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https://doi.org/10.1177/0886368717750904
Compensation & Benefits Review
1 –17
© 2018 SAGE Publications
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DOI: 10.1177/0886368717750904
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Article
Introduction
Compensation is one of the most important
organizational cost; companies spend a fifth
to half of their operating budget, represent-
ing billions in workforce salary,1,2 and they
are increasingly seeking to leverage their
compensation practices to attract top per-
forming employees and increase their com-
petitive edge and competiveness on the
market.3-6 One of these practices, the use of
financial incentives and cash rewards, has
stirred much controversy, with research and
application showing divergent results on
employees’ motivation, engagement, perfor-
mance, and work ethic.7-13
750904CBRXXX10.1177/0886368717750904Compensation & Benefits ReviewThibault Landry et al.
research-article2018
Corresponding Author:
Jacques Forest, ESG UQAM, ORH Department,
CP 8888, Downtown Station, Montréal, Québec,
Canada H3C 3P8.
Email: forest.jacques@uqam.ca
The Carrot or the Stick?
Investigating the Functional
Meaning of Cash Rewards and
Their Motivational Power
According to
Self-Determination Theory
Anaïs Thibault Landry, UQAM; Jacques Forest, ESG UQAM;
Drea Zigarmi, The Ken Blanchard Companies; Dobie Houson,
The Ken Blanchard Companies;
and Étienne Boucher, Normandin Beaudry
Abstract
As much debate exists concerning the beneficial effect of using financial incentives to motivate
employees in the scientific and practitioner literature, the current research explored employees’
perceptions of the cash rewards they receive at work to better understand their motivational
impact. A model based on self-determination theory and its postulates concerning the
functional significance of rewards was tested in two studies, one with Canadians and another
with international workers. Results from path analysis indicate that through their impact on
employees’ psychological needs, cash rewards perceived as informational lead to healthier
forms of motivation, greater psychological health, and better overall work intentions than
cash rewards perceived as controlling. These findings suggest that compensation plans must
be carefully studied, designed, and implemented with the workforce to avoid overemphasizing
the reward contingencies in employees’ eyes, having a deleterious impact on their motivation,
and giving rise to unwarranted consequences on their psychological health and work behaviors.
Keywords
self-determination theory, functional meaning, cash rewards, psychological needs, motivation,
psychological health, work intentions
2 Compensation & Benefits Review 00(0)
The current research aims to shed light on
the effect of cash rewards using concepts from
self-determination theory (SDT).14 Originating
from social psychology, with its 40 years of
empirical research, SDT can help explain why
using financial incentives healthily motivate
employees and lead to beneficial outcomes
under some circumstances, or be detrimental
under other circumstances. Putting forth a
long-neglected concept in SDT, we propose
that this differential effect lies in the functional
significance of cash rewards, that is, in the sub-
jective meaning that employees attribute to the
cash reward they receive. We first review and
then empirically test, in a set of two studies,
SDT’s postulates that cash rewards can take on
different meanings depending of employees’
perceptions, and therefore be experienced as
informational if they contribute to the satisfac-
tion of employees’ basic psychological needs,
or controlling if they contribute to the frustra-
tion of those same needs. The resulting psycho-
logical need satisfaction or frustration then
determines whether the cash reward has a
healthy or unhealthy effect on employees’
work attitudes and behaviors. In doing so, we
aim to bridge the gap between social psycho-
logical theories on human motivation and the
organizational incentive literature,15-17 thus
helping the academic as well as the practitioner
community to conciliate the seemingly contra-
dictory findings and deepen our understanding
as to how to best leverage cash rewards in the
workplace.
