The Real Impact of Incentives on Performance at Work

What empirical impact do extrinsic and intrinsic motivators have on company performance?

Incentive Programs Boost Performance

A 2010 meta-analysis conducted the International Society of Performance Improvement (ISPI) found that properly constructed incentive programs increase performance by anywhere between 25 and 44 percent. The same study found that these incentive programs engage participants and help companies attract quality employees.

Conditions for Success

According to the researchers, a properly constructed incentive program accounts for psychological factors that drive human behavior.

  • The cause of inadequacy performance is due to a deficiency in motivation
  • The desired performance can be quantified
  • The goal is challenging but achievable
  • The desired behavior does not conflict with other organizational goals
  • Incentive programs structured with employee input work best

Incentives in the Retail Sector

A fourth study by Cornell University on performance-based incentive plans in the retail sector also found that the implementation of a performance-based incentive program is associated with increases in sales that persist and increase over time.

Income, Happiness, and Motivation

Popular research Daniel Kahneman and Angus Deaton on the link between income and emotional wellbeing found that emotional wellbeing rises with income but only up to US$75,000, and that a high income improves life satisfaction but not happiness.

Motivating High-Paid Employees

Per Abraham Maslow, once people have their basic needs satisfied, they look to satisfy their higher needs, and so the same holds true for motivating top-tier employees.

Founder: Collective Campus, Host: Future Squared, Author: Time Rich & Employee to Entrepreneur. Clubhouse: @steveglaveski Visit: steveglaveski.com #MELB

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