Needs Versus Wants: Which Motivates More Effort?

• In Event: Tangible Rewards and Incentive Framing

Abstract

A significant and increasing number of North American organizations are using non-cash ‘tangible’ rewards (e.g., gift cards) to motivate employees. However, there remains a limited understanding as to whether or not they are effective in motivating effort. In Study One, we use a lab experiment to examine how the nature of tangible rewards, i.e., the extent to which they are perceived as being utilitarian (satisfying ‘needs’) versus hedonic (satisfying ‘wants’), affects participants’ effort. Consistent with our prediction based on mental accounting theory, we find participants eligible for hedonic tangible rewards outperform those eligible for utilitarian tangible rewards. In a follow-up task, we employ a free-sort exercise to examine how individuals mentally categorize utilitarian and hedonic tangible rewards. In keeping with mental accounting theory, results show that relative to hedonic tangible rewards, participants categorize utilitarian tangible rewards as being more similar to salary. In Study Two, we use a second lab experiment to examine whether differentially framing the potential use of cash rewards on hedonic versus utilitarian items can achieve the same effect on effort as we observed in our first experiment. If successful, cash reward framing could provide the motivational benefits of tangible hedonic rewards without the associated costs of identifying suitable reward items for recipients. Using the same task and procedures as our first experiment, we find no difference in participants’ performance between our two framed cash conditions. Implications for theory and practice are discussed.

Authors

• William Timothy Mitchell, University of Massachusetts

• Adam Presslee, University of Waterloo

• Axel Klaus-Dieter Schulz, La Trobe University

• Alan Webb, University of Waterloo