Cash Rewards and
Motivation According to
SDT
Based on the premise that money is one of
the best motivators, companies are increas-
ingly using one form or another of financial
incentives.18-20 Indeed, in the field and as
reported in the organizational incentive lit-
erature, a number of studies indicate that
employee performance increases when
using money as a reward such as bonuses,
short-term incentives and pay for perfor-
mance plans.21-26 However, research in the
field of social psychology delving into the
subject suggests more mitigated results:
first, this boosting effect only seems to be
temporary as performance quickly revolved
back to its normal level after a few weeks27;
second, this boosting effect only affects the
quantity of output, and this, at the cost of its
quality.28 In other words, due to a motiva-
tional shift, employees produce more, but of
lesser quality, which on the longer run risks
hindering both individual and organiza-
tional productivity.29-31
To better understand this motivational shift,
SDT postulates that human motivation can
best be qualified as a continuum that ranges
from autonomous to controlled.32 Accordingly,
individuals experience intrinsic motivation
when they engage in an activity for fun and
pleasure, and identified motivation when they
engage in it because they perceive it as coher-
ent with their identity, their personal values
and goals.33 Together, these two types of moti-
vation comprise the autonomous pole of moti-
vation and, in more general terms, individuals
who are autonomously motivated are said to
appreciate the activity in-and-of itself and par-
take in it voluntarily, without external pressure
nor gain to make. In line with this definition,
autonomous motivation is said to be a healthy
form of motivation as it relates positively to
psychological health and optimal functioning,
both in general life and at work. To this point,
many studies in the work setting have repli-
cated the finding that autonomous motivation
is positively associated with psychological
health, as well as organizational commitment
and performance.34-37
Autonomous motivation is said to arise
when individuals feel that their three basic
psychological needs, namely, the need for
relatedness (or social affiliation and connect-
edness), the need for competence (or personal
efficacy and belief in personal potential) and
the need for autonomy (or self-reliance and
appropriate guidance without interference),
are fulfilled.38 As such, satisfaction of these
psychological needs in a single context leads
to autonomous motivation for the said activity
and many studies concur this finding,39
including in the work setting.40,41 Conversely,
active thwarting, or frustration, of these same
Thibault Landry et al. 3
needs has been found to be negatively associ-
ated with autonomous motivation, and even
positively associated with increased levels of
controlled motivation.42
At the opposite end of the motivational
spectrum, both introjected and extrinsic moti-
vations are used to describe a means-to-an-end
mindset, where the individuals partake in the
activity to progress toward a goal, and together
they form the controlled pole of motivation.43
Hence, controlled motivation better describes
motivation originating from external sources,
such as external pressure, feelings of guilt or
uneasiness, rewards and potential gains, and
individuals with this type of motivation engage
in the activity in anticipation of the expected
return that they either will get or avoid, thus
leading them to view their participation as
instrumental in reaching a finality.
In this light, controlled motivation is gener-
ally considered a less healthy form of motivation
as it is associated with less optimal functioning
and psychological health.44 Several studies in a
variety of settings, including the workplace,
have shown that controlled motivation is associ-
ated not only with lower psychological well-
being but also with greater psychological
ill-being.45 More particularly at work, it has
been related to diminished level of organiza-
tional commitment and engagement.46,47 To this
matter, controlled motivation is generally traced
back to lower psychological need satisfaction
and greater need frustration.48 Indeed, many
studies show that need frustration may be a bet-
ter predictor of controlled motivation as it con-
cerns specifically the direct impediment of
individuals’ psychological needs and not a mere
passive lack of need satisfaction.49,50
In line with SDT postulates, using finan-
cial incentives, and more generally allocat-
ing cash rewards based on performance
contingencies, would appear to create a dual
effect by increasing controlled motivation,
while simultaneously eroding autonomous
motivation.51-54 The mechanism behind this
effect would be that the increased saliency of
the reward and its contingency would lead
individuals to focus on it, thus operating a
change from genuine appreciation of the
activity to viewing it as accessory to get the
reward.55,56 With time, the reward would
gradually be perceived as a means to control
their behavior, as individuals experience
diminished feelings of self-determination
and intrinsic enjoyment toward the activity,
and their autonomous motivation fades.
Interestingly, this motivational shift fol-
lowing the introduction of financial incentives
has also been associated with organizationally
deviant behavior.57 Indeed, research in spe-
cific job industries such as salesforces as well
as with adults from a variety of other contexts
(e.g., sports, education) has shown that overly
stressing financial incentives can increase
problematic work behaviors such as dishonest
reporting, manipulative sales, cheating and
lying in order to get the cash reward.58-63 This
suggests that by overly focusing on the
rewards, individuals with controlled motiva-
tion are prompted to adopt a “the-end-justi-
fies-the-means” mentality and try to game the
system. Taken together, these findings imply
nonnegligible consequences for the work set-
ting as the impact of financial incentives on
performance could be greater than originally
anticipated, influencing not only employees’
work attitudes and behaviors in terms of the
efforts, engagement and commitment they
choose to invest in their job but also increas-
ing their propensity for deviant behavior.
