Does Incentive Pay Motivate Better Workplace Performance?
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Does Incentive Pay for Better Workplace Performance?

Does Incentive Pay Motivate Better Workplace Performance?

For many people in the workforce, completing a hard day in the office and collecting their pay is enough for them. As such, some business leaders dangle a carrot – incentivised rewards – which are supposed to drive performance and engagement therefore providing enterprise growth.

However, this begs a simple question: Does the offer to earn additional revenue or other benefits actually work?

This was recently the subject of a study from The University of Texas at Dallas. Led by Doctoral candidate Joyce Cong Ying Wang, the study analysed two individual characteristics (career ambition and task attention) to understand more about whether these affected the ability to work towards incentivised pay.

Incentivised pay and workplace attitude

Using students who also operate as managers, the study presented various business scenarios where a strategic decision was necessary. In the findings, Ms Wang noted that those with higher career ambitions were more willing to take more risks when incentivised pay is on the table. Managers with strong task attention were also swayed by this type of reward.

“We found that task attention more consistently affects managers’ response to incentive pay,” she said.

“When managers are offered incentive pay, if they are very attentive to tasks, they will take more risks. They tend to invest more strategically, and they also are more likely to change strategies.”

One of the conclusions that Ms Wang took from the report was the business leaders must be smarter with the way that they apply incentive pay. It is not appropriate to have a blanket package when every manager has different ambitions and goals.

“If the manager is ambitious and attentive to tasks, then it’s appropriate to give them performance-based pay to incentivise them to take more risks.”

Fair and equal incentivised pay vital

While it is positive that business leaders are looking at innovative solutions to improve corporate performance, this is something that must apply to everyone, particularly across genders.

Between 1992 and 2005, the New York Federal Reserve investigated the pay of 40,000 executives. The reserve found that female executives were offered fewer incentivised opportunities, compared to their male counterparts. In fact, male executives received rewards worth on average 10 times more – highlighting a clear gender pay gap.

While similar statistics are unavailable in Australia, the gender wage gap remains a hot topic. The Workplace Gender Equality Agency (WGEA) report that men are paid 17.9 per cent more – calculating to around $284 difference per week.

Whether your business is looking to identify incentivised reward options or manage remuneration components, Employee Connect has the tools to help. With smart HR management software, it is possible to move your remuneration in the right direction this year.

Ari Kopoulos

CEO at EmployeeConnect