ICS' Park, Burton publish incentives study
Chapter examines outcomes, underlining the sensitivity of incentive design
Director of Research Tae Youn Park and ICS Academic Director Diane Burton of a new book chapter released this month in Research in Personnel and Human Resources Management. The work, authored with ILR HR doctoral student Reed Eaglesham and Jason D. Shaw, Professor at Nanyang Technological University, develops an organizational take on the sensitivity of incentive pay design.
Incentives are effective at enhancing productivity, but research also suggests that performance incentives can have “unintended negative consequences” including increases in hazard/injuries, increases in errors, and reduction in cooperation, prosocial behaviors, and creativity. Relatively overlooked is whether, when, and how incentives can be designed to prevent such negative consequences. The authors review literature in several disciplines (construction, healthcare delivery, economics, psychology, and [some] management) on this issue. This chapter, in toto, sheds a generally positive light and suggests that, beyond productivity, incentives can be used to improve other outcomes such as safety, quality, prosocial behaviors, and creativity, particularly when the incentives are thoughtfully designed. The review concludes with several potential fruitful areas for future research such as investigations of incentive-effect duration.