The Functional Significance
of Cash Rewards
Despite the evidence from laboratory studies
and others contexts (e.g., sports, education)
showing the detrimental effect of using cash
rewards, these practices remain popular as
many studies from the business field have
shown that they can help organizations reach
their performance goals.64 How then can these
seemingly contradictory findings be concili-
ated? And more important, how can financial
incentives be leveraged to foster healthy
forms of motivation and avoid unhealthy
ones? To answer this question, SDT proposes
that external factors such cash rewards can
take on different meanings depending on how
they are presented to employees.65,66 More
specifically, cash rewards can be presented in
4 Compensation & Benefits Review 00(0)
a supportive way, thus conferring them an
informational meaning, or in an oppressive
way, giving rise to a controlling meaning.67-69
In general, rewards are experienced as
informational when they are presented in a
way that encourages individuals’ efforts and
participation in the activity.70 This would sub-
sequently fulfill individuals’ basic psycholog-
ical needs, suggesting a direct link between
the informational meaning of rewards and sat-
isfaction of the basic psychological needs. On
the other hand, rewards are experienced as
controlling when they are presented in a way
that constraint individuals and enhance the
pressure they feel. This would consequently
thwart their basic psychological needs, thus
reflecting a direct link between the controlling
meaning of rewards and frustration of the
basic psychological needs.
With regard to the workplace, previous
research has shown that the psychological
needs for competence and autonomy are the
most relevant and directly targeted by current
compensation practices.71-74 The rationale
behind this would be that offering cash
rewards for reaching specified levels of per-
formance should heavily weight on individu-
als’ need for autonomy as it influences
whether they feel pressure or volitionally
chose to engage in the stipulated behavior.75,76
More precisely, in line with the concept of
functional significance, when perceived as
informational, financial incentives should be
experienced as encouraging employees to
demonstrate the expected behavior and to feel
that its demonstration is self-determined,
whereas when perceived as controlling, finan-
cial incentives should be experienced as
coercing employees to meet the organiza-
tional requirements, constantly reminding
them of what they ought to do, and forcing
them to endorse behaviors that are purely
accessory to getting the reward.
The need for competence also appears
directly relevant to the issue at hand to the
extent that cash rewards are provided as a token
of one’s ability to reach the specified goal.77,78
As such, when perceived as informational,
cash rewards should help fulfill employees’
need for competence, as they are emblematic
of goal attainment, representing an acknowl-
edgement of skills and ability at work.
However, when perceived as controlling, cash
rewards should thwart employees’ competence
need as they constantly remind employees of
the goal to attain and the required level of skills
and ability needed to reach it.
The Present Research
Based on the current review of the literature
and postulates from SDT, the present research
investigates the empirical validity of the func-
tional significance of cash rewards. Exploring
employees’ perceptions, we tested a model in
which cash rewards experienced as informa-
tional lead to healthier motivation and work
outcomes through increased satisfaction of
employees’ psychological need, while cash
rewards experienced as controlling lead to
less healthy motivation and detrimental con-
sequences through increased frustration of
these same needs. More precisely, we focused
specifically on the psychological needs for
competence and autonomy and we formulated
the following hypotheses:
Hypothesis 1a: Through greater compe-
tence and autonomy need satisfaction and
lower competence and autonomy need
frustration, the informational meaning of
cash rewards will lead to greater autono-
mous motivation and lower controlled
motivation.
Hypothesis 1b: In turn, greater autono-
mous motivation and lower controlled
motivation will lead to greater and more
positive work attitudes and behavior, and
psychological health.
Hypothesis 2a: Through lower competence
and autonomy need satisfaction and greater
competence and autonomy need frustration,
the controlling meaning of cash rewards
will lead to lower autonomous motivation
and greater controlled motivation.
Hypothesis 2b: In turn, lower autonomous
motivation and greater controlled motiva-
tion will lead to lower and more negative
work attitudes and behavior, and psycho-
logical health.
Thibault Landry et al. 5
Study 1
In Study 1, we focus on negative work-
related behaviors, namely, organizational
deviance and psychological health. As recent
studies show that autonomous motivation is
a better predictor of positive outcomes, and
controlled motivation, a better predictor of
negative outcomes,79,80 we included in our
study design indicators of both dimensions
of psychological health, namely, psychologi-
cal well-being and ill-being.
