Implicit Rewards Research Articles

Subjectivity in Tournaments: Implicit Rewards and Penalties and Subsequent Performance

This study extends the literature on the tradeoffs associated with subjectivity in tournament incentive systems by describing the effects of implicit penalties (rewards), whereby workers ranked at the top (bottom) of objective performance rankings fail to receive the reward (penalty) due to management's subjective performance evaluations. Using data from a field setting where incentive contracts are structured as repeated tournaments, we find that workers respond differently to subjective versus objective awards of rewards and penalties. Additionally, workers subject to implicit rewards (penalties) exhibit performance reactions that counterbalance those of workers receiving subjective penalties (rewards), with net effects indistinguishable from zero. However, while the effects of subjective rewards and penalties reverse in the subsequent period, the performance effects of implicit rewards and penalties persist. Our study documents consequences of subjectivity that might alter the effectiveness of tournament incentives, and is relevant for the practice of incentive design.

Organizational Enablers for NPD Portfolio Selection

Despite substantial research that advocates the “right” portfolio of new product development initiatives for the firm, one important aspect has been overlooked: Creating a portfolio of new product development initiatives is not equivalent to choosing from a menu of initiatives. Rather, these initiatives are defined by and within the organization. Thus, portfolio selection rests upon two challenges: 1) the cross-functional nature of collaborative tasks; and 2) the role of explicit and implicit incentives on innovative outcomes. This paper explores how these factors ultimately determine the initiatives an organization pursues. We abstract a new product development organization as two functional managers who report to senior management and analyze the strategic interactions between all three stakeholders. Senior management decides whether to empower the functional managers to define the initiative and how to reward them contingent on the outcome. We evaluate how the asymmetry of information regarding each function's capability, and the explicit and implicit rewards and penalties imposed on the functional managers affect the upfront resource allocation. We find a profound effect of the information asymmetry: the set of initiatives the firm deems profitable is reduced, thus impeding the organization's potential to innovate. To counter such a shortcoming, senior management may optimally misalign the objectives of the stakeholders.

Does Mercy Bear Richer Fruits than Strict Justice? Implicit Effects of Subjective Rewards and Penalties in Tournaments

This study explores the effects of subjective ex-post adjustments of objective performance in a tournament incentive contract including both rewards and penalties. We extend prior literature on the tradeoffs associated with subjectivity in performance evaluations by considering the effects of subjective rewards (penalties) not only on the members of the organization that explicitly receive them, but also on those that, as a mechanical consequence of the tournament structure, face implicit penalties (rewards). We predict and find that, in presence of subjective evaluations, performance effects related to implicit rewards (penalties) counterbalance those associated with explicit penalties (rewards). While the net effect between subjective rewards and implicit penalties is not significantly different than zero, we find that the balance between subjective penalties and implicit rewards is significantly positive. Our study documents effects of subjective evaluations that might alter the effectiveness of incentive systems, and are relevant for the practice of management accounting.

Improving Performance Measures through Managerial Rotation

In this study, we examine conditions under which business unit (BU) managers improve performance measures upon which they are evaluated. BU managers often have more information about improving performance measures than corporate managers because they are closer to the actions that cause distortion in performance measures. Consequently, they can either exploit their information advantage and extract rents from inflated performance measure realizations or improve their performance measures and receive implicit rewards from corporate managers. Using a laboratory experiment, we predict and find that improvements to performance measures are higher for BU managers who rotate across business units because managerial rotation lowers the value of BU managers’ information advantage making expected implicit rewards more attractive. By varying the amount of distortion that business unit managers uncover and the value of performance measure improvements to corporate managers, we also examine performance measure improvements under varying circumstances. Our study extends previous research on the involvement of business unit managers in the design of their performance measurement system by documenting that managerial rotation can have beneficial effects.

