Wording and Saliency Matter: The Impact of Incentive Systems and Organizational Value Statement on Employees’ Performance

• In Event: Breakfast and Research Forum

Abstract

This study extends recent research on the interaction of formal and informal controls. We use a sequence of two experiments to expand upon research by Kachelmeier, Thornock, and Williamson (2016). Experiment 1 extends Kachelmeier et al. to consider the moderating effect of a general organizational value statement rather than a quality specific statement, and finds that a similar interactive effect occurs—a crowding in (out) effect from the value statement increases (decreases) productivity associated with fixed pay (piece-rate) incentives. Experiment 2 further extends the work on value statements by considering the espoused management best practices of broadly reinforcing the value statement to increase the statement’s saliency with employees. The results of the second experiment confirm that enhancing the saliency of the organizational value statement through active delivery, as opposed to the passive delivery used in previous studies, increases the moderation effect. On an overall basis, the results provide strong support for the motivation crowding theory and the related theorized disordinal interaction between formal and informal controls. These results contribute to the growing stream of research beginning to explore the abnormal effects that can occur when controls are considered in packages.

Authors

• Kazeem Olalekan Akinyele, University of Wisconsin Oshkosh

• Vicky Arnold, University of Central Florida

• Steve G Sutton, Norwegian School of Economics