Methodology
Participants and Procedure. This first study
was conducted locally in a single Canadian
province with French-speaking workers. The
sample was comprised of 236 adults (63.6%
women and 36.4% men) working in the
greater Montréal region. They all spoke
French and were aged between 19 and 63
(M = 34.76, SD = 10.41). Seventy-seven per-
cent of the sample worked full-time, 73% had
a bachelor degree or more in terms of educa-
tion, and 66.9% worked in the private sector.
Average organizational tenure was 5.73 years
(SD = 6.16), while average job tenure was
3.31 (SD = 3.65). Average annual salary was
CAN$74,869 (SD = CAN$54,531). Question-
naires were distributed by email and data were
collected through a secure website. Respon-
dents participated in the study on a voluntary
and anonymous basis, and they received no
compensation for their participation.
Measures. Measures with validated French
versions were used, with the exception of the
ones for functional significance of cash
rewards. For these particular ones, the stan-
dard back-to-back procedure81 was used to
create French translation. Reliability coeffi-
cients for all measures are presented along the
diagonal in Table 1.
Informational meaning of cash rewards.
Employees’ perceptions of the informational
meaning of the cash rewards offered at their
workplace were assessed using items from the
Perceived Autonomy Support Scale for Exer-
cise Settings.82 In the sports setting, this scale
is used to assess the different styles and meth-
ods used by coaches with their athletes. The
four items selected were adapted to the work
setting (e.g., “My supervisor displays confi-
dence in my ability to work when he gives me
a cash reward”). Participants rated the extent
to which they agreed with each statement on
a 7-point Likert-type scale ranging from 1 =
Strongly disagree to 7 = Strongly agree.
Controlling meaning of cash rewards. Employ-
ees’ perceptions of the controlling meaning of
the cash rewards offered at their workplace were
assessed using the Controlling use of rewards
subscale of the Controlling Coach Behavior
Scale.83 In the sports setting, this subscale is
used to measure the extent to which coaches
employ external rewards to motivate their ath-
letes. The three items were adapted to the work
setting (e.g., “My supervisor only uses cash
Table 1. Study 1 Descriptives, Coefficient Alphas (Along the Diagonal), and Correlations Between
Variables (N = 236).
Variables M SD 1 2 3 4 5 6 7 8 9 10 11
1. Informational meaning 3.64 2.39 (.94)
2. Controlling meaning 2.36 1.80 .61** (.88)
3. Autonomy NS 5.52 1.19 .05 −.12 (.81)
4. Competence NS 5.93 .94 −.01 −.10 .58** (.93)
5. Autonomy NF 3.34 1.39 −.02 .13* −.49** −.15* (.83)
6. Competence NF 2.80 1.39 −.04 .06 −.46** −.35** .63** (.85)
7. Autonomous motivation 5.19 1.26 −.13 −.28** .61** .39** −.39** −.32** (.93)
8. Controlled motivation 3.72 1.06 −.15* .05 −.03 −.16* −.13 .11 .06 (.81)
9. Psychological well-being 4.23 .77 .00 −.13* .46** .37** −.24** −.25** .59** .00 (.70)
10. Psychological ill-being 2.74 .99 .12 .15* −.43** −.40** .36** .41** −.51** .18** −.42** (.92)
11. Organizational deviance 2.15 .99 .09 .18* −.49** −.28** .28** .21** −.48** .14* −.39** .47** (.77)
** p < .01. *p < .05.
6 Compensation & Benefits Review 00(0)
rewards so that I stay focused on tasks during
work”). Participants rated the extent to which
they agreed with each statement on a 7-point
Likert-type scale ranging from 1 = Strongly
disagree to 7 = Strongly agree.
Autonomy and competence need satisfac-
tion. Employees rated their autonomy and
competence need satisfaction using the
Work-Related Basic Needs Scale on a 7-point
Likert-type scale ranging from 1 = Strongly
disagree to 7 = Strongly agree (autonomy 4
items: “I feel like I can be myself at my job”;
competence 4 items: “I really master my tasks
at my job”).84
Autonomy and competence need frustra-
tion. Employees rated their autonomy and
competence need frustration using the Psy-
chological Need Thwarting Scale on a 7-point
Likert-type scale ranging from 1 = Strongly
disagree to 7 = Strongly agree (autonomy
4 items: “I feel pushed to behave in certain
ways”; competence 4 items: “There are occa-
sions where I feel incompetent because others
impose unrealistic expectations upon me”).85
Autonomous and controlled motivation.