Metrics thermostat⋆

The explosion of information and information technology has led many firms to evolve a dispersed product development process with people and organizations spread throughout the world. To coordinate such dispersed processes a critical role of managers is to establish and foster a culture that implicitly rewards and motivates product development teams to perform against a set of strategic metrics such as customer satisfaction, time to market, defect reduction, or platform reuse. We focus on a practical method to fine‐tune a firm's relative emphasis on these metrics. In particular, we seek to advise a firm how to modify their emphasis on each metric in order to improve profits. We use a thermostat analogy based on an adaptive control feedback mechanism in which we estimate the incremental improvements in priorities that will increase profits. Iterations seek to maximize profits even if the environment is changing.In developing the metric thermostat we recognize that there are hundreds of detailed actions, such as the use of the house of quality and the use of robust design, among which the product development team must choose. We also recognize that team members will act in their own best interests to choose the actions that maximize their own implicit rewards as determined by the metrics. Management need not observe or dictate these detailed actions, but rather can control the process by establishing implicit weights on the metrics. The thermostat works by changing those implicit weights.We define the problem, introduce the adaptive control mechanism, modify “agency” theory to deal with incremental changes about an operating point, and derive methods that are practical and robust in light of the data that firms have available. Our methods include statistical estimation and internal surveys. The mathematics identify the critical few parameters that need be determined and highlight how to estimate them. Both the measures and the estimation are illustrated in an initial application to a large office‐equipment firm with $20 billion in revenue. The metrics thermostat suggests that this firm has about the right emphasis on time‐to‐market, but has overshot on platform reuse and has lost its focus on customer satisfaction. We describe how the firm reacted to the recommendations and changed its organization.

Metrics thermostat ☆

The explosion of information and information technology has led many firms to evolve a dispersed product development process with people and organizations spread throughout the world. To coordinate such dispersed processes a critical role of managers is to establish and foster a culture that implicitly rewards and motivates product development teams to perform against a set of strategic metrics such as customer satisfaction, time to market, defect reduction, or platform reuse. We focus on a practical method to fine-tune a firm’s relative emphasis on these metrics. In particular, we seek to advise a firm how to modify their emphasis on each metric in order to improve profits. We use a thermostat analogy based on an adaptive control feedback mechanism in which we estimate the incremental improvements in priorities that will increase profits. Iterations seek to maximize profits even if the environment is changing. In developing the metric thermostat we recognize that there are hundreds of detailed actions, such as the use of the house of quality and the use of robust design, among which the product development team must choose. We also recognize that team members will act in their own best interests to choose the actions that maximize their own implicit rewards as determined by the metrics. Management need not observe or dictate these detailed actions, but rather can control the process by establishing implicit weights on the metrics. The thermostat works by changing those implicit weights. We define the problem, introduce the adaptive control mechanism, modify “agency” theory to deal with incremental changes about an operating point, and derive methods that are practical and robust in light of the data that firms have available. Our methods include statistical estimation and internal surveys. The mathematics identify the critical few parameters that need be determined and highlight how to estimate them. Both the measures and the estimation are illustrated in an initial application to a large office-equipment firm with $20 billion in revenue. The metrics thermostat suggests that this firm has about the right emphasis on time-to-market, but has overshot on platform reuse and has lost its focus on customer satisfaction. We describe how the firm reacted to the recommendations and changed its organization.

The importance of self-determination theory for medical education.

While some theories of human motivation focus exclusively on levels of motivation, self-determination theory argues that different types of motivators, even when the resulting motivation is high, will lead to very different outcomes. This theory differentiates between two primary kinds of motivation, controlled and autonomous. Controlled motivation depends either on explicit or implicit rewards or punishment or on people's internalized beliefs about what is expected of them. Learning in controlled situations, in which students act under pressure and anxiety, is likely to be rote, short-lived, and poorly integrated into students' long-term values and skills. In contrast, autonomous motivation, as its name implies, is personally endorsed and reflects what people find interesting and important. While controlled motivation involves compliance with pressures, autonomous motivation involves behaving with a sense of volition, agency, and choice. Autonomously motivated learning leads to better educational outcomes. There is evidence that medical students who learn in autonomy-supportive environments act in more autonomy-supportive ways in their interactions with patients. Because the reliable implementation of practice guidelines and physicians' use of an autonomy-supportive style have been associated with more positive health outcomes (particularly in the behavior-related areas of smoking cessation, weight loss, etc.), more autonomy-supportive medical education may result in more effective health care delivery.

