Management Accounting Section Midyear Meeting

Work for Money: the Behavioral Effects of Feedback Format on Employees’ Performance

• In Event: Employee Rewards and Feedback (Mixed Methods)

Abstract

This paper investigates how incorporating the concept of money in performance feedback influences employees’ behavior. We predict that reminders of money increases employees’ feelings of strength, thus enhancing their perceived ability to cope with task challenges and in turn motivating their effort exertion. To test our predictions, we conduct a field experiment using sales employees at a service company and an online experiment whereby participants perform a symbol decoding task. Overall, the data collected using different methods yield consistent results in support of our theory, suggesting that, holding economic incentives constant, the presence of monetary cues in performance feedback leads to significantly better performance than when monetary cues are absent. We also find that individuals’ perceived ability to overcome task challenges mediates this performance effect. The implications of our findings for management control theory and practice are discussed.

Authors

• Lulu Di, Jinan University

• Wei Jiang, Jinan University

• Jason Kuang, Georgia Institute of Technology

• Suyun (Sue) Wu, Georgia Institute of Technology