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Do financial incentives help or harm performance in interesting tasks?
Ji Hyun Kim1, Barry Gerhart1, Meiyu Fang2
1Wisconsin School of Business, University of Wisconsin-Madison.
The Journal of Applied Psychology
|March 11, 2021
Summary
Financial incentives positively impact performance in both interesting and noninteresting tasks. This effect remains consistent across various factors like incentive intensity and autonomy, though quality-based performance may show weaker positive results.
Area of Science:
- Organizational Psychology
- Behavioral Economics
Background:
- Conflicting meta-analyses exist regarding financial incentives' impact on performance, particularly for intrinsically motivating tasks.
- Discrepancies highlight the need for a comprehensive review to resolve debates on incentive effectiveness.
Purpose of the Study:
- To conduct a new meta-analysis on the relationship between financial incentives and performance.
- To investigate the moderating roles of task interest, incentive intensity, motivation, and autonomy.
Main Methods:
- Integrated primary studies from previous meta-analyses and additional sources.
- Performed a comprehensive meta-analysis examining incentives-performance across task types.
- Analyzed key moderators influencing the incentive-performance relationship.
Main Results:
- Financial incentives show a positive effect on performance in both interesting (δ = +.58) and noninteresting tasks (δ = +.52).
- The positive relationship is robust across task interest, incentive intensity, motivation, and autonomy.
- Performance quality, especially in interesting tasks, demonstrated a less pronounced positive effect.
Conclusions:
- Financial incentives generally enhance performance, irrespective of task type or moderating factors.
- Task interest and autonomy do not negate the positive impact of financial incentives.
- Future research should explore nuances in performance quality measurement and incentive design.
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