Two Strategies for Reducing the Aversive Effects of Implicit Rewards

The effectiveness of two simple strategies designed to reduce the aversive effects of implicitreward conditions (i.e., rewarding only one child of a pair, although both are performing a set task), as previously reported by Sharpley, were tested with 96 Grade 3 and 4 children of both genders. The task used as the dependent variable was timed digit-symbol exercises, and the reward for successful performance was verbal praise and feedback of results. Data indicated that both of the strategies designed to reduce the previously reported aversive effects of implicit rewards were successful but that there was still evidence that direct application of the reward was more reinforcing than implicit conditions. Hypothetical explanations for these findings are discussed, and children's cognitive evaluations of comparative reward conditions are suggested as an important but often overlooked causal variable in child behavior modification procedures.

The Effects of Pre-experience on Performance Within an Implicit Reward Situation

The effects of implicit rewards upon adults' performance were examined in a study which replicated the design and procedures of previous research using children as subjects. Data revealed that unlike children, the adults in the present study did not show implicit extinction effects under certain experimental conditions. However, there were significant inconsistencies in performance across the two different conditions contrasted here, indicating effects attributable to the implicit reward paradigm and the order in which it occurs relative to other reward conditions.

Effects of varying contingency and directness of rewards upon children's performance under implicit reward conditions

The application of verbal praise as a reward for completion of a digit-symbol coding task was investigated under contingent versus noncontingent and direct versus implicit reward conditions. Results from two studies were compared with control (no-reward) data, all collected over eight trials of the coding task. Subjects were 84 third and fourth grade children, and results indicated that noncontingent rewards possessed no significant reinforcer effect under either direct or implicit reward conditions. By comparison, contingent rewards administered directly were reinforcing, but contingent rewards administered implicitly were not. Results are discussed in terms of the relative power of directness and contingency as determinants of reinforcer effect. Consideration of the detrimental effects which implicit rewards may have upon the success of child behavior modification procedures could explain the apparent “failure” of such strategies in some instances.

Effects of implicit rewards on adults' motor skill responses.

Effects of implicit rewards on adults' motor skill responses.

Effects of implicit rewards on adults' motor skill responses.

Effects of implicit rewards on adults' motor skill responses.

Children’s Evaluations of the Hypothetical Administration of Implicit Rewards in the Classroom

AbstractThe reactions that children had to the hypothetical administration of implicit rewards in the classroom were investigated by interviewing 84 elementary school children under two experimental conditions, direct contingent rewards (DCR) and implicit rewards (IR), plus four treatments within the latter condition. Results indicated that there were some differences between children’s responses to the hypothetical IR situation and previous responses to the actual IR situation. In particular, children considered that others would not be as distressed when they (the subjects) were treated unfairly as when the situation was reversed. Additionally, performance decrements present under the actual IR conditions were not predicted by the subjects in this study. Implications for classroom applications of operant procedures are discussed.

Implicit rewards in the classroom

Although well established in a range of situations, the application of operant methodologies to typical classrooms is often difficult for teachers because of logistic considerations which may lead to a subgroup of a class being rewarded, with peers showing performance decrement. This paper reviews the use of “vicarious” and “implicit” rewards in both special and normal classrooms, critically examining previous literature and concluding that several key issues are open to speculation. A series of four further studies which were designed to investigate some of these issues and overcome some of the design and methodology flaws of previous research are reported, with several important distinctions being drawn between “vicarious reinforcement” effects and outcomes from “implicit reward” situations. Criterion variables are discussed, with several key findings suggesting that the concept of vicarious reinforcement as based upon the general literature is simplistic and inaccurate. Suggestions are made for the successful use of “implicit reward” procedures in the classroom.

Implicit rewards as reinforcers and extinguishers

Previous studies of implicit reinforcement with children have presented the implicit reward phase after baseline conditions. The present study replicated this design and compared these effects within a design where implicit rewards were presented after direct rewards to both targets and peers. Thirty-two fourth grade children copied the letters of the alphabet under varying reward conditions. Data indicated the presence of reinforcement effects when presented after baseline, and extinction effects when presented after direct reward conditions.