THE SEARCH FOR THE OPTIMUM INDIVIDUAL MONETARY INCENTIVE PAY SYSTEM -A COMPARISON OF THE EFFECTS OF FLAT PAY AND LINEAR AND NONLINEAR INCENTIVE PAY SYSTEMS ON WORKER PRODUCTIVITY

This study continued the search for the optimum individual monetary in centive pay system by investigating the effects of a flat pay system a nd three individual incentive pay systems (linear, positively accelera ting and negatively accelerating) on worker productivity. Four experim ents were conducted using a within-subject, multiple-baseline design. Experiment I was a systematic replication of the earlier work of Oah a nd Dickinson (1992) and Experiments 2, 3 and 4 were systematic replica tions of each other with different questions being asked about the eff icacy of the three incentive pay systems. In each experiment, the subj ects worked in groups, ranging in size from four to six members, and w ere exposed to the flat pay system and to one of the incentive pay sys tems while engaged in a simple production task. Subjects participated in twenty (Experiment 1 and 2) to twenty-five (Experiment 3 and 4) fif teen-minute sessions. The production task consisted of constructing '' widgets'' from pop beads. The primary dependent variables were the num ber of correctly made widgets per work session and the cost-per-widget . The four experiments produced mixed results with respect to widget p roductivity and cost-per-widget; however, there were two consistent fi ndings. A systematic relationship between pay and productivity emerged in that, with all four experiments, the incentive pay systems generat ed higher levels of productivity than did the flat pay system. Also, t he three incentive pay systems differentially affected performance lev els and cost-per-widget. Across the four experiments, the negatively a ccelerating pay system emerged as the most reasonable option for pay s ystem designers. This finding suggests that it is not the size of the incentive which controls performance, but rather the fact that there w as a pay-for-performance contingency in place.