Digest 41. Incentives for interesting and creative tasks: Dos and Don’ts
Image by rawpixel.com on freepik
As we often hear saying, “we live in the knowledge-based economy”, and indeed one billion workers worldwide can be considered knowledge workers today. Knowledge workers are essentially required to combine their domain-specific expertise (explicit knowledge) and know-how (implicit knowledge) with action and (often) the use of technology when performing their jobs. Comparing this type of jobs (that is, knowledge jobs) with those that were dominant until about 60 years ago, the differences are striking. Especially in terms of job enrichment and autonomy, which make jobs far more interesting. Often, knowledge jobs also entail finding alternative or creative solutions to problems, and in the creative industry knowledge workers are paramount.
Considering the changes in the levels of autonomy, “interestingness” and creativity of many contemporary jobs, one may wonder whether management tools that were invented in the previous century are still valid and effective. In particular, financial incentives are a management tool rooted in the behaviorist tradition. They were originally proposed as “reinforcements” of positive behaviors, implicitly alluding to simple behaviors to replicate. Hence, one may question their effect on creative and more complex behaviors.
Do incentives help or harm performance in interesting tasks? And in creative ones?
Kim, Gerhart and Fang (2022) conducted a meta-analysis of 69 studies to understand the impact of financial incentives on individual performance in interesting tasks. Specifying that they focused on “interesting tasks” is important because this is the core of a long-standing debate. According to the Self-Determination Theory (look here to know more!), individual motivation can be distinguished in extrinsic (visible when a behavior is enacted to achieve an external reward) and intrinsic (visible when a behavior is enacted for the pleasure of the activity in itself). Some authors have suggested, and found, that offering extrinsic rewards to people that are intrinsically motivated to perform their tasks may be counterproductive. However, the meta-analysis by Kim and colleagues shows that there is a positive impact of incentives on performance in interesting tasks. In fact, such a positive effect is very similar when comparing interesting and uninteresting tasks. Moreover, further insights come from zooming in on the type of performance by distinguishing quantity (e.g., number of tasks completed) and quality (e.g., accuracy of the completed task). With respect to performance quantity, incentives even worked better in interesting rather than in uninteresting tasks. In interesting tasks, the difference in performance between people who receive incentives and those who did not, is large. In uninteresting tasks, the difference between people who receive incentives vs. do not receive them is only medium. On the other hand, with respect to performance quality, incentives’ effect still appears to be more mixed. Overall, and very similarly across interesting and uninteresting tasks, the impact is positive but only a small difference in performance is observed between people with and without incentives. What is more concerning, is the greater variability of these latter findings, which indicate that there are instances in which the presence of incentives deteriorates performance quality. More research is needed to fully understand the conditions in which this occurs.
In another meta-analysis of 60 different studies, Byron and Khazanchi (2012) explored the effect of incentives on creative tasks. These authors included in their analysis quite diverse research, conducted in and outside of the workplace with samples including adults as well as children, which makes the findings generalizable to multiple situations. The results, once again, reveal that rewards are beneficial to creative performance, provided that some specific conditions are met. First, only rewards that are creativity-contingent lead to stronger creative performance. This is because these incentives clarify that creativity is valued and expected. On the opposite, rewards that are performance-contingent or completion-contingent (i.e., associated to the level of performance reached and the completion of a task, respectively) are negatively associated with creative outputs. Second, creativity-contingent rewards are more effective when combined with feedback that helps people understand how to improve their attempts (find out more on how feedback impacts creativity in our Digest 20). Third, creativity-contingent rewards that leave people opportunities to choose (e.g., which reward they want) are even more successful at improving creativity.
Organizational implications
When the goal is to design incentive systems or pay-for-performance plans to reward knowledge workers and especially their performance in interesting and creative tasks, it is important to consider the following:
Distinguish between quantity and quality of performance and be aware that incentives will be more effective at promoting quantity performance. This means that extrinsic motivation can sum up with intrinsic motivation in interesting tasks and lead to better outcomes.
Apply financial rewards with care to motivate quality performance, instead, because in this case extrinsic rewards may crowd out intrinsic motivation or even accuracy and attention to detail that are prerequisites for quality performance.
Offer rewards that are tied to the creative output and not to the level of performance or task completion if the intention is truly to foster more creativity.
Always provide feedback along the way, so that people are better enabled to attain their valued rewards (from a motivational standpoint, this means increasing their Expectancy, namely the perception to be able to reach the reward with their behavior).
Whenever possible, let people choose the type of reward they want from a set of options, which is what many companies have already implemented for benefits under the label “cafeteria-style”.
——
References:
Byron, K., & Khazanchi, S. (2012). Rewards and creative performance: a meta-analytic test of theoretically derived hypotheses. Psychological Bulletin, 138(4), 809. https://doi.org/10.1037/a0027652
Kim, J. H., Gerhart, B., & Fang, M. (2022). Do financial incentives help or harm performance in interesting tasks?. Journal of Applied Psychology, 107(1), 153. https://doi.org/10.1037/apl0000851