Employees who receive financial incentives for some tasks also temporarily put more effort into tasks they do not receive a bonus for, research has found.
Although prior studies have shown that incentives such as piece-rate pay or commission motivate employees because they think good performance will generate future incentive payments, the study by Bayes Business School and ESCP Business School finds that incentive plans can also generate temporary good performance on other tasks.
The researchers suggest this is because employees are more motivated to help meet the organisations’ goals in return for the financial incentive, even if their tasks do not bring immediate returns. Employees who receive financial rewards also feel a greater sense of affinity with the organisation, the study found.
Dr Hans Frankort, a reader in strategy at Bayes Business School, said: “This research shows that after payment, employees temporarily seem to put more effort into unincentivised tasks. This may be because they not only anticipate future incentive payments but because they are responding positively having received the payment.
Pay and performance
“The employee responses to periodic incentive payments explain about 2 per cent of total turnover, which is a lot for a behavioural effect. These findings are of interest to employers, who can use such insight by timing other motivators during periods removed from the moment of incentive payment.
“The research is also counter to previous studies that suggest that because employees know in advance how much their effort will be worth under transparent systems, the reward they receive should not be a surprise and therefore should not result in a temporary increase in performance.”
The researchers looked at how incentive payments affected how customer support employees at an unnamed web company performed. Employees believed that their individual performance would continue to be observed and rewarded in line with a incentive programme.
They found in the two weeks after workers received an incentive payment, task performance and sales revenues improved compared with the two weeks before the bonus was paid. However, both drop off slightly beyond the two-week period.