More Bang for the Buck? Personality Traits as Moderators of Responsiveness to Pay-for-Performance

Extensive prior research has found that, on average, people are more productive under properly designed incentive pay systems; this effect is not necessarily uniform across people, however. In two laboratory studies utilizing within-person study designs and tasks varying in level of structure, we examine how individuals’ personality dispositions systematically predict differential responsiveness to pay-for-performance (PFP) relative to fixed pay. As expected, average productivity was higher when people received PFP (in the form of piecework pay) than when they received fixed pay, but the productivity-enhancing effects of PFP were especially pronounced for more extraverted and less conscientious individuals in less structured tasks. Emotionally stable individuals also had enhanced productivity under PFP, an effect that has not been observed in previous research on personality and pay.