The Effects of Reward Type on Employee Goal Setting, Goal Commitment, and Performance

Abstract

The use of tangible rewards in the form of non-cash incentives with a monetary value has become increasingly common in many organizations (Peltier et al. 2005). Despite their use, the behavioral and performance effects of tangible rewards have received minimal research attention. Relative to cash rewards, we predict tangible rewards will have positive effects on goal commitment and performance but will lead employees to set easier goals, which will negatively affect performance. The overall performance impact of tangible rewards will depend on the relative strength of these competing effects. We conduct a quasi-experiment at five call centers of a financial services company. Employees at two locations earned cash rewards for goal attainment while employees at three locations earned points, with equivalent retail value to cash rewards, redeemable for merchandise. Results show that cash rewards lead to better performance through their effects on the difficulty of the goals employees selected. Implications for theory and practice are discussed. Data Availability: The data used in this study are available upon request.

How employees view smart cycling to work: A regional survey in the Netherlands

“…According to some studies, in-kind gifts can be a good alternative to money [33] [34]. However, Shaffer and Arkes [35] concluded that this is only the case when money and in-kind gifts are not offered simultaneously.…”

Experimental Examination of the Relationship between Relative Performance Information, Goal Setting and Performance

“…In a context when an assigned goal is applied, it is essential to examine the effect of an employee's commitment toward the goal, as it has been indicated by prior studies (Locke & Latham, 2002;Presslee, Vance, & Webb, 2013) that individual's performance would be affected by his/her commitment toward the assigned goal. In line with the goal setting theory (Locke, 1996), an individual's goal commitment therefore becomes an essential factor that initiate motivation and effort, which will subsequently affect performance.…”

Managerial Practices and Organizational Conditions That Encourage Employee Growth and Development

“…♦ Rewards support the organization's culture (Bartol & Srivastava, 2002). Presslee, Vance, and Webb (2013) report that such systems are adaptable to changing business conditions, are clearly communicated and fully understood by employees, and are related to actual business DOI: 10.1002/piq Performance Improvement Quarterly performance. Finally, Randolph and Kemery (2011) believe that such systems allow employees to participate in their design, are regularly reviewed for eff ectiveness in meeting stated goals and objectives, and are perceived by employees as having value.…”

“…Th e result is motivated, productive employees ready to accept challenges and take initiative for professional development (Bartol & Srivastava, 2002). According to Presslee et al (2013), developmentally oriented managers do not develop employees; they equip employees to develop themselves.…”