The interactive effect of organizational identification and reward type on reward valuation

Abstract

Recent management trends highlight two techniques firms use to motivate employee effort: (1) fostering employees' organizational identification (OI) and (2) offering employees tangible rewards such as gift cards instead of cash rewards. We use three studies to examine how OI affects employees' reward valuation and how such effects differ depending on the reward type. Study 1 is an experiment, demonstrating that increasing OI increases the emphasis participants place on a reward's symbolic value, which then increases the total value of the reward—to a larger extent when the reward is tangible than when it is cash. Study 2 is an experiment, providing evidence that Study 1 results are robust to using a tangible reward that is not socially consumed, that is selected either by the firm or by the employee, and that is either a good or poor fit with the employee's personal preference. Finally, Study 3 is a survey, asking respondents about actual rewards they received from their current employer and capturing their actual OI with their current employer. Results in Study 3 are inferentially similar to those in Study 1 and Study 2, albeit stronger for rewards of smaller monetary value. Collectively, these results highlight the particular benefit of strong OI on how employees value tangible rewards relative to cash rewards, which should be of interest to incentive system designers.

We're in This Together: The Motivational Effects of Tangible Rewards in a Group Setting*

“…In combination, our three experiments add important pieces to the puzzle that complement prior evidence on how tangible rewards relate to goal setting (Presslee et al 2013), reward framing (Kelly et al 2017; Choi and Presslee 2022), creativity (Cardinaels et al 2020), reward frequency (Newman et al 2022), organizational identification (Kelly et al 2021), and cost savings (Jeffrey and Shaffer 2007). Although all these phenomena are important, we take a different bent by focusing on two additional phenomena—group uncertainty and the attractiveness of a shared experience among coworkers who like each other—that can further shape the effects of tangible rewards in group settings.…”

“…In particular, the positive incremental effect of a shared experience group reward in our second and third experiments occurs only when coworkers tend to like each other. A conceptually distinct but perhaps related insight is Kelly et al's (2021) recent evidence that a strong sense of organizational identification can enhance the effectiveness of tangible rewards in an individual‐reward setting. We encourage further research on the social factors that condition the effectiveness of both monetary and tangible rewards.…”