Employees reported their motivation using the
Multidimensional Work Motivation Scale86
and indicated the degree to which each state-
ment represented a reason why they chose to
invest effort in their current job using a 7-point
Likert-type scale ranging from 1 = Not at all to
7 = Completely. An overall index was created
for autonomous motivation based on the three
items of the Identified motivation subscale (e.g.,
“Because this job fits my personal values”) and
the three items of the Intrinsic motivation sub-
scale (e.g., “Because I enjoy this work very
much”). An overall index for controlled motiva-
tion was created based on the four items of the
Introjected motivation subscale (e.g., “Because
I would feel ashamed if I did not succeed at this
job”) and the six items of the Extrinsic moti-
vation subscale (e.g., “Because it allows me to
make a lot of money”).
Psychological health. Employees’ psycho-
logical well-being was measured using the
Positive Affect subscale of the work-adapted
version of the Positive affect and Negative
affect Scale–Short form.87 Participants were
asked to indicate the extent to which they felt
“alert,” “inspired,” “determined,” “attentive”
and “active” at work in the past month using a
7-point Likert-type scale ranging from 1 = Not
at all to 7 = Strongly. Employees’ psychologi-
cal ill-being was assessed using the Shirom-
Melamed Burnout Scale,88 which measures
emotional, cognitive and physical exhaustion.
Employees were asked to rate the extent they
felt the way described in each of the 12 state-
ments in the past month using a 5-point scale
ranging from 1 = Never or almost never to 5
= Always or almost always (e.g., “I have no
energy for going to work in the morning”).
Organizational deviance. Employees indi-
cate the extent to which they engaged in
unethical work behaviors over the past month
on a 7-point Likert-type scale ranging from
1 = Never to 7 = Everyday, using the 6-item
Organization subscale of the Workplace Devi-
ance Scale89 (e.g., “I have taken an additional
or longer break than is acceptable at my work-
place”).
Results and Discussion
Descriptive statistics and correlations for the 11
variables under study are presented in Table 1,
and results of hypothesis testing are visually
presented in Figure 1. Preliminary analysis of
the correlation matrix revealed that the control-
ling meaning of cash rewards was significantly
and positively correlated with autonomy need
frustration, yet the informational meaning of
cash rewards appears unrelated to any need sat-
isfaction nor need frustration. Both autonomy
and competence need satisfaction were posi-
tively correlated to autonomous motivation,
and both autonomy and competence need frus-
tration were negatively associated with it. Only
competence need satisfaction appeared to be
negatively correlated to controlled motivation.
Finally, autonomous motivation was positively
associated with psychological well-being and
negatively with psychological ill-being and
organizational deviance, whereas controlled
Thibault Landry et al. 7
motivation was positively associated with the
latter two, thus lending preliminary support to
our hypotheses.
We tested a model with the hypothesized
paths through path analysis using Mplus ver-
sion 7.31.90 The informational and controlling
meaning of cash rewards, as well as compe-
tence and autonomy need satisfaction, and
autonomous and controlled motivation were
allowed to covary. Three goodness-of-fit indi-
ces were used: the comparative fit index (CFI),
root mean square error of approximation
(RMSEA), and standardized root mean square
residual (SRMR). Generally, values above .90
for the CFI indicate a satisfactory fit,91,92 and
values below .09 for the RMSEA as well as for
the SRMR suggest an adequate fit.93,94 Overall,
the hypothesized model provided a satisfactory
fit to the data, χ2(22) = 73.24, p < .05, CFI = .93,
RMSEA = .09, and SRMR = .06.
Most results supported our hypotheses
concerning the differential effect of the func-
tional meaning of cash rewards on employ-
ees’ psychological needs. More specifically,
perceiving cash rewards as informational
was significantly associated with greater
autonomy need satisfaction (β = .10, SE =
.04, p < .05), and lower autonomy need frus-
tration (β = −.08, SE = .05, p < .10); yet it did
not appear to reach significance for either
competency need satisfaction or frustration
(β = .03, SE = .04, p > .05; β = −.07, SE = .03,
p > .05), offering partial support for
Hypothesis 1a. On the other hand, perceiving
cash rewards as controlling was significantly
associated with lower autonomy need satis-
faction (β = −.16, SE = .06, p < .01), but not
significantly with lower competency need
satisfaction (β = −.07, SE = .05, p > .05)
and with both greater competence (β = .10,
SE = .06, p < .10) and autonomy need frus-
tration (β = .17, SE = .07, p < .01), thus sup-
porting Hypothesis 2a.
