Decision of Incentives Type in Power Holders’ Hands: Joint Evaluation as a Cause of Overemphasize on Monetary Incentives

Abstract

Most organizations emphasize monetary incentives more than non-monetary incentives. The practice is still common although ample of research showed it might have detrimental effects on performance and produce less satisfaction. Power holders in organization are responsible for this because the decision of incentives system is mainly on them. Recent research by Shaffer and Arkes (2009) suggest that people are prone to preference reversals of incentives type, in which they said they prefer to have monetary incentives but indicated more satisfaction with non-monetary incentives. Evaluation of both incentives together in joint evaluation (JE) mode elicits preference for monetary incentives; meanwhile separate evaluation (SE) mode elicits preference for non-monetary incentives. Power holders acknowledge both monetary and non-monetary incentives when they have to decide which incentives type to implement. That means power holders are in JE mode and it elicits more preference on monetary incentives. Thus, it might explain why organizations - via power holders’ decision - emphasize more on monetary incentives. Further implications and possible remedies are discussed.



Author Information
Herman Yosef Paryono, Leiden University, The Netherlands

Paper Information
Conference: ACSS2015
Stream: Economics and Management

This paper is part of the ACSS2015 Conference Proceedings (View)
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