COMPARISON OF THE EFFECTS OF INDIVIDUAL INCENTIVE AND HOURLY COMPENSATION PLANS ON WORK OUTPUT (MOTIVATION, PAY, PRODUCTIVITY)
Abstract
The primary purpose of this study was to compare the effects of individual-incentive and hourly compensation plans on work output. The secondary purpose of the study was to evaluate the validity of the expectancy theory of work motivation. Thirty-eight individuals who were hired to perform an assembly task were randomly assigned to either an experimental group or a control group. The study ran for a 4-week period. The control group was paid on an hourly basis for the first 3 weeks and on an unrealistic-incentive basis during the fourth week. The experimental group was switched from hourly to realistic-incentive to hourly to unrealistic-incentive over the 4-week period. Work-ouput data were collected daily and expectancy-theory data were collected weekly. Analyses revealed that the individual-incentive compensation plan yielded significantly (p < .01) greater work output than the hourly compensation plan. A probe of this finding indicated that the greater output may be explained by a stronger belief that work output is linked to the amount of pay received. The analyses also indicated that expectancy theory was reasonably valid in predicting work output.
Degree
Ph.D.
Subject Area
Management
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