Well It’s Only Fair: How Perceptions of Manager Discretion in Bonus Allocation Affect Intrinsic Motivation

Abstract

Perceptions of manager discretion in incentive allocation are theoretically and practically important to help explain the much‐debated relationship between performance‐related bonuses and intrinsic motivation. We argue, and demonstrate, that perceived managerial discretion is a key moderator to this relationship because of its relevance to procedural fairness. In a first study, we developed a measure for perceived manager discretion and distinguished it from related concepts. In a second experiment, we found that higher bonuses associated with higher levels of perceived manager discretion enhanced procedural fairness but those based on lower discretion did not. In a third field study, we found that actual bonuses implemented by a service organization enhanced intrinsic motivation indirectly through procedural fairness, but only when employees perceived their bonus to be based on higher levels of perceived manager discretion. Conversely, when bonus level was associated with lower perceived manager discretion, it negatively predicted of intrinsic motivation.

Mapping the determinants of carbon-related CEO compensation: a multilevel approach

“…Past research suggests that, although extrinsic rewards can hold the potential for eroding intrinsic motivation when perceived as nonparticipatory (Cerasoli and Ford, 2014; Deci et al , 2017), they can also strengthen the positive link between intrinsic motivation and task performance (Bruni et al , 2020; Cerasoli et al , 2014; Parmar et al , 2019). This is especially the case when rewards convey information about an individual’s contribution and when performance measures are defined in a participatory and transparent way (Hewett and Leroy, 2019; Langevin and Mendoza, 2013). Thus, in the presence of intrinsic motivation towards carbon emission reduction activities, CEOs are likely to approve of carbon-related compensation because it entails a contractual obligation to pursue initiatives and goals related to carbon emission reduction, which will allow them to unfold their intrinsic motivations.…”

Work motivation. Self-determination theory: literature review

“…Avšak ani výše platu ani vnímání distribuční spravedlnosti nemělo následně vliv na uspokojení potřeb souvisejících s intrinsickou motivací, konkrétně potřeby kompetence a autonomie (Olafsen a kol., 2015). Naproti tomu byl prokázán významný pozitivní vztah mezi podporou ze strany nadřízeného a procedurální spravedlností a u obou faktorů byla prokázána pozitivní souvislost s uspokojením potřeb (Hewett a Leroy, 2019). Empirické studie zároveň potvrdily silný pozitivní vztah mezi uspokojením potřeb kompetence a autonomie a intrinsickou motivací.…”

The Ethics and Politics of Microaffirmations

“…An individual microaffirmation can teach people something about their skills or competence that they would not otherwise know in ways that are significant. For example, bonus structures in a company can have differential impact on intrinsic employee motivation and well-being, depending on how much discretion recipients perceive managers have to influence payouts (Ittner et al 2003;Hewett and Leroy 2019).…”