The effects of reward type on employee goal setting, goal commitment, and performance

Adam Presslee, Thomas W. Vance, R. Alan Webb

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)1805-1831
Number of pages27
JournalAccounting Review
Volume88
Issue number5
DOIs
StatePublished - Sep 1 2013

Keywords

  • Goals
  • Performance
  • Tangible rewards

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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