Academic Research in Action: How Tangible Rewards Drive Superior Worker Performance and Quality in Tasks Not Directly Compensated

An intriguing recent study provides robust support for the conclusion that tangible rewards effectively drive higher engagement and performance on uncompensated task dimensions by eliciting emotional (affective) rather than purely calculative (i.e. transactional) responses.

Numerous previous research supports the core theoretical framework of the study by explaining why tangible rewards elicit affective responses and positively influence uncompensated task dimensions. These include but are not limited to:

• Hsee & Rottenstreich’s, Affect Valuation Theory (2004), which directly supports the core theoretical framework of the study by explaining why tangible rewards elicit affective responses and positively influence uncompensated task dimensions.

• Scott Jeffrey’s “Justifiability and Motivational Power of Tangible Non-cash Incentives” (2009) which provides foundational empirical evidence demonstrating that tangible rewards can lead to higher task performance compared to cash rewards through increased hedonic valuation and emotional attachment.

• Kelly, Presslee, & Webb’s “Field Study on Tangible vs. Cash Rewards”, (2017) which offers real-world evidence confirming that tangible rewards often outperform cash incentives, particularly by improving the motivation of lower-performing employees, aligning closely with the spillover effect identified in the current study.

The author’s integration of affect valuation theory, mental accounting, and empirical evidence across laboratory and field settings strengthens confidence in his findings. However, caution is needed regarding its generalizability to broader, diverse workplace environments.

Key Findings:

• Compensated Task Dimension: The study finds no significant difference between tangible and cash rewards in motivating performance on explicitly incentivized tasks. Both reward types drive similar performance levels when employees directly receive incentives for task completion.

• Uncompensated Task Dimension: Tangible rewards significantly outperform cash rewards in motivating higher performance on tasks that employees are not directly incentivized to perform (spillover effect).

Theoretical Explanation:

• Affect Valuation Theory: This theory argues that tangible rewards (e.g., gift cards, travel) elicit more emotional (affective) valuation, whereas cash rewards encourage calculative mindsets. Employees motivated by cash rewards become focused solely on measurable, compensated dimensions, neglecting uncompensated aspects of tasks due to the emphasis on financial benefit. Conversely, those receiving tangible rewards develop more holistic engagement, performing better even on dimensions lacking direct incentives.

Implications:

• Research Contributions: The study extends prior research on tangible rewards and partial incentives by demonstrating the positive spillover effects tangible rewards have in multidimensional environments, offering new insights into reward system effectiveness.
• Practical Implications: Organizations are encouraged to use tangible rewards to improve employee engagement on important but difficult-to-measure task dimensions, highlighting the strategic role of reward choice in performance management.

Actionable Takeaways for Leaders

1. Utilize Tangible Rewards to Enhance Intrinsic Motivation

• Leverage tangible (non-cash) rewards, such as gift cards, merchandise, or experiences, to motivate employees on tasks or behaviors not explicitly incentivized.
• Such rewards foster emotional attachment (affective valuation), leading to increased effort and better overall performance—even on uncompensated dimensions.

2. Combine Tangible and Cash Rewards Strategically

• Maintain cash incentives for directly measurable and compensated tasks, but complement them with tangible rewards to encourage higher-quality work and engagement in aspects of work not directly rewarded financially.

3. Focus Tangible Rewards on Tasks with Spillover Potential

• Employ tangible incentives in multidimensional environments where certain essential performance dimensions are difficult to explicitly measure or compensate.
• Doing so reduces negative spillover effects (ignoring uncompensated aspects) and boosts performance holistically.

4. Be Aware of Employees’ Psychological Mindsets

• Recognize that cash rewards may promote a highly calculative mindset, increasing employees’ tendency to prioritize personal financial gains at the cost of overall task quality or teamwork.
• Tangible rewards help reduce overly self-interested behavior by fostering a broader, more engaged outlook on work tasks.

5. Leverage Tangible Rewards to Shape Organizational Culture

• Use tangible incentives to strengthen positive social norms, cooperation, and engagement within teams.
• Gift cards or experiences can become powerful symbols reinforcing organizational values and culture.

6. Regularly Evaluate and Adapt Reward Programs

• Continually assess whether the rewards provided align with desired employee behaviors and organizational goals, particularly regarding uncompensated or intangible aspects of tasks.
• Adapt reward types based on ongoing performance outcomes and employee feedback to sustain motivation effectively.

7. Clearly Communicate the Purpose of Rewards

• Clearly articulate why specific rewards are chosen (e.g., to foster collaboration, attention to detail, creativity) so employees understand the deeper purpose behind reward structures.
• Transparency strengthens employee trust, engagement, and acceptance of reward programs.

While tangible rewards and cash rewards are similarly effective on explicitly incentivized tasks, tangible rewards uniquely enhance employee motivation and performance on important but non-incentivized task dimensions.

Appendix A: The Experiment, Methods and Outcomes Explained

Experiment

• Modified Slider Task:
  • Participants worked individually on a computerized task for 10 minutes, adjusting sliders along a scrollbar (0 to 1000) to a specified target number.
  • Each slider adjusted within ±50 units of the target was considered successfully positioned (quantity dimension—compensated).
  • Accuracy (how close the slider was to the exact target) represented the uncompensated dimension (quality dimension—uncompensated).

Participants were randomly assigned to one of two reward conditions:

• Cash reward: Participants earned $0.10 per successfully positioned slider.
• Tangible reward: Participants earned a Starbucks gift card valued equivalently at $0.10 per successfully positioned slider.

All participants also received a fixed wage ($3.00) plus their performance-based reward.

Measures of Performance:

• Compensated Dimension: Number of sliders correctly positioned within the acceptable range (quantity).
• Uncompensated Dimension: Accuracy of slider positioning, measured as the average distance from each slider’s target number (quality).

Key Findings:

• Compensated Dimension: No significant difference in performance between the cash and tangible reward groups.
• Uncompensated Dimension: Participants receiving tangible rewards significantly outperformed those receiving cash rewards, indicating tangible rewards enhanced motivation and engagement beyond explicitly incentivized tasks.

Psychological Mechanism Tested:

• The experiment included a survey measuring participants’ calculative mindset to explore whether cash rewards induced a higher calculative (self-interested, financial) mindset compared to tangible rewards, as predicted by affect valuation theory.

Conclusion and Implications:

• Tangible rewards provide motivational benefits extending beyond incentivized tasks, effectively improving overall performance in multidimensional environments.
• Organizations may benefit by strategically utilizing tangible rewards to enhance performance across critical but difficult-to-incentivize task dimensions.