The Effects of Incentive Scheme and Task Difficulty on Employees' Altruistic Behavior Outside the Firm

Abstract

Employer‐sponsored opportunities for altruism outside the workplace can improve employee engagement and passion within the firm, enhance the firm's corporate visibility, and improve its recruitment. There is limited understanding of whether and how a firm's management control system on employees' daily tasks can influence employee willingness to engage in altruism outside the workplace. In this study, we investigate via an experiment how the incentive scheme (tournament vs. piece rate) on employees' daily tasks interacts with the difficulty level of these tasks (low vs. high) to affect employees' altruistic behavior outside the firm. Our results indicate that, compared to a piece‐rate scheme, a tournament scheme leads to a greater decrease in non‐winning participants' altruistic behavior outside the firm when the original, incentivized task is more difficult compared to when it is less difficult. Consistent with our theory, participants' feelings of excessive entitlement partially mediate the interaction effect of incentive scheme and task difficulty on participants' altruistic behavior outside the firm. This study informs firms about how the design of its incentive scheme on employees' daily task inside the firm and the nature of that task can influence employee willingness to act altruistically outside the firm.

Ambiguous Sticks and Carrots: The Effect of Contract Framing and Payoff Ambiguity on Employee Effort

“…Our primary dependent variable, total effort, was measured as the total of all repetitions completed throughout the ten rounds of the task. Consistent with prior studies using real-effort tasks (Loftus and Tanlu 2018;Newman, Tafkov, and Zhou 2020;Libby and Olczak 2021), we also include performance during the practice round (which occurred before any manipulations were introduced) as a covariate to control for individual differences, such as ability.…”

Setting goal difficulty in monetary incentives to physicians: evidence from an online health knowledge-sharing platform

“…There are two ways that people can cope with this situation. One is to use immoral means or engage in risky behavior to meet the requirement, and the other is to give up (Newman et al, 2020). Both of these behaviors will damage the interests of the organization.…”

“…According to the goal-setting theory, if a goal is too difficult to achieve and there is a large gap between staff performance and the requirements of the goal, staff will be upset and have low self-efficacy and will thus perform worse (Newman et al, 2020). Therefore, if the monetary incentive includes goals that are difficult to achieve and physicians think they cannot easily obtain the reward, the volume of PHKS may decline.…”

“…As discussed, goals that are too difficult to achieve have a negative impact on staff performance (Vandegrift and Brown, 2003;Wicker et al, 2005;Barmby et al, 2012;Newman et al, 2020). The goal-setting theory is also applicable to the duration of PHKS.…”

“…According to the goal-setting theory, if a goal is too difficult to achieve and there is a large gap between staff performance and the requirements of the goal, staff will be upset and have low self-efficacy and will thus perform worse (Newman et al. , 2020).…”