An Undesired Effect of Cash Incentives

Most career sales jobs have a commission pay structure. In addition, many companies pay bonuses in attempt to motivate employees to stretch themselves and improve performance. Pay for performance is a time-honored compensation strategy, but recent research shows that people who are rewarded based on performance think differently about money than people who receive a fixed salary. The performance pay approach risks encouraging workers to focus on pay and not on the work. According to a report, commission-based workers express more desire for money than people who receive fixed salaries – even when the amounts they earn are similar. In a study by Loran Nordgren, an associate professor of management and organizations at Northwestern University’s Kellogg School of Management, participants