Autonomy need satisfaction was signifi-
cantly related to greater autonomous motivation
(β = .52, SE = .09, p < .01) as expected, as well
as to greater controlled motivation (β = .18,
SE = .08, p < .05). Conversely, autonomy need
frustration was negatively associated with
autonomous motivation (β = −.14, SE = .07,
p < .05) and positively associated with con-
trolled motivation (β = .15, SE =.07, p < .05). In
terms of the need for competence, its satisfac-
tion was negatively associated with controlled
motivation (β = −.28, SE = .09, p < .01), yet it
did not reach significance for autonomous moti-
vation (β = .15, SE = .10, p > .05), and its frustra-
tion appears unrelated to either forms of
motivation (β = .07, SE = .07, p > .05; β = .04,
SE = .07, p > .05).
Finally, empirical support was found for
Hypotheses 1b and 2b. As such, autonomous
Figure 1. Results for Study 1. Unstandardized path coefficients are shown. Continuous gray lines
indicated nonsignificant relations between the connected variables, while black lines represent significant
positive relations between the connected variables, and dotted black lines represent significant negative
relations between the connected variables.
8 Compensation & Benefits Review 00(0)
motivation was significantly related to greater
psychological well-being (β = .36, SE = .04,
p < .01), lower psychological ill-being (β = −.41,
SE = .05, p < .01) and lower organizational devi-
ance (β = −.39, SE = .05, p < .01), while the
opposite pattern was found for controlled moti-
vation (psychological ill-being: β = .19, SE =
.05, p < .01; organizational deviance: β = .15,
SE = .05, p < .01) with the exception of psycho-
logical well-being for which the path did not
reach significance (β = −.03, SE = .04, p > .05).
Given that results of this first study gener-
ally supported all four hypotheses, it was
deemed necessary to gather additional empiri-
cal evidence from a different sample in order
to increase the generalizability and validity of
our findings. In order to achieve this, a broader
and more diversified international working
sample was used, along with measures assess-
ing positive work outcomes.
Study 2
As our goal was to replicate our findings from
Study 1 using different variable operational-
ization to increase conceptual validity, in
Study 2, in addition to measuring psychologi-
cal health, we measured employees’ positive
work intentions. More specifically, we
assessed their intentions to provide in-role
and extra-role effort, to commit to their orga-
nization and stay in their organization. We
voluntarily choose to focus on self-reported
intentions rather than self-ratings of actual
performance to avoid self-distortion and pre-
senter bias, and because measures of attitudes
have been found to be reliable predictors of
actual behavior.95-97
Methodology
Participants and Procedure. The sample com-
prised 934 English-speaking workers from
across the globe, including 56.1% women and
43.9% men. Participants were aged between
22 and 82 years (M = 50.71, SD = 10.52), and
came from the United States (66.6%), Canada
(4.4%), Latin America (3%), Europe (14.5%),
the Asian Pacific Rim (6.2%), and other coun-
tries (5.3%). Overall, 94.6% worked full-time,
92.3% had 2 years or more of college educa-
tion, and 52.1% worked in the private sector.
Average organizational tenure was 12.12
years (SD = 9.84), while average job tenure
was 4.08 years (SD = 4.21). Questionnaires
were distributed by email through an Ameri-
can management firm’s contact list and data
were collected through a secure website.
Respondents participated in the study on a
voluntary and anonymous basis and received
no compensation for their participation.
Measures. For this particular study, all the orig-
inal versions of the measures in English were
used. The same measures as in Study 1 were
used (see Table 2 for reliability coefficients),
with the exception of psychological health, for
which only the measure for psychological
well-being was used, and organizational devi-
ance, which was replaced with measures of
employees’ positive work intentions.
