Human Ressource Management

12 Personnel Compensation


Question

How do financial incentives affect performance?


Answer
  • In general yes, but not always
  • Money is a motivator, people try harder and longer

  • Simple vs Complex

  • In simple tasks big bonuses help, simple effort-needing tasks
  • In complex cognitive tasks bonuses don't work very well (Bonus as a source of stress or distraction) -> "Maybe I wont make it and get the big bonus" Can lead to unethical behavior
  • In complex tasks: Intrinsic better, just pay enough

Bonuses are dangerous! -> High stakes may lead to big mistakes




Comments

Bonuses are good when task requires effort, but not skill/problemsolving.