Bonuses, Goals, and Instrumentality Effects

Three experimental studies showed that bonuses based on end-of-period determinations of standards led to the setting of more challenging goals but lower performance than a control condition in which bonuses were based on the achievement of self-set goals. Performance differences between the bonus an...

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Bibliographic Details
Published in:Journal of applied psychology 1999-10, Vol.84 (5), p.703-720
Main Authors: Wood, Robert E, Atkins, Paul W. B, Bright, James E. H
Format: Article
Language:English
Subjects:
Applied psychology
Biological and medical sciences
Bonuses
Employees
Female
Fundamental and applied biological sciences. Psychology
Goal Setting
Human
Human resources
Influences
Instrumentality
Job Performance
Male
Management
Management Personnel
Managers
Monetary incentives
Motivation. Job satisfaction. Attitude
Occupational psychology
Pay
Performance related pay
Psychological aspects
Psychology
Psychology. Psychoanalysis. Psychiatry
Psychology. Psychophysiology
Self regulation
Self-Efficacy
Statistical analysis
Studies
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Summary:Three experimental studies showed that bonuses based on end-of-period determinations of standards led to the setting of more challenging goals but lower performance than a control condition in which bonuses were based on the achievement of self-set goals. Performance differences between the bonus and control conditions were not mediated by levels of self-set goals or goal commitment as predicted by goal theory. However, self-set goals and self-efficacy were significant predictors of performance within both the bonus and control conditions. Changes in performance under the end-of-period bonus condition in Study 3 were fully mediated by judgments of instrumentality. Participants in the end-of-period bonus condition were less certain of receiving a bonus, and this negatively affected their performance. Implications for the use of appraisal ratings to allocate bonuses and for the design of bonus schemes for management are discussed.
ISSN:0021-9010
1939-1854
DOI:10.1037/0021-9010.84.5.703