
- *Farr, J.L. (1976a). Task characteristics, reward contingency, and intrinsic motivation. Organizational Behavior and Human Performance, 16, 294–307.
- *Farr, J.L., Vance, R.J., & McIntyre, R.M. (1977). Further examinations of the relationship between reward contingency and intrinsic motivation. Organizational Behavior and Human Performance, 20, 31–53.
- *Fatseas, V.A., & Hirst, M.K. (1992). Incentive effects of assigned goals and compensation schemes on budgetary performance. Accounting and Business Research, 22, 347–355.
10.1080/00014788.1992.9729450 Google Scholar
- *Ferrari, J.R., Barone, R.C., Jason, L.A., & Rose, T. (1985). The use of incentives to increase blood donations. The Journal of Social Psychology, 125 (6), 791–793.
- *Frisch, C.J., & Dickinson, A.M. (1990). Work productivity as a function of the percentage of monetary incentives to base pay. Journal of Organizational Behavior Management, 11 (1), 13–33.
10.1300/J075v11n01_03 Google Scholar
- *Hamner, W.C., & Foster, L.W. (1975). Are intrinsic and extrinsic rewards additive: A test of Deci's cognitive evaluation theory of task motivation. Organizational Behavior and Human Performance, 14, 398–415.
- *Hatcher, L., & Ross, T.L. (1991). From individual incentives to an organization-wide gain-sharing plan: Effects on teamwork and product quality. Journal of Organizational Behavior, 12 (3), 169–183.
- *Henry, R.A., & Strickland, O.J. (1994). Performance self-predictions: The impact of expectancy strength and incentives. Journal of Applied Social Psychology, 24 (12), 1056–1069.
- Jenkins, G.D., Mitra, A., Gupta, N., & Shaw, J.D. (1998). Are financial incentives related to performance? A meta-analytic review of empirical research. Journal of Applied Psychology, 83 (5), 777–787.
- *Jessup, P.A., & Stahelski, A.J. (1999). The effects of a combined goal setting, feedback and incentive intervention on job performance in a manufacturing environment. Journal of Organizational Behavior Management, 19 (3), 5–26.
- *Jorgenson, D.O., Dunnett, M.D., & Pritchard, R.D. (1973). Effects of the manipulation of a performance-reward contingency on behavior in a simulated work setting. Journal of Applied Psychology, 57 (3), 271–280.
- *LaMere, J.M., Dickinson, A.M., Henry, M., Henry, G., & Poling, A. (1996). Effects of a multi-component monetary incentive program on the performance of truck drivers. Behavior Modification, 20 (4), 385–405.
- *Latham, G.P., Mitchell, T.R., & Dossett, D.L. (1978). Importance of participative goal setting and anticipated rewards on goal difficulty and job performance. Journal of Applied Psychology, 63 (2), 163–171.
- *Lee, C. (1988). The effects of goal setting and monetary incentives on self-efficacy and performance. Journal of Business and Psychology, 2 (4), 366–372.
10.1007/BF01013767 Google Scholar
- *Lee, T.W., Locke, E.A., & Phan, S.H. (1997). Explaining the assigned goal-incentive interaction: The role of self-efficacy and personal goals. Journal of Management, 23 (4), 541–559.
- *Lorenzi, P. (1988). Underestimated effects of goals and rewards: A systematic replication. Journal of Organizational Behavior Management, 9 (2), 59–71.
10.1300/J075v09n02_05 Google Scholar
- *Luthans, F., Paul, R., & Baker, D. (1981). An experimental analysis of the impact of contingent reinforcement on salespersons' performance behavior. Journal of Applied Psychology, 66 (3), 314–323.
- *Murray, J.P., & Heide, J.B. (1998). Managing promotion program participation within manufacturer-retailer relationships. Journal of Marketing, 62 (1), 58–68.
- *Nederhof, A.J. (2000). The effects of material incentives in mail surveys: Two studies. Public Opinion Quarterly, 47 (1), 103–111.
- *Oden, L., & Price, J.H. (1999). Effects of a small monetary incentive and follow-up mailings on return rates of a survey to nurse practitioners. Psychological Reports, 85 (4), 1154–1156.
