The Effects of Performance Incentives and Creativity Training on Creative Problem-Solving Performance

Abstract

I investigate the effect of different incentive schemes on employees’ effort and performance in a creative problem-solving task because current literature is divided on the effect of performance-based incentives on creative problem-solving. Using an experiment, I compare two types of performance-based incentives (piece-rate pay and fixed wage plus recognition) with fixed wage alone and examine whether creativity training can moderate the relationship between incentives and creative problem-solving performance. Extending the theoretical predictions from Bonner and Sprinkle’s (2002) incentive-effort-performance model to creative tasks, I predict that the effect of performance-based incentives on creative problem-solving performance will be more positive in the presence of creativity training than in its absence. In the experiment, 120 participants attempted to solve six problems requiring creative insight under time constraints. Creative problem-solving performance is measured as the number of insight problems solved. Significant interactions with training are found for both piece-rate wage and recognition. I find that, without training, piece-rate pay produces lower performance than fixed wage. With training, however, performance is higher under piece-rate pay than under fixed wage. Relative to fixed wage alone, fixed wage plus recognition has no effect on performance without training, but recognition generates higher performance with training. Findings from this study have implications for organizations that need creative output from their employees and are looking to use incentives, either monetary or non-monetary, to motivate superior performance.