Pay for Performance

History, Controversy, and Evidence

Thomas C Mawhinney

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781317953067
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

First published in 1992. This collection is devoted to trying to provide a better understanding of pay for performance. The volume includes an excellent history, a notable long-term success story that is at least partly based on pay for performance, a discussion of the source of some of the misunderstandings, a review of some of the better research on the subject, and some promising research developments.

Experimental Research

The Use of Concurrent Schedules to Evaluate the Effects of Extrinsic Rewards on “Intrinsic Motivation”: A Replication

Kelli J. Skaggs
Alyce M. Dickinson
Kimberly A. O’Connor

SUMMARY. Although extrinsic monetary rewards have been shown to increase work performance, they have been criticized on the grounds that they may also decrease an employee’s intrinsic mo־ tivation, leading to decreased quality, creativity, and a loss of self-determination. Stated more behaviorally, extrinsic rewards may usurp the control of intrinsic rewards and permanently decrease their reinforcing value. This study, a replication of Mawhinney, Dickinson and Taylor (1989), used concurrent schedules to assess the effects of extrinsic rewards; a procedure that enables an assessment of the degree to which extrinsic rewards usurp control of intrinsic rewards during reward administration. Unlike the results of Mawhinney et al., extrinsic monetary rewards usurped control of the intrinsic rewards for six of eight experimental subjects. Similar to Mawhinney et al., the extrinsic rewards did not weaken the reinforcing value of the intrinsic rewards as indicated by subject performance following extrinsic reward termination. The reasons for the differences in results are discussed, followed by a discussion of the importance of carefully specifying the work behaviors upon which monetary rewards are based.

In today’s competitive business world, many organizations have begun to adopt performance-contingent reward systems in an effort to improve productivity. Numerous experimental and case studies have reported the success of such systems (Anderson, Crowell, Sucec, Gilligan, & Wikoff, 1982; Dierks & McNally, 1987; Evans, Kienast, & Mitchell, 1988; Feeney, Staelin, O’Brien, & Dickinson, 1982; Gaetani, Hoxeng & Austin, 1985; George & Hopkins, 1989; Johnson & Masotti, 1990; Komaki, Waddell, & Pierce, 1977; Luthans, Paul, & Taylor, 1985; Nebeker & Neuberger, 1985; Potter, 1989; Snyder & Rourk, 1989; Wilk & Redmon, 1990). Although performance-contingent rewards have been shown to increase work performance, some have criticized their use claiming that they may also decrease the intrinsic motivation of employees (Deci & Ryan, 1985; Kohn, 1988; Slater, 1980).

Concern for the possible detrimental effects of extrinsic rewards originally arose from the use of token economy systems in educational settings (Condry, 1977; Lepper, 1981; Levine & Fasnacht, 1974). It was feared, based on the results of early studies (Amabile, DeJong & Lepper, 1976; Deci, 1971, 1972a, 1972b; Greene & Lepper, 1974; Greene, Sternberg, & Lepper, 1976; Harackiewicz, 1979; Lepper, Greene & Nisbett, 1973), that a child’s intrinsic interest or “love of learning” could be permanently destroyed if rewards were provided for the performance of academic tasks. Because of the increasing popularity of performance-contingent reward systems in business and industry, particularly pay-for-performance systems (Dolan, 1985; Kantor, 1987; Kopelman, 1983; Murray, 1987; O’Dell, 1986; Skryzcki, 1987), concern that extrinsic rewards may decrease intrinsic motivation has resurfaced, this time directed toward the work place.

In their book, Intrinsic Motivation and Self-Determination in Human Behavior, Deci and Ryan (1985) devoted a chapter to criticizing the use of performance-contingent rewards in the work setting. When introducing this chapter, they stated:

The research reported in Chapters 3 and 4 is directly relevant to work organizations. One general conclusion was that reward structures that tend to be experienced as controlling also tend to induce pressure and tension and undermine intrinsic motivation, relative to structures that tend to be experienced as informational. It is, of course, not always easy to predict when a particular structure will be experienced as controlling, because part of the variance in how it is experienced is a function of the perceiver and part of the variance a function of the rewarder (i.e., the interpersonal context); however, the research has consistently shown that any contingent payment system tends to undermine intrinsic motivation. The use of rewards to motivate behavior can in general be said to be deleterious to intrinsic motivation. (Notz, 1975) (pp. 298–299)

Kohn (1988), in a recent article in the popular business publication INC., summarized the arguments against performance-contingent rewards in the following manner:

First, rewards encourage people to focus narrowly on a task, to do it as quickly as possible, and to take few risks…. The more emphasis placed on the reward, the more inclined someone will be to do the minimum necessary to get it. And that means lower-quality work………..

Second, extrinsic rewards can erode intrinsic interest. Peopie who come to see themselves as working for money or approvai find their tasks less pleasurable and therefore do not do them as well….

