Applying self‐determination theory to understand the motivational impact of cash rewards: New evidence from lab experiments

Abstract

We investigated, based on self‐determination theory (SDT), the impact of the functional meaning of monetary rewards on individuals' motivation and performance and further tested the role of the psychological needs as the underlying mechanism. In two experimental studies, we show that when presented in an autonomy‐supportive way, rewards lead participants to experience greater intrinsic motivation, which leads them to perform better, than when monetary rewards are presented in a controlling way. This is mediated by greater psychological need satisfaction, indicating that through greater feelings of competence, autonomy, and relatedness, individuals experience greater intrinsic motivation for the task at hand. Our findings suggest that rewards can have a distinct effect on individuals' motivation and performance depending on whether they take on an autonomy‐supportive or controlling meaning, thus providing empirical evidence for the theoretical and practical implications of SDT's concept of functional meaning of rewards. By highlighting the importance of this concept, this research contributes to our understanding of the effectiveness of such rewards in the workplace, suggesting that they can foster employee motivation and performance if organisations present them to employees in an autonomy‐supportive way to convey an informational meaning and positively contribute to their psychological need stisfaction.

“Here’s Some Money, Your Work’s So Worthy?” A Brief Report on the Validation of the Functional Meaning of Cash Rewards Scale

“…More precisely, our results are in line with prior research on compensation describing the impact of contingency cash rewards on employees’ motivation in organizations (e.g., see Thibault-Landry et al, 2017 ; Thibault-Landry et al, 2019b ; Olafsen and Deci, 2020 ). In this paper, using the Functional Meaning of Cash Rewards Scale, we demonstrated that using the monetary rewards perceived as informational led to healthier forms of motivation, greater psychological health, and better overall work intentions than did cash rewards perceived as controlling, because informational rewards are conducive to greater basic psychological need satisfaction.…”

“…Perhaps the most controversial set of the findings within the umbrella of SDT is directly related to pay—namely, the findings concerning reward effects on intrinsic motivation and related concepts. Even though contingency rewards have been initially represented as an antecedent of controlled motivation ( Gagné and Deci, 2005 ), prior research demonstrated that studying the motivational impacts of the reward itself is insufficient, it is rather the meaning (i.e., informative or controlling) associated with contingency rewards that could influence employees’ level of need satisfaction and work motivation (e.g., Thibault-Landry et al, 2019b ). Nevertheless, even though research on SDT should continue to investigate the contextual nature of rewards, the research did not find yet adequate validated tools to do so ( Forest et al, 2022 ).…”

“…This emphasizes the point that offering a monetary reward, as well as any other type of rewards, occurs within the context of a social exchange between a giver and a recipient, and that as a result, this reward can take on different meanings for the recipients based on their perceptions of the giver’s intention. More specifically, together, these findings suggest that it is the functional meaning (informative or controlling) and the recipient’s interpretation of the reward, not the reward itself, which can have motivating or de-motivating effect ( Thibault-Landry et al, 2017 , 2019b ). Hence, for monetary rewards to be efficient tools to motivate employees in healthy and optimal ways, there must be a genuine intent on behalf of the giver (i.e., the employer or the manager), and such intent must be perceived by the recipient (i.e., the employees).…”

“…Intrigued by the distinct downstream implications of monetary rewards, Thibault-Landry et al (2017 , 2019a , 2019b) empirically tested these SDT-postulates, exploring the functional meaning of monetary rewards, and investigating how and why monetary rewards perceived as having an informative meaning and those perceived as having a controlling meaning could lead to different employee psychological experiences and functioning at work. They found empirical evidence that when it comes to informative monetary rewards, perceiving monetary rewards as informative appeared to be associated not only with feeling meaningfully connected, competent, and (even more so) autonomous at work, but could potentially buffer against feelings of incompetence, oppression, and rejection in the workplace, thus leading to optimal functioning at work ( Thibault-Landry et al, 2019a ).…”

Evidence of validity and reliability of the controlling motivational style questionnaire in the work context

“…Thibault-Landry et al [ 70 , 73 ] have empirically argued that controlling monetary rewards have a negative psychological effect on employees, such as feeling pressured and coerced to behave in a certain way, leading to suboptimal functioning. In a Canadian context, other research by Thibault-Landry et al [ 74 ] highlighted the functional value of rewards beyond the reward itself, which can lead employees to focus on rewards and care little about the quality of work. In addition, rewards can generate hidden labor costs such as performing tasks dishonestly [ 75 ], completing tasks without the required standards [ 76 ], lowering the quality of services [ 77 ], or affecting job satisfaction or organizational performance [ 78 ].…”