Abstract
This study examined the relative effects of different monetary incentive distribution methods on work performance and satisfaction in small groups. Three types of incentive plans were compared: individual incentives, equally distributed group incentives (EG), and differentially distributed group incentives (DG). Four participants performed a simulated work task for 21 four-hour sessions. An alternating treatment design was adopted, and three experimental conditions randomly alternated for each session. The main dependent variables were the number of correctly completed work tasks and amount of off-task time. Results indicated that performance under DG was higher than that of EG and the individual incentives condition. However, the EG and individual incentive conditions had the similar levels of performance. The amount of off-task time was higher in the EG condition than in the other two conditions. In addition, the error rates did not differ across the three incentive conditions, whereas satisfaction and fairness ratings were the highest for individual incentives. Finally, implications for researchers and practitioners, along with limitations of the study, are discussed.
Similar content being viewed by others
References
Allison, D. B., Silverstein, J. M., & Galante, V. (1993). Relative effectiveness and cost-effectiveness of cooperative, competitive, and independent monetary incentive systems. Journal of Organizational Behavior Management, 13(1), 85–112.
Atkinson, A. A., Banker, R., Kaplan, R. S., & Young, S. M. (2001). Management accounting (3rd ed.). Upper Saddle River, NJ: Prentice-Hall.
Barlow, M. D. H., & Hersen, M. (1984). Single case experimental designs: Strategies for studying behavior change (2nd ed.). New York, NY: Pergamon.
Beersma, B., Hollenbeck, J. R., Conlon, D. E., Humphrey, S. E., Moon, H., & Ilgen, D. R. (2009). Cutthroat cooperation: The effects of team role decisions on adaptation to alternative reward structures. Organizational Behavior & Human Decision Processes, 108, 131–142.
Blinder, A. S. (1990). Introduction. In A. S. Blinder (Ed.), Paying for productivity: A look at the evidence (pp. 1–13). Washington, DC: Brookings Institution.
Bonner, S. E., & Sprinkle, G. B. (2002). The effects of monetary incentives on effort and task performance: Theories, evidence, and a framework for research. Accounting, Organizations & Society, 27(4–5), 303–345.
Bucklin, B. R., & Dickinson, A. M. (2001). Individual monetary incentives: A review of different types of arrangements between performance and pay. Journal of Organizational Behavior Management, 21(3), 45–137.
Bucklin, B. R., McGee, H. M., & Dickinson, A. M. (2004). The effects of individual monetary incentives with and without feedback. Journal of Organizational Behavior Management, 23(2–3), 65–94.
Condly, S. J., Clark, R. E., & Stolovitch, H. D. (2003). The effects of incentives on workplace performance: A meta-analytic review of research studies 1. Performance Improvement Quarterly, 16(3), 46–63.
Conrad, C. (1994). Strategic organizational communication: Toward the twenty-first century (3rd ed.). Fort Worth, TX: Harcourt Brace College Publishers.
Daniels, A. C. (1999). Bringing out the best in people. New York, NY: McGraw Hill.
Dickinson, A. M., & Gillette, K. L. (1993). A comparison of the effects of two individual monetary incentive systems on productivity: Piece rate pay versus base pay plus monetary incentives. Journal of Organizational Behavior Management, 14, 3–82.
Dierks, W., & McNally, K. (1987). Incentives you can bank on. Personnel Administrator, 32, 61–65.
Farr, J. L. (1976). Incentive schedules, productivity, and satisfaction in work groups: A laboratory study. Organizational Behavior & Human Performance, 17(1), 159–170.
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, 14–34.
Garbers, Y., & Konradt, U. (2014). The effect of financial incentives on performance: A quantitative review of individual and team-based financial incentives. Journal of Occupational & Organizational Psychology, 87(1), 102–137.
Gerhart, B. (2017). Incentives and pay for performance in the workplace. Advances in Motivation Science, 4, 91–140.
Honeywell, J. A., Dickinson, A. M., & Poling, A. (1997). Individual performance as a function of individual and group pay contingencies. Psychological Record, 47, 261–274.
Honeywell-Johnson, J. A., & Dickinson, A. M. (1999). Small group incentives: A review of the literature. Journal of Organizational Behavior Management, 19(2), 89–120.
Honeywell-Johnson, J. A., McGee, H. M., Culig, K. M., & Dickinson, A. M. (2002). Different effects of individual and small group incentives on high performance. Behavior Analyst Today, 3(1), 88–103.
Huitema, B. E. (2011). The analysis of covariance and alternatives: Statistical methods for experiments, quasi-experiments, and single-case studies. Hoboken, NJ: Wiley.
Jenkins Jr., G. D., Gupta, N., Mitra, A., & 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.
Kang, K., Oah, S., & Dickinson, A. M. (2005). The relative effects of different frequencies of feedback on work performance: A simulation. Journal of Organizational Behavior Management, 23(4), 21–53.
Konetzka, R. T., Skira, M. M., & Werner, R. M. (2018). Incentive design and quality improvements: Evidence from state Medicaid nursing home pay-for-performance programs. American Journal of Health Economics, 4(1), 105–130.
