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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.

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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.

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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.