Abstract The effects of individual and small group monetary incentives on the performance and satisfaction of performers were examined. The design was an ABCB within-subject reversal design, where A = hourly pay, B = individual incentives and C = group incentives. Four college students were told that they were members of a10-Person group. During the group monetary incentive condition, the simulated group's performance was manipulated so that the participants were high performers. Participants performed four simultaneous computerized tasks, an arithmetic task, a memory task, a visual monitoring task and an auditory monitoring task, earning points for correct responding. Three of the four participants performed an average of 16%, 14%and 12% lower when paid group incentives than when paid individual incentives. All four preferred individual incentives to group incentives and hourly pay, and three of the four reported that group incentives were more stressful than either hourly pay or individual incentives. ********** Laboratory and field studies have consistently demonstrated that individual monetary incentives and small group monetary incentives increase performance in comparison to hourly pay (for recent reviews, see Bucklin & Dickinson, in press; Honeywell-Johnson D Jenkins, Gupta, Mitra, & Shaw, 1998). Given the relevance of compensation systems to business organizations, most of this research has been conducted within that context. The results of these studies, however, have implications for other settings and, perhaps, for rewards other than money (Hantula, 2001). No doubt this is because individual and group monetary incentives have many of the same characteristics that have been identified by behavior analysts as features of any type of effective management reward system (Braksick, 2000; Brown, 1982; Daniels, 1989; O'Brien & Dickinson, 1982). They: (a) are based on the performance of the individual or the performance of only a small number of individuals; (b) are based on clearly specified behaviors or outputs; (c) are certain (that is, if the behavior/output occurs, the individual will receive the incentives); and (d) are paid as soon after the performance as possible as part of the individual's paycheck. Nonetheless, the current discussion will be restricted to the examination of the effects of individual and group monetary incentive systems within the field of organizational behavior. Surveys conducted over the past decade have consistently reported that about 35% of U.S. companies pay their employees individual monetary incentives and about 15%-20% pay their employees small group monetary incentives (Gross, 1995; Lawler, Ledford, & Mohrman, 1989; Mitchell, Lewin, & Lawler, 1990;O'Dell & McAdams, 1987; Peck, 1990). While individual monetary incentive systems are currently more prevalent in business and industry, the use of small group incentives is increasing. In one survey, 39% of the respondents who did not use group incentives reported that they were considering them (Gross, 1995). Based on the results of another survey, Ledford and Hawk (2000) reported that the use of small group monetary incentives in Fortune 1000 firms increased by 50% between1987 and 1996. This increase reflects the fact that many organizations have adopted group pay plans to support new organizational structures based on work teams (Flannery, Hoftichter, & Platten, 1996). When individuals are paid individual monetary incentives, the incentives are based solely on the performance of the individual employee. In contrast, when individuals are paid group incentives, the incentives are based on the total performance of the group. Because workers have less control over the group's performance and hence their individual earnings, they may be less productive than when they are paid individual incentives (Blinder, 1990; Dierks & McNally, 1987; Honeywell, Dickinson, P McCoy, 1992). …
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