Effects of Different Incentive Distribution Methods on Work Performance and Satisfaction in Small Groups: a Simulation Study

Abstract

This study examined the relative effects of different monetary incentive distribution methods on work performance and satisfaction in small groups. Three types of incentive plans were compared: individual incentives, equally distributed group incentives (EG), and differentially distributed group incentives (DG). Four participants performed a simulated work task for 21 four-hour sessions. An alternating treatment design was adopted, and three experimental conditions randomly alternated for each session. The main dependent variables were the number of correctly completed work tasks and amount of off-task time. Results indicated that performance under DG was higher than that of EG and the individual incentives condition. However, the EG and individual incentive conditions had the similar levels of performance. The amount of off-task time was higher in the EG condition than in the other two conditions. In addition, the error rates did not differ across the three incentive conditions, whereas satisfaction and fairness ratings were the highest for individual incentives. Finally, implications for researchers and practitioners, along with limitations of the study, are discussed.