Impact of Incentives on Employee Job Performance – Exam Review Notes

Motivation & Incentives

  • Motivation: internal states driving goal-directed behavior; higher incentives ⇒ greater effort\text{higher incentives}\ \Rightarrow\ \text{greater effort}.

  • Incentives split into:

    • Intrinsic (internal satisfaction)

    • Extrinsic (external reward / punishment)

  • Organizational practice: Financial vs Non-Financial incentives to align employee goals with company mission.

Types of Incentives

  • Financial (Monetary): salary, bonus, profit-sharing, allowances, cash value gifts\text{cash value gifts}.

  • Non-Financial (Non-Monetary): status, recognition, job security, responsibility.

  • Employees in study prefer \text{Monetary} > \text{Non-Monetary}.

Theoretical Foundations

  • McClelland’s Needs: Achievement, Affiliation, Power.

  • Incentive impact logic: Higher incentive⇒Higher motivation⇒Better performance\text{Higher incentive} \Rightarrow \text{Higher motivation} \Rightarrow \text{Better performance} (Gneezy et al., 2011).

  • Individual Work Performance (Koopmans et al., 2014):
    Task, Contextual, Adaptive, Counterproductive{\text{Task},\ \text{Contextual},\ \text{Adaptive},\ \text{Counterproductive}}.

Job Performance Dimensions

  1. Task Performance – core job duties.

  2. Contextual Performance

    • Interpersonal: helping/coaching peers.

    • Organizational: extra-role acts benefiting firm.

  3. Adaptive Performance – adjusting to change.

  4. Counterproductive Work Behavior – actions harming org/people.

Research Design

  • Quantitative, correlational; n=53n = 53 private-sector employees (San Pablo City, PH).

  • Instrument: 5-point Likert survey (SA=5 … SD=1).
    xˉ=∑fxN\bar x = \frac{\sum f x}{N} (weighted mean).

  • Analysis: Average Weighted Mean; One-Way ANOVA (significance at p < 0.05).

Key Findings

Dimension

Monetary Mean

Influence

Non-Monetary Mean

Influence

Task

4.474.47

Very

3.803.80

Moderate

Contextual–Interpersonal

4.324.32

Very

3.923.92

Moderate

Contextual–Organizational

4.334.33

Very

3.173.17

Neutral

Adaptive

4.294.29

Very

3.333.33

Neutral

Counterproductive (reverse)

3.933.93

Reduced CWB

2.672.67

Neutral

ANOVA: Significant differences by preferred incentive on all dimensions except Contextual–Interpersonal (p=0.222p = 0.222).

Conclusions & Recommendations

  • Monetary incentives exert the strongest positive effect on all performance facets and reduce CWB.

  • Significant performance differences align with employees’ preferred incentive type.

  • Organizations should:

    1. Implement systematic incentive schemes.

    2. Prioritize financial rewards to maximize motivation, morale, and profitability.