Date of Award

8-1993

Degree Name

Doctor of Philosophy

Department

Psychology

First Advisor

Alyce M. Dickinson

Abstract

Studies have shown that individuals working under individual monetary incentive conditions perform at higher rates than those working under an hourly pay condition (Farr, 1976; Frisch & Dickinson, 1990; Gaetani, Hoxeng, & Austin, 1985; George & Hopkins, 1989; London & Oldham, 1977; Nebeker & Neuberger, 1985; Orphen, 1982; Terborg & Miller, 1978; Yukl, Wexley, & Seymore, 1972). Although these studies indicate that incentive pay improves productivity, the results of two laboratory studies suggest that the portion of pay that is tied to performance is not important (Frisch & Dickinson, 1990; Gillette, 1991). In other words, once pay is linked to performance, strengthening that link may not produce further increases in performance.

In the current study, an individual monetary incentive system, combined with daily feedback, was implemented for 22 truck drivers in a waste disposal company. The drivers were divided into two groups, and a multiple baseline across groups design was used. The purpose of the study was to determine the impact of the system on job satisfaction and job performance. During the course of the study, the amount of incentive pay was increased on two occasions, and the effects on job performance were assessed.

The results indicated that although job satisfaction remained unchanged, job performance improved considerably. For Group 1, performance increased during a feedback phase, and increased further when incentive pay was introduced. When the incentive values were increased, performance continued to improve. When the incentives were increased a second time, no further improvements occurred. For Group 2, performance improved during the feedback phase, and improved further when the incentive condition was introduced. However, the two subsequent increases in the incentives did not produce further improvements.

For both groups, performance increased in the initial incentive condition, when incentives accounted for a small portion of pay~approximately 3% of base pay. When the incentives were increased to approximately 6% of base pay, only the performance of Group 1 improved. These results suggest that the portion of incentive pay may not be an important determinant of performance. A small portion of incentive pay improved performance, but an increase in that portion did not necessarily produce further improvements in performance.

Access Setting

Dissertation-Open Access

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