The Secret Formula to Making Workplace Incentives Work

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Whether or not incentive programs are effective has been a long standing question, spanning multiple academic disciplines.

Some point to studies demonstrating the motivational potential of performance incentives, while others point to a “crowding-out” of intrinsic motivation when incentives are present.

Given the data that has amassed on either side of the debate, where do we stand today?

When do incentives become more effective?

Some recent research may help shed light on this question. Using a field experiment to assess the conditions when incentives become more or less effective, several interesting findings emerged.

First, the authors found that the use of monetary incentives alone actually contributed to decreased performance, where the task was simple data entry of sports data in exchange for base plus piece-rate pay. Initially, one might assume that incentives crowd out the intrinsic interest and value that workers may place in a task.

A second set of findings, though, provides some more color to that conclusion. The researchers found that incentives, when combined with motivational language, actually resulted in improved performance, in terms of both quality and quantity of work.

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