LaMere, J. M., Dickinson, A. M., Henry, M., Henry, G., & Poling, A. (1996). Effects of a multicomponent monetary incentive program on the performance of truck drivers: A longitudinal study. Behavior Modification, 20(4), 385–405.
Laughlin, P. R., Hatch, E. C., Silver, J. S., & Lee, B. (2006). Groups perform better than the best individuals on letters-to-numbers problems: Effect of group size. Journal of Personality & Social Psychology, 90, 644–651.
Lawler III, E. E. (1990). Strategic pay. San Francisco, CA: Jossey Bass.
London, M., & Oldham, G. R. (1977). A comparison of group and individual incentive plans. Academy of Management Journal, 20(1), 34–41.
Long, R. D., Wilder, D. A., Betz, A., & Dutta, A. (2012). Effects of and preference for pay for performance: An analogue analysis. Journal of Applied Behavior Analysis, 45(4), 821–826.
Matthews, G. A., & Dickinson, A. M. (2000). Effects of alternative activities on time allocated to task performance under different percentages of incentive pay. Journal of Organizational Behavior Management, 20(1), 3–27.
Mawhinney, T. C. (1984). Philosophical and ethical aspects of organizational behavior management: Some evaluative feedback. Journal of Organizational Behavior Management, 6(1), 5–31.
McAdams, J. L., & Hawk, E. J. (1992). Capitalizing on human assets. Scottsdale, AZ: American Compensation Association.
McGee, H. M., Dickinson, A. M., Huitema, B. E., & Culig, K. M. (2006). The effects of individual and group monetary incentives on high performance. Performance Improvement Quarterly, 19(4), 107–130.
Moon, K., Lee, K., Lee, K., & Oah, S. (2017). The effects of social comparison and objective feedback on work performance across different performance levels. Journal of Organizational Behavior Management, 37(1), 63–74.
Morgeson, F. P., DeRue, D. S., & Karam, E. P. (2010). Leadership in teams: A functional approach to understanding leadership structures and processes. Journal of Management, 36(1), 5–39.
Oah, S., & Lee, J. H. (2011). Effects of hourly, low-incentive, and high-incentive pay on simulated work productivity: Initial findings with a new laboratory method. Journal of Organizational Behavior Management, 31(1), 21–42.
Pritchard, R., Hollenbeck, J., & DeLeo, P. (1980). The effects of continuous and partial schedules of reinforcement on effort, performance, and satisfaction. Organizational Behavior and Human Performance, 25, 336–353.
Prue, D. M., & Fairbank, J. A. (1981). Performance feedback in organizational behavior management: A review. Journal of Organizational Behavior Management, 3(1), 1–16.
Roberts, S. L., & Leary, K. A. (1990). Pay for performance. Unpublished manuscript.
Salas, E., Priest, H. A., Stagl, K. C., Sims, D. E., & Burke, C. S. (2007). Work teams in organizations: A historical reflection and lessons learned. In L. L. Koppes (Ed.), Historical perspectives in industrial and organizational psychology (pp. 407–438). Mahwah, NJ: Lawrence Erlbaum Associates.
Sinclair, R. (2003). Indigenous research in social work: The challenge of operationalizing worldview. Native Social Work Journal, 5, 117–139.
Slowiak, J. M., & Nuetzman, A. (2014). The impact of goals and pay on feedback-seeking behavior. Psychological Record, 64(2), 217–232.
Smoot, D. A., & Duncan, P. K. (1997). The search for optimum individual monetary incentive pay system: A comparison of the effects of flat pay and linear and non-linear pay systems on worker productivity. Journal of Organizational Behavior Management, 17, 5–75.
Stoneman, K. G., & Dickinson, A. M. (1989). Individual performance as a function of group contingencies and group size. Journal of Organizational Behavior Management, 10(1), 131–150.
Thurkow, N. M., Bailey, J. S., & Stamper, M. R. (2000). The effects of group and individual monetary incentives on productivity of telephone interviewers. Journal of Organizational Behavior Management, 20(2), 3–25.
Todman, J. B., & Dugard, P. (2001). Single-case and small-n experimental designs: A practical guide to randomization tests. Mahwah, NJ: Lawrence Erlbaum Associates.
Weinstein, A. G., & Holzbach, R. L. (1973). Impact of individual differences, reward distribution, and task structure on productivity in a simulated work environment. Journal of Applied Psychology, 58(3), 296–301.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of Interest
On behalf of all authors, the corresponding author states that there are no conflicts of interest.
Ethical Approval
All procedures performed in studies involving human participants were in accordance with the ethical standards of the institutional and/or national research committee and the 1964 Helsinki declaration and its later amendments or comparable ethical standards.
Informed Consent
Informed consent was obtained from all individual participants included in the study.
Rights and permissions
About this article
Cite this article
Oah, S., Shon, D. & Moon, K. Effects of Different Incentive Distribution Methods on Work Performance and Satisfaction in Small Groups: a Simulation Study. Psychol Rec 69, 83–93 (2019). https://doi.org/10.1007/s40732-018-0303-2
Published:
Issue Date:
DOI: https://doi.org/10.1007/s40732-018-0303-2