Do Bonuses and Other Extrinsic Rewards Guarantee Greater Employee Creativity?

By dint of the very nature of their jobs, managers have to make tough financial decisions. Offering extrinsic rewards—such as bonuses, incentive pay, etc.—is usually not one of them, since it makes intuitive sense that a promise of such rewards boosts employee performance. But does it also boost employee creativity? According to a recent paper published by M. Abdur Rahman Malik, Arif N. Butt, and Jin Nam Choi in the Journal of Organizational Behavior (2014), that may not be the case necessarily.

In their research, Malik and his co-authors argue that extrinsic rewards lead to greater creativity on the part of only those employees who possess two key traits: confidence in their own abilities to perform creatively; and willful ownership of the success and failure of their work. Employees who have both these personality traits—confidence in their creative talent and in their ownership of their output—respond most positively to extrinsic rewards intended to boost creativity. In addition to these two traits, extrinsic rewards enhance employees’ creativity only when the employees consider these rewards as important and valuable.

Also, contrary to popular perception, such rewards are not necessarily neutral in their effects either. A manager may announce a reward intended to increase creativity assuming that in the best case scenario the intended purpose will be achieved, while in the worst case scenario the employee output in terms of creativity will remain the same as before. The evidence presented in the research, however, betrays this assumption. According to the authors, such rewards can actually have negative effects as well, as those employees who either do not consider themselves to be creative, or who think that their success and failure in their task is not entirely up to them, may give up on the creative task assigned to them altogether. As a result, they may shift their energies towards tasks that lead to the goals that they value and that they know they can attain. This will compromise their output with respect to the creative task for which the reward was promised in the first place.

In short, in order to increase employee creativity through extrinsic rewards, managers must target those employees who display the two characteristics mentioned above. This further implies that for managers to be able to identify creative minds from within the workforce, they need to know the personalities of the employees—their priorities, their strengths, and their motivations. The data for this research were collected through questionnaires answered by 181 employee-supervisor pairs.

REFERENCE

Malik, M. Abdur Rahman, Butt, Arif N., & Choi, Jin Nam (2015). Rewards and employee creative performance: Moderating effects of creative self-efficacy, reward importance, and locus of control. Journal of Organizational Behavior, 36(1), 59-74. http://onlinelibrary.wiley.com/doi/10.1002/job.1943/full

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