Intention to provide in-role and extra-role
effort. Employees rated on 6-point scale rang-
ing from 1 = To no extent to 6 = To the full-
est extent their intention to provide efforts in
their job (e.g., “I intend to spend my discre-
tionary time finding information that will help
this organization”) and to engage in organiza-
tional citizenship behaviors (e.g., “I intent to
watch out for the welfare of others at work”)
using, respectively, the 3-item Intention to use
discretionary efforts subscale and Intention to
use organizational citizenship behaviors sub-
scale from the Work Intention Inventory.98
Intention to commit and to stay in the orga-
nization. Employees reported their affec-
tive commitment to their organization on a
7-point scale with 1 corresponding to Strongly
disagree and 7 corresponding to Strongly
agree, using the 6-item Affective Commit-
ment subscale from the Work Commitment
Scale99 (e.g., “This organization has a great
deal of personal meaning for me”). Employ-
ees reported their intentions to stay in their
current organization on a 6-point scale rang-
ing from 1 = To no extent to 6 = To the fullest
extent, using the three-item Intention to stay
in the organization subscale from the Work
Thibault Landry et al. 9
Intention Inventory100 (e.g., “I intent to stay
with this organization even if offered a more
appealing job elsewhere”).
Results and Discussion
Descriptive statistics, reliability coefficients
and correlations for the 13 variables under study
are presented in Table 2, and results of hypoth-
esis testing are visually presented in Figure 2.
Preliminary analysis of the correlation matrix
provided support to our hypotheses by reveal-
ing that the informational meaning of cash
rewards was positively associated with auton-
omy need satisfaction, and negatively with both
autonomy and competence need frustration.
Table 2. Study 2 Descriptives, Coefficient Alphas (Along the Diagonal), and Correlations Between
Variables (N = 934).
Variables M SD 1 2 3 4 5 6 7 8 9 10 11 12 13
1. Informational meaning 3.68 1.77 (.91)
2. Controlling meaning 2.41 1.42 .42** (.82)
3. Autonomy NS 5.79 1.97 .18** −.06 (.84)
4. Competence NS 6.83 1.62 .00 −.05 .40** (.90)
5. Autonomy NF 3.77 1.86 −.11** .15** −.63** −.16* (.83)
6. Competence NF 3.18 1.92 −.15** .07* −.63** −.28* .70** (.89)
7. Autonomous motivation 5.07 1.25 .15** .01 .61** .33** −.38** −.39** (.94)
8. Controlled motivation 4.07 1.02 .16** .16** .03 .05 .08* .11** .22** (.79)
9. Psychological well-being 4.02 .71 .10** −.05 .44** .25** −.34** −.34** .56** .10** (.75)
10. Intention to commit to
the organization
4.57 1.75 .15** .00 .58** .21** −.42** −.40** .62** .09** .49** (.83)
11. Intention to stay in the
organization
3.69 1.47 .13** −.03 .53** .19** −.41** −.40** .57** .16** .43** .73** (.91)
12. Intention to provide
in-role effort
3.98 1.20 .13** .01 .28** .13** −.25** −.24** .37** .11** .40** .44** .40** (.76)
13. Intention to provide
extra-role effort
5.48 .71 .10** −.11** .24** .24** −.16** −.20 .24** .02 .37** .31** .25** .35** (.86)
** p < .01. *p < .05.
Figure 2. Results for Study 2. Unstandardized path coefficients are shown. Continuous gray lines
indicated nonsignificant relations between the connected variables, while black lines represent significant
positive relations between the connected variables, and dotted black lines represent significant negative
relations between the connected variables.
10 Compensation & Benefits Review 00(0)
Conversely, the controlling meaning of cash
rewards was positively associated with the frus-
tration of both needs. As expected, satisfaction
of both needs was positively associated with
autonomous motivation, while frustration of
these same needs was negatively associated
with it as well as positively to controlled moti-
vation. Autonomous motivation was positively
correlated with all five work outcomes.
Surprisingly, controlled motivation was also
positively related to psychological well-being
and employees’ intention to provide in-role
effort, commit and stay in the organization.
As in Study 1, the same model representing
all four hypotheses was tested through path anal-
ysis. The informational and controlling mean-
ings of cash rewards, competence and autonomy
need satisfaction and frustration as well as
autonomous and controlled motivation were
allowed to covary. The model yielded a very
good fit to the data, χ2(34) = 254.71, p < .05,
CFI = .95, RMSEA = .06, and SRMR = .08. In
line with results from Study 1, perceiving cash
rewards as informational was significantly asso-
ciated with greater autonomy need satisfaction
(β = .28, SE = .04, p < .01), lower autonomy
need frustration (β = −.22, SE = .04, p < .10) and
lower competency need frustration (β = −.24,
SE = .04, p < .01), but not greater competency
need satisfaction (β = .03, SE = .03, p > .05),
thus lending partial support to Hypothesis 1a.
