When Does Pay for Performance Motivate Employee Helping Behavior? The Contextual Influence of Performance Subjectivity

Abstract

An extensive body of literature has demonstrated the incentive effect by which pay for performance (PFP) motivates employees’ in-role task performance. Nonetheless, scholars have also posited that PFP is likely to demotivate employees’ extra-role behaviors. Drawing upon expectancy theory (Vroom, 1964) and the heuristic processing literature (Kahneman, 2011), we examine the relationship between PFP and employee helping behavior. We perform this examination not only by considering the “pay” component (e.g., PFP intensity) but also by scrutinizing the “performance” component; namely, performance subjectivity, which refers to the extent to which the criteria or indicators used to measure employee performance in the performance appraisal system are subjective. Specifically, we propose that PFP has a conditional positive effect (i.e., in the context of high performance subjectivity) on employee helping behavior, and further theorize and test the underlying psychological mechanism by which individual perceived helping–performance expectancy accounts for the interactive effects between PFP and performance subjectivity on employee helping behavior. The empirical results of three studies employing distinctive methodologies provide general support for our hypotheses. Taken together, our research challenges the conventional wisdom that PFP undermines employees’ extra-role behaviors by providing new insight into understanding when and why PFP motivates employee helping behavior.

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