The effect of financial incentives on performance: A quantitative review of individual and team‐based financial incentives
verifiedrich profile · Journal of Occupational and Organizational Psychology · 2013
Garbers, Yvonne; Konradt, Udo
How this was studied
A meta-analytic synthesis — it pools many primary studies rather than running a single design, so there is no single-study diagram.
What this article reports
The findings we extracted from this work, normalized into Principia’s relationship form (X → Y). Each feeds the synthesized models below.
financial incentives → task performance
financial incentives → overall job performance
Models this article informs
The meta-analytic priors this article contributes evidence to — its place in the broader synthesis.
financial incentives causes task performance
financial incentives predicts overall job performance
financial incentives predicts task performance
pay for performance correlates overall job performance
pay for performance predicts overall job performance
In the authors’ words
The article’s own abstract.
We meta‐analysed 146 studies ( n = 31,861) to examine the effects of individual and team‐based financial incentives on peoples' performance and to explore potential moderators. The overall effect size of the individual incentives (116 studies) was positive ( g = 0.32). Moderator analyses revealed effect sizes to be larger for field studies ( g = 0.34) than for laboratory studies ( g = 0.29), larger for qualitative ( g = 0.39) than quantitative performance measures ( g = 0.28), and smaller for less complex tasks ( g = 0.19). Results on team‐based incentives (30 studies) indicated a positive effect regarding team‐based rewards on performance ( g = 0.45), with equitably distributed rewards resulting in higher performance than equally distributed rewards. This relationship was larger in field studies and smaller for less complex tasks. In addition, our results show that the effect of team‐based rewards depends on team size and gender composition. Implications for organizational rewards and suggestions for future research are discussed. Practitioner points Our study demonstrates the importance of rewarding employees as teams to motivate them to a greater extent. The results show that equitably distributed rewards lead to higher performance than equally distributed rewards. Managers should design their appraisal and feedback process for individual team members and the team as a whole. Our results provide useful information regarding the creation of appropriate reward systems. Differences in reward characteristics, team composition, and distribution rules offer practical implications for factors on organizational (i.e., personnel selection, frequency, and amount of rewards), team (i.e., team characteristics, type of performance measurement), and individual level (i.e., importance of rewards, personality).
What the literature says about it
Attributed, open-access quotes from other works that cite this article, plus the citation-graph verdict tally. Corroborations and disputes, in one place — the honest-broker view.
supports “…organizations, tangible and intangible rewards are often offered to induce desired employee behaviors (Perkins & Jones, 2020), such as performance (Garbers & Konradt, 2014), innovation (De Spiegelaere et al., 2018; Kesting et al., 2016), creativity (Baer et al., 2003; Jiang et al., 2012; Yoon et…”
supports “As performance reward expectancy can occur both at the individual level and the team level, directing attention can be expected at both levels towards high-performance goals (e.g., Baker & Delpechitre, 2013; Garbers & Konradt, 2014; Haines & Taggar, 2006; Han et al., 2015).”
supports “Garbers & Konradt (2014) found that there was an overall positive correlation between financial incentives and performance; and was more pronounced in field studies rather than laboratory studies.”
supports “It has been shown that there is a positive effect of financial incentives on performance.(23) This is why pay-forperformance (P4P) programs were introduced into the health-care industry in recent years.”
disputes “This explanation, often viewed with scepticism, of what (except incentives) can predict or enhance performance, is offered by self-determination theory (SDT); [1–3], which is one of the most often cited theories of human motivation.”
Ancillary research
Neighbouring works in the citation graph around this article.
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- 10.2147/jmdh.s358733
- 10.1371/journal.pone.0256558
Assembled from Principia’s registry — bibliographic record, extracted effect sizes, the models they inform, and open-access citing literature.