Supporting Hypothesis 2a, perceiving cash
rewards as controlling was significantly associ-
ated with both lower competence (β = −.07,
SE = .04, p < .10) and autonomy need satisfac-
tion (β = −.23, SE = .05, p < .01), respectively,
and both greater competence (β = .22, SE = .05,
p < .01) and autonomy (β = .31, SE = .05,
p < .01) need frustration, respectively.
Competence and autonomy need satisfaction
were both significantly related to greater auton-
omous motivation (β = .08, SE = .03, p < .01;
β = .35, SE = .03, p < .01). Competence need
satisfaction was not significantly associated
with controlled motivation (β = .08, SE = .03,
p > .05), while its frustration was significantly
associated with it (β = .09, SE = .03, p < .01)
and unrelated to autonomous motivation
(β = .00, SE = .03, p > .05). There was also no
significant association between autonomy need
frustration and any form of motivation
(β = −.02, SE = .03, p > .05; β = .04, SE = .03,
p > .05); however, similar to Study 1, auton-
omy need satisfaction was associated with
greater controlled motivation (β = .09, SE = .03,
p < .01).
Finally, in terms of Hypotheses 1b and
2b, autonomous motivation was positively
related to greater psychological well-being
(β = .33, SE = .02, p < .01), and greater
intentions to provide in-role and extra-role
efforts (β = .35, SE = .03, p < .01; β = .15,
SE = .02, p < .01) and to commit and stay in
the organization (β = .88, SE = .04, p < .01;
β = .66, SE = .03, p < .01). With regard to
controlled motivation, we only found evi-
dence for its negative relation with employ-
ees’ intentions to commit to the organization
(β = −.08, SE = .05, p < .10); psychological
well-being: (β = −.02, SE = .02, p > .05;
intentions to provide in-role and extra-role
efforts: β = .04, SE = .04, p < .01; β = −.02,
SE = .02, p < .01; intention to stay in the
organization: β = .04, SE = .04, p < .01).
General Discussion
The overall findings of this study support
SDT’s postulate that cash rewards take on dif-
ferent meaning and that it is this meaning per se
that determines the impact of the reward on
employees’ behaviors. In two studies, we found
evidence that employees’ perceptions of cash
rewards as informational, thus encouraging
their efforts and participation, was associated
with greater satisfaction, and conversely, lower
frustration of their autonomy need. At the other
end of the spectrum, employees’ perceptions of
cash rewards as controlling, thus coercing them
into specific ways and stressing particular
behaviors, was associated with lower satisfac-
tion and greater frustration of that same need.
Perceptions of cash rewards as controlling also
predicted greater frustration of the need for
competence, and Study 2 indicated some sup-
port for its association with lower competence
need satisfaction. In both studies, psychologi-
cal need satisfaction, as opposed to need frus-
tration, was a better predictor of autonomous
motivation, and conversely, psychological
Thibault Landry et al. 11
need frustration was a better predictor of con-
trolled motivation than need satisfaction, which
is in line with the current literature on the
topic.101 Finally, in terms of motivation, auton-
omous motivation appeared to be a better pre-
dictor of psychological health and positive
work intentions such as intention to provide in-
role and extra-role efforts, and to commit and
stay in the organization. Controlled motivation
was indeed related to negative work attitudes
and behaviors, including psychological ill-
being and organizational deviance, and both of
these observations are coherent with general
findings in the SDT literature102 as well as the
organizational literature.103-106
In light of these findings, much point toward
the significant impact of cash rewards on
employees’ psychological need for autonomy.
Perhaps the lesser support observed for the psy-
chological need for competence results from
the conditional effect of obtaining the reward.
As such, it could be that when financial incen-
tives are initially presented to employees, they
directly influence their autonomy need as
employees chose to engage toward the goal pre-
scribed by the reward in place. However, it may
only be once distributed that cash rewards have
an impact on employees’ competence need, as
obtaining the reward may be key for the
employee to attribute an informational meaning
to the reward. From this perspective, initial pre-
sentation of the potential cash reward may not
be sufficient to fulfill employees’ need for com-
petence. Alternatively, the effect of cash rewards
on employees’ competence need may be influ-
enced by individual characteristics such as per-
sonal feelings of self-efficacy and locus of
control. This would then suggest an indirect
effect of cash rewards on employees’ compe-
tency need satisfaