The effect of financial incentives on performance: A quantitative review of individual and team-based financial incentives
Article first published online: 5 OCT 2013
© 2013 The British Psychological Society
Journal of Occupational and Organizational Psychology
Volume 87, Issue 1, pages 102–137, March 2014
How to Cite
Garbers, Y. and Konradt, U. (2014), The effect of financial incentives on performance: A quantitative review of individual and team-based financial incentives. Journal of Occupational and Organizational Psychology, 87: 102–137. doi: 10.1111/joop.12039
- Issue published online: 21 JAN 2014
- Article first published online: 5 OCT 2013
- Manuscript Accepted: 28 AUG 2013
- Manuscript Revised: 27 AUG 2013
- Manuscript Received: 20 NOV 2012
- financial incentive;
- team-based rewards
We meta-analysed 146 studies (n = 31,861) to examine the effects of individual and team-based financial incentives on peoples' performance and to explore potential moderators. The overall effect size of the individual incentives (116 studies) was positive (g = 0.32). Moderator analyses revealed effect sizes to be larger for field studies (g = 0.34) than for laboratory studies (g = 0.29), larger for qualitative (g = 0.39) than quantitative performance measures (g = 0.28), and smaller for less complex tasks (g = 0.19). Results on team-based incentives (30 studies) indicated a positive effect regarding team-based rewards on performance (g = 0.45), with equitably distributed rewards resulting in higher performance than equally distributed rewards. This relationship was larger in field studies and smaller for less complex tasks. In addition, our results show that the effect of team-based rewards depends on team size and gender composition. Implications for organizational rewards and suggestions for future research are discussed.
- Our study demonstrates the importance of rewarding employees as teams to motivate them to a greater extent.
- The results show that equitably distributed rewards lead to higher performance than equally distributed rewards.
- Managers should design their appraisal and feedback process for individual team members and the team as a whole.
- Our results provide useful information regarding the creation of appropriate reward systems.
- Differences in reward characteristics, team composition, and distribution rules offer practical implications for factors on organizational (i.e., personnel selection, frequency, and amount of rewards), team (i.e., team characteristics, type of performance measurement), and individual level (i.e., importance of rewards, personality).