Wording and Saliency Matter: The Impact of Incentive System and Organizational Value Statement on Employees’ Performance

Abstract

A recent focus within the management control literature has been the recognition of the need to consider how packages of controls interact to influence employee behavior. This study extends recent research on the interaction of formal and informal controls. We use a sequence of two experiments to expand upon research by Kachelmeier, Thornock, and Williamson (2016) who find that a value statement focused on quality can moderate productivity associated with incentive schemes. Experiment 1 replicates Kachelmeier et al., but substitutes a general organizational value statement in place of a quality specific statement and finds that the same basic interactive effect occurs—a value statement increases (decreases) productivity associated with fixed pay (piece-rate) incentives. Experiment 2 further extends the work on value statements by considering the espoused management best practices of broadly reinforcing the value statement to increase the statement’s saliency with employees. The results of the second experiment confirm that enhancing the saliency of the organizational value statement through active delivery, as opposed to the passive delivery used in previous studies, increases the moderation effect. These results contribute to the growing stream of research that is beginning to explore the interactive effects of packages of controls.