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 performance-based 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. One hundred and twenty participants attempted to solve six creative insight problems under time constraint. Creative problem-solving performance is measured as the number of insight problems solved. As predicted, significant performance incentive by creativity training interactions are found for both the piece-rate pay and the fixed wage plus recognition. Without training, piece-rate pay produces lower performance than fixed wage alone. With training, however, performance is higher under piece-rate pay than under fixed wage alone. Relative to fixed wage alone, fixed wage plus recognition has no effect on performance without training, but fixed wage plus recognition generates higher performance with training. Supplemental analysis reveals that individuals receiving performance-based incentives (piece-rate pay or fixed wage plus recognition) and training spent less time solving each problem than those receiving performance-based incentives and no training, suggesting that the combination of performance-based incentives and training increases individual efficiency. Further, regardless of incentive scheme, individuals display a similarly high level of interest in the task, suggesting that intrinsic motivation was not negatively affected by tying incentives to task performance. Findings from this study have implications for organizations that seek to motivate creative performance using either monetary or non-monetary incentives.