Individual Monetary Incentives

Abstract

Studies in three thematic lines of research have manipulated parameters of individual monetary incentive systems to determine whether those parameters were functionally related to performance. Studies have examined: (a) the size of the percentage of total pay and base pay earned in incentive pay; (b) various ratio schedules of monetary reinforcement; and (c) linear, accelerating, and decelerating piece rate pay. The review revealed that individual monetary incentives plus feedback improved performance in comparison to hourly pay plus feedback in studies in all three thematic research lines. However, performance levels were not functionally related to (a) the size of the percentage of total pay or base pay earned in incentive pay for percentages that ranged from 3% to 100% of a person's total pay and base pay; (b) the per piece incentive amount; (c) the amount earned in total pay or total incentive pay; (d) the ratio schedule of delivery for CRF, FR3, VR2, VR3, and VR4 schedules; or (e) linear, accelerating, or decelerating piece rate pay. Taken together, the data suggest that, at least for the parameters investigated to date, the most critical determinant of performance is the ratio schedule contingency between performance and pay; that is, a relationship in which individuals earn a specified amount of money for the number of work units they complete. They also suggest that once a ratio relationship exists, variations in the parameters of individual monetary incentive systems may not greatly affect performance. Relatively few studies, however, have been conducted and further research is required.