The Effects of Individual and Group Monetary Incentives on High Performance

Abstract

This study examined whether high performers performed better (a) under individual and group incentive pay than under hourly pay and (b) under individual incentive pay than under group incentive pay. Participants were 11 college students. An ABCDC within-subject design was used in which A was hourly pay with individual feedback, B was individual incentives with individual feedback, C was individual incentives with individual and group feedback, and D was group incentives with individual and group feedback. Participants performed better under both individual and group incentive pay than under hourly pay (p<.01). They did not significantly decrease performance when switched from individual to group incentives, but increased their performance when switched back to individual incentives (p<.01). Individual incentive pay was rated as the most preferred and most satisfying of the three pay systems, and group incentive pay as the least preferred, least satisfying and most stressful. These data suggest that high performers perform better under individual than group incentive pay after exposure to both and are highly likely to prefer individual incentive pay.

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