The Effects of Incentives on Workplace Performance: A Meta-analytic Review of Research Studies 1

Abstract

A meta-analytic review of all adequately designed field and laboratory research on the use of incentives to motivate performance is reported. Of approximately 600 studies, 45 qualified. The overall average effect of all incentive programs in all work settings and on all work tasks was a 22% gain in performance. Team-directed incentives had a markedly superior effect on performance compared to individually-directed incentives. This effect was not influenced by the location of the study (business, government, or school), the competitive structure of the incentive system (programs where only the highest performers get incentives versus programs where everyone who increased performance receives incentives), the type of study (whether the study was a laboratory experiment or a field study), or the performance outcome (quality, quantity, or both). In these studies, money was found to result in higher performance gains than non-monetary, tangible incentives (gifts, travel). More research is needed on the relative cost-benefit of cash and gift incentives, and the way different types of tangible incentives are selected. Long-term programs led to greater performance gains than shorter-term programs did, and somewhat greater performance gains were realized for manual than for cognitive work. Explanations based on cognitive psychological principles accompany each of the analyses.