- *Orpen, C. (1982). The effects of contingent and non-contingent rewards on employee satisfaction and performance. The Journal of Psychology, 110 (1), 145–150.
10.1080/00223980.1982.9915335 Google Scholar
- *Pinder, C.C. (1976). Additivity versus non-additivity of intrinsic and extrinsic incentives: Implications for work motivation, performance, and attitudes. Journal of Applied Psychology, 61 (6), 693–700.
- *Pritchard, R.D., Campbell, K.M., & Campbell, D.J. (1977). Effects of extrinsic financial rewards on intrinsic motivation. Journal of Applied Psychology, 62 (1), 9–15.
- *Pritchard, R.D., & DeLeo, P.J. (1973). Experimental test of the valence-instrumentality relationship in job performance. Journal of Applied Psychology, 57 (3), 264–270.
- *Pritchard, R.D., De Leo, P.J., & von Bergen, C.W., Jr. (1976). A field test of expectancy-valence incentive motivation techniques. Organizational Behavior and Human Performance, 15, 355–406.
- Reeve, J. (1996). Elements of the competitive situation that affect intrinsic motivation. Personality & Social Psychology Bulletin, 22 (1), 24–33.
- *Riedel, J.A., Nebeker, D.M., & Cooper, B.L. (1988). The influence of monetary incentives on goal choice, goal commitment, and task performance. Organizational Behavior and Human Decision Processes, 42 (2), 155–180.
- *Saari, L.M., & Latham, G.P. (1982). Employee reactions to continuous and variable ratio reinforcement schedules involving a monetary incentive. Journal of Applied Psychology, 67 (4), 506–508.
- *Salvemini, N.J., & Reilly, R.R. (1993). The influence of rater motivation on assimilation effects and accuracy in performance ratings. Organizational Behavior and Human Decision Processes, 55, 41–60.
- Swets, J.A., Dawes, R.M., & Monahan, J. (2000). Psychological science can improve diagnostic decisions. Psychological Science in the Public Interest, 1 (1), 1–26.
- *Terborg, J.R., & Miller, H.E. (1978). Motivation, behavior and performance: A closer examination of goal setting and monetary incentives. Journal of Applied Psychology, 63 (1), 29–39.
- *Terborg, J.R., & Ungson, G.R. (1985). Group-administered bonus pay and retail store performance: A two-year study of management compensation. Journal of Retailing, 61 (1), 63–77.
- *Toppen, J.T. (1965). Money reinforcement and human operant (work) behavior: III. Piecework-payment and time-payment comparisons. Perceptual and Motor Skills, 21, 907–913.
- *Turnage, J.J., & Muchinsky, P.M. (1976). The effects of reward contingency and participative decision making on intrinsically and extrinsically motivating tasks. Academy of Management Journal, 19, 482–489.
- *Vecchio, R.P. (1982). The contingent-noncontingent compensation controversy: An attempt at a resolution. Human Relations, 35, 449–462.
- *Wimperis, B.R., & Farr, J.L. (1979). The effects of task content and reward contingency upon task performance and satisfaction. Journal of Applied Social Psychology, 9 (3), 229–249.
- *Wright, P.M. (1990). Monetaryincentives and task experience as determinants of spontaneous goal setting, strategy development, and performance. Human Performance, 3 (4), 237–258.
10.1207/s15327043hup0304_2 Google Scholar
- *Wright, P.M. (1989). Test of the mediating role of goals in the incentive-performance relationship. Journal of Applied Psychology, 74 (5), 699–705.
- *Wright, P.M., & Kacmar, K.M. (1995). Mediating roles of self-set-goals, goal commitment, self-efficacy, and attractiveness in the incentive-performance relation. Human Performance, 8 (4), 263–296.
- *Yukl, G.A., Latham, G.P., & Pursell, E.D. (1976). The effectiveness of performance incentives under continuous and variable ratio schedules of reinforcement. Personnel Psychology, 29, 221–231.
- *Yukl, G.A., Wexley, K.N., & Seymore, J.D. (1972). Effectiveness of pay incentives under variable ration and continuous reinforcement schedules. Journal of Applied Psychology, 56 (1), 19–553.
- Studies included in the meta-analysis.