Examining the Effects of Performance-Based Pay and Performance Monitoring on Task Performance

51 Pages Posted: 17 Aug 2015

See all articles by Charles D. Bailey

Charles D. Bailey

James Madison University

Nick Fessler

University of Texas at Tyler

Brian K. Laird

Arkansas State University

Date Written: August 16, 2015

Abstract

Past research suggests that individual, task, and environmental factors interact to affect task performance in the workplace. This study reports the results of a laboratory experiment where 88 participants completed both an algorithmic clerical task and a creative problem-solving task, in a factorial experiment that manipulated the presence and absence of performance-based pay (PBP) and performance monitoring (PM). Additionally, we collected participants’ perceptions of the attractiveness and difficulty of the two tasks, as well as other affective reactions to the control environments. Contrary to hypotheses, PBP improved performance of the creative problem-solving task, but degraded performance of the algorithmic clerical task, while PM had less effect on task performance. Although the effects of PBP were surprising, consideration of the mediating effects of perceived task attractiveness and perceived task difficulty, along with affective reactions to PBP, offer an explanation. These results shed light on how individual, task, and control factors may interact to affect task performance, and highlight the difficulty of predicting the effects of internal controls in a complex work environment.

Keywords: Performance-Based Pay, Performance Monitoring, Task Attractiveness, Task Difficulty, Task Performance, Creative Task, Algorithmic Task

JEL Classification: M49

Suggested Citation

Bailey, Charles D. and Fessler, Nick and Laird, Brian K., Examining the Effects of Performance-Based Pay and Performance Monitoring on Task Performance (August 16, 2015). Available at SSRN: https://ssrn.com/abstract=2645380 or http://dx.doi.org/10.2139/ssrn.2645380

Charles D. Bailey (Contact Author)

James Madison University ( email )

Harrisonburg, VA 22807
United States
901 484-0867 (Phone)

Nick Fessler

University of Texas at Tyler ( email )

Tyler, TX
United States
903-565-5733 (Phone)

Brian K. Laird

Arkansas State University ( email )

College of Business
PO Box 970
Jonesboro, AR 72404
United States

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