The relationship between incentives and employee performance is well documented, but what role do employee needs play in this? A recent US study examined the role of the human needs for autonomy, competence, and relatedness, in incentivized performance contexts and found them to be contributing factors in predicting performance. This study also found that the relationship between performance and need satisfaction was moderated by the extent to which incentives were directly linked to performance.
Key Topics: Employee motivation; Employee needs; Rewards; Productivity; Autonomy; Competence; Relatedness
Title of Reviewed Article: Performance, incentives, and needs for autonomy, competence, and relatedness: a meta-analysis
Researchers: Christopher P. Cerasoli (The Group for Organizational Effectiveness, Inc.), Jessica M. Nicklin (University of Hartford), and Alexander S. Nassrelgrgawi (University at Albany).
Publication: Motivation and Emotion, 2016, Vol. 40 No. 6, pp. 781–813.
Setting the Scene
Self-determination theory (SDT; Ryan & Deci, 2000) is one of the foremost theories of human motivation, and argues that for optimal functioning across the various areas of life, people require the satisfaction of three basic psychological needs: the need for competence, autonomy, and relatedness.
The need for autonomy reflects the need to experience self-determination and for people to be causal agents of their environment (Deci & Ryan, 1987). Autonomy is related to performance in a number of ways, with ownership of actions and circumstances, perceived volition, and freedom of choice all linked to greater performance (e.g. Reeve, 2009). Conversely, when autonomy is suppressed or individuals feel manipulated, it can lead to reduced effort and performance (Kane, 1997).
The need for competence relates to the individual’s need to demonstrate and improve their abilities, and as such, when a person’s performance cannot be evaluated, their effort and performance is likely to decrease (Karau & Williams, 1993).
Relatedness needs relate to the general desire to meaningfully connect with others, and be respected and valued (Deci & Ryan, 2000). Meeting relatedness needs has been shown to improve performance, while performance has been shown to decrease when controlling relationships are imposed (Moss & St-Laurent, 2001) or when authority figures are not respected (Porath & Erez, 2009).
Despite the established importance of need satisfaction, in work performance contexts their importance has been slow in being established. This study looks to examine the need satisfaction-performance relationship for the three needs of competence, autonomy, and relatedness.
Research further suggests that need satisfaction can be influenced by the type of task being undertaken (Cerasoli et al., 2014), the presence of incentives (Deci et al., 1999) and the extent to which they are directly linked to performance (Cerasoli et al., 2014), and these factors are further examined in this study.
This study puts forward a number of Hypotheses:
Hypothesis 1 – “Perceived autonomy is positively related to performance.”
Hypothesis 2 – “Perceived competence is positively related to performance.”
Hypothesis 3 – “Perceived relatedness is positively related to performance.”
Hypothesis 4 – “The relationship between perceived need satisfaction and performance is stronger for quality tasks than quantity tasks.”
Hypothesis 5 – “In the presence of incentives, overall need satisfaction is lower when incentives are directly (versus indirectly) performance salient.”
Hypothesis 6 – “In the presence of incentives, the predictive validity of need satisfaction is attenuated for directly-salient incentives and augmented for indirectly-salient incentives.”
How the research was conducted
This study sought to carry out a meta-analysis review of prior research on performance, incentives, and the need for autonomy, competence, and relatedness.
The researchers searched a number of databases (e.g. psycINFO, PubMed) for published studies up to 2015. They searched for studies relating to combinations of the needs of autonomy, competence, relatedness coupled with performance. In total, 96 studies, which captured 30,648 participants, were included in the final analysis for the study.
In review of these studies, the researchers also captured employee incentives, and these were coded as directly-performance salient, where there was a clear direct incentive-performance link, and coded as indirectly-performance salient where there was an indirect or ambiguous incentive-performance link.
Various other factors were also examined in the studies, such as differences in tasks, performance contexts, participant demographics, and location of study. In total 30 moderating factors were examined.
Key Research Findings
The results indicated that perceived autonomy was a predictor of performance, and as such Hypothesis 1 was supported.
Perceived competence was also found to be predictor of performance, supporting Hypothesis 2.
Hypothesis 3 was also supported, as perceived relatedness was found to be a predictor of performance.
The results indicated that need satisfaction is a greater predictor of performance quality than of performance quantity, which supports Hypothesis 4.
In the presence of incentives, overall need satisfaction was found to be lower when incentives were directly, rather than indirectly, performance salient.
Similarly, in the presence of incentives, the predictive validity of need satisfaction was found to be lower for directly-salient incentives and higher for indirectly-salient incentives. This finding supports Hypothesis 6.
The finding that performance is positively related to all three psychological needs accessed is unsurprising; those who perceive that their needs are being met are more likely to outperform those who do not.
This positive relationship between needs and performance was strongest in relation to the need of competence, which is consistent with a number of prior studies that indicated that those with higher self-efficacy are more likely to be higher performers (Stajkovic & Luthans, 1998).
Consistent with research on intrinsic motivation and incentives (Cerasoli et al., 2014; Deci et al., 1999), what the results highlight is that the impact of incentives on performance is dictated by the salience of those incentives; need satisfaction can be undermined when incentives are directly tied to performance and vice versa.
Prior research has suggested that incentives alone predict performance (Jenkins et al. 1998), however this study extends this assertion by establishing that need satisfaction and incentives play a role in performance contexts. The presence of incentives alone does not appear to effect need satisfaction, and indeed incentives that are more indirectly linked to performance increase need satisfaction.
Organizational and Reward Implications
The results of this study provide strong evidence that key relationships exist between incentives, need satisfaction, and performance, and that focusing on employee psychological need satisfaction can have direct performance benefits.
For companies, satisfying the psychological needs of employees should be viewed as central to performance, rather than a ‘nice to have’. This study indicates that companies looking to increase employee engagement, performance, and general wellbeing should implement policies that assist employees in meeting their autonomy, competence, and relatedness needs.
One such initiative would be the development of a goal setting system, which would encourage employees to set and strive for specific and attainable goals, which would likely improve employees’ perceptions of competence and self-efficacy (Locke & Latham, 2002), and in turn performance.
This study provides much needed focus on the combined role of incentives and need satisfaction in employee performance contexts, and further highlights that the needs for autonomy, competence, and relatedness matter in the behaviour of employees, as does the salience, and not just the presence of incentives. The comprehensive meta-analytic review of prior research carried out for this study provides strong support for its findings.
Source Article: Cerasoli, C. P., Nicklin, J. M. & Nassrelgrgawi, A.S. (2016). Performance, incentives, and needs for autonomy, competence, and relatedness: a meta-analysis. Motivation and Emotion, 40(6), 781–813.
Published by: Springer International Publishing
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