But there is a third reason that the use of external motivators can backfire. People come to see themselves as being controlled by a reward. They feel less autonomous, and this often interferes with performance, (pp. 93, 94)

Finally, in his book Wealth Addiction, sociologist Slater (1980) stated “Getting people to chase money … produces nothing except people chasing money. Using money as a motivator leads to a progressive degradation in the quality of everything produced” (p. 127). Due to the above beliefs, these authors have advised managers to reject performance-contingent reward systems in favor of more “intrinsically-motivating” and “self-determining” management programs such as job enrichment and participative management, in spite of the fact that individual monetary incentives, group monetary incentives and goal-setting and feedback have been shown to increase employee performance considerably more than those types of programs (Locke, 1982).

The controversy surrounding the detrimental effects of performance-contingent rewards is predicated on the philosophical assumption that some, but not all, of an individuals behavior is self-initiated or self motivated (Dickinson, 1989; Mawhinney, Dickinson & Taylor, 1989). Behavior that occurs in the absence of obvious external consequences is assumed to be intrinsically or in* ternally motivated while behavior maintained by obvious external consequences is assumed to be extrinsically or externally motivated (Zimmerman, 1985). Further, intrinsically-motivated behavior is believed to be more creative, spontaneous and flexible than extrinsically-motivated behavior (Amabile, 1983; Condry, 1977; Deci & Ryan, 1985, p. 35; Koestner, Ryan, Bernieri, & Holt, 1984; Me-Graw & Cullers, 1979).

According to the above position, the motivation to perform an activity is either primarily extrinsic or intrinsic (Pittman & Heller, 1987). When extrinsic rewards are provided for intrinsically motivated activities, they may decrease intrinsic motivation and, hence, creativity, spontaneity, and flexibility. In a work setting, while production may go up, quality and innovation may go down. Further, employees may experience a loss of self-determination and autonomy.

From a behavioral perspective, all behavior is ultimately initiated by the external environment, controlled by contingencies of reinforcement or contingencies of survival. In keeping with this philosophical position, Horcones (1987) has provided a way to distinguish between “intrinsically” and “extrinsically” controlled behavior without appealing to functionally different motivational constructs. Intrinsically controlled behavior, or behavior that occurs in the absence of obvious external consequences, may be defined as behavior that is controlled by unprogrammed consequences, environmental stimulus changes that are the natural and automatic results of responding. Extrinsically controlled behavior, or behavior maintained by salient extrinsic consequences, consists of behavior controlled by programmed consequences, environmental stimulus changes that are arranged and provided by the social environment. Given these definitions, control by extrinsic rewards does not pre-elude control by intrinsic rewards: behavior may be simultaneously and equally controlled by both. Further, as indicated earlier, unlike the more traditional distinction, the dichotomy between self-initiated and environmentally-initiated behavior is eschewed.

While a number of theories have been developed to explain why extrinsic rewards may decrease intrinsic motivation (see Lepper & Greene, 1978), Lepper’s overjustification theory (Lepper, 1981; Lepper et al., 1973) and Deci and Ryan’s theory of intrinsic motivation and self-determination (Deci & Ryan, 1980, 1985) are the most popular. Both theories were originally derived from self-perception and attribution theories (Bern, 1967, 1972; deCharms, 1968; Kelley, 1967; Rotter, 1954, 1966). According to self-perception and attribution theories, individuals constantly assess the reasons for their behavior and these assessments influence future motivation and performance. If behavior occurs in the absence of obvious consequences, individuals will attribute their behavior to their own in* trinsic interest or motivation, and hence will continue to engage in the behavior in the future in the absence of obvious environmental consequences. On the other hand, if behavior is followed by obvious environmental consequences, individuals will attribute their behavior to those consequences and thus will not engage in the behavior in the future when they are absent. Lepper et al. (1973), based on these postulates, proposed “that a person’s intrinsic interest in an activity may be undermined by having him engage in that activity as an explicit means to some extrinsic goal” (p. 130). If the external justification for performing the activity is high, or “psychologically oversufficient,” the individual may infer that the activity is motivated by the external contingencies rather than by interest in the activity itself. Due to this perceptual shift, the activity will not be performed in the absence of the extrinsic goals or rewards in the future. Lepper (1981) maintains that intrinsic interest will decrease only when perceptual shifts occur and has repeatedly cautioned against overgeneralization. “Certainly there is nothing in the present line of reasoning or the present data to suggest that con-trading to engage in an activity for an extrinsic reward will always, or even usually, result in a decrement in intrinsic interest in the activity” (Lepper et al., 1973, p. 136; Lepper, 1981, p. 170). He suggests that extrinsic rewards are likely to produce perceptual shifts and, hence, decreases in intrinsic motivation when there is sufficient initial interest in the activity to allow perceptual shifts, when the relationship between performance and rewards is salient, when rewards are tangible and when rewards do not increase perceived compet...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• CONTENTS
• Introduction
• HISTORICAL CONTEXT
• EXPERIMENTAL RESEARCH
• CRITICAL REVIEW
• AN EXEMPLARY CASE DESCRIPTION