Does the Effect of Reward Frequency on Performance Depend on Reward Type?

• In Event: Attributes of Incentives

Abstract

Recent trends in incentive compensation highlight two important features regarding performance-based rewards: (a) firms are paying out rewards more frequently, and (b) firms are increasingly using tangible rewards in lieu of cash rewards to motivate employees. This study investigates whether and how reward frequency and reward type jointly influence employee performance. Drawing on both economic and behavioral theories, we predict and find that increasing reward frequency has a positive effect on employee performance. Moreover, this positive effect is greater for cash rewards than it is for tangible rewards. Results of our study contribute to both theory and practice by enhancing our understanding of the role of reward frequency in motivating employee performance and more importantly, how its efficacy is affected by reward type.

Authors

• Andrew H Newman, University of South Carolina

• Ivo D Tafkov, Georgia State University

• Nathan Waddoups, University of Denver

• Grazia Xiong, University of South Carolina