A Comparison of the Effects of a Linear and an Exponential Performance Pay Function on Work Productivity

Abstract

This study examined how work productivity was affected by the way in which individual monetary incentives were related to performance. Two types of relationships, or performance pay functions, were compared: a linear function in which a specific per piece incentive was provided for each piece completed in excess of a performance standard and an exponential function in which the amount of the per piece incentive accelerated as productivity increased. Forty college subjects were randomly assigned to one of the two pay conditions. Each subject participated in 15 forty-five minute sessions. Subjects performed a computerized work task that simulated the job of a proof operator at a bank, entering the cash values of simulated bank checks using a computer keyboard. The dependent variable was the number of correctly complcted checks. Productivity was comparable for subjects exposed to the linear and exponential performance pay functions, even though subjects exposed to the exponential function earned significantly more money than the subjects exposed to the linear function. The results suggest that, within certain parameters that have yet to be determined, differences in the way in which monetary incentives are related to performance may not differentially affect performance.