Introduction
The authors recognize the value of incentives to promote behaviors that lead to desired performance outcomes. In this article, they examine how individual and group incentives can be weighted to achieve the greatest results within and across workgroups, with an emphasis on sharing knowledge.
Article
Siemsen, E., Balasubramanian, S., & Roth, A. (2007). Incentives that induce task-related effort, helping, and knowledge sharing in workgroups. Management Science, 53(10), 1533-1550. doi:10.1287/mnsc.1070.0714
Background
The authors begin by identifying three types of inter-employee linkages within workgroup contexts:
- outcome linkages, whereby one employee’s outcome is influenced by another, such as on a manufacturing assembly line;
- help linkages, in which co-workers can assist one another, as with sales representatives covering each other’s territories;
- knowledge linkages, in which work-related knowledge that improves performance is shared, as when experienced employees share “tricks of the trade” with new hires.
Work groups linked by outcome require coordinated efforts in order to be successful. For help and knowledge linkages, cooperation is key to optimal performance. The authors discuss the roles of group versus individual incentives in achieving optimal performance. They stress that incentive systems designed to elicit the desired levels of cooperation and coordination must consider factors such as the tension of cooperation’s benefits versus incentive-related risk. For example, will employees be unwilling to help each other if they have the perception that although the group may benefit by meeting goals, they may be penalized for taking time away from their regular duties?
The authors present potential models for gauging what incentive types work with each linkage, as well as for combinations of help/outcome and knowledge/outcome linkages. The models account for the impact of individual and group incentives (both positive and negative) on each other and on individual performance outcomes.
The article lists several caveats and assumptions regarding their model designs:
- they focus on two-person workgroups for analytical tractability;
- they view incentives to be linear in task outcome levels;
- they assume that task outcomes increase with task-related effort;
- they consider the effects of uncertainty outcomes based on moral-hazard research.
Research Design
The authors refer to the literature to validate most of their models. They did conduct an empirical study focused knowledge linkages. Their own research was structured to gather data supporting their hypotheses regarding incentives for increasing knowledge sharing in workgroups.
Hypothesis 1. The effect of group rewards on an employee’s perception of being rewarded for sharing knowledge with a co-worker increases in the presence of individual rewards.
Hypothesis 2. The effect of an employee’s perception of being rewarded for sharing knowledge on his motivation to share increases when the knowledge to be shared is considered useful.
The study involved four companies in various service/manufacturing and blue collar/white collar firms in both the public and private sectors:
- a job shop on an assembly line at an aircraft components manufacturer (technicians)
- a project unit in power station design at a public utility (engineers)
- an assembly line at a private food manufacturing company (line workers and technicians)
- an IT project unit at a public university (IT professionals).
In each instance, the entire department or plant was surveyed. Employees were offered incentives to participate with the promise of anonymity. Response rates ranged from 11% to 54%. Sample data was collected as to union membership, age, job tenure, gender, and education.
The survey was developed specifically for this study and consisted of a series of statements with responses collected on a 7-point Likert scale (from “strongly disagree” to “strongly agree”). Statements corresponded to the following constructs:
- RS (rewards for sharing knowledge) A perceived benefit from knowledge sharing that the sender believes originated with the company
- IR (individual rewards) A perceived benefit for individual performance that the sender believes originated from the company
- GR (group rewards) A perceived benefit for group performance that the sender believes originated from the company
- MS (motivation to share) The sender’s inner drive to share knowledge with the recipient
- UT (usefulness) The sender’s perception that the knowledge he or she possesses is of particular use to the recipient
Dummy statements related to education, gender, age, gender, and management role were included as controls. The authors used established statistical models to predict employee motivation to share and an employee’s perceived rewards for knowledge sharing.
Findings
The authors findings support both hypotheses regarding knowledge sharing. As the usefulness of knowledge increases, the effect of incentives on motivation to share increases. The effect of group rewards or individual rewards on knowledge-sharing increases the effect of the reciprocal reward component. The interactions were found to be statistically significant (p ≤ .05) in both cases.
In practical terms, the authors find that individual and group incentives play complementary roles where knowledge linkages exist. Individual incentives play a positive role in ensuring that shared knowledge is used to increase the recipient’s productivity. Group incentives increase the likelihood that knowledge senders will engage in knowledge sharing, since senders will realize the benefits of the recipient’s improved performance. When the sender perceives the knowledge to be especially useful to the recipient, the motivation to share is further enhanced. Thus, it is useful to consider not only the sender but also the recipient in knowledge linkages.
The authors’ findings on knowledge-sharing linkages as well as their analysis of models for help and outcome linkages have implications for managers creating incentive plans to improve performance. Being mindful of the complex nature of employee interactions and work processes can help managers design effective plans for optimal performance incentives.
Questions for IPT-N Members
What types of employee linkages exist in your organization? Have you found group or individual incentives (or some combination of the two) to be more helpful in driving optimal performance?
Have you encountered situations where reward incentives were actually counterproductive? What do you see as causal factors in such situations?
Workplace Oriented Research Central (WORC)
Prepared by OPWL Graduate Assistant, Susan Virgilio
Directed by OPWL Professor, Yonnie Chyung
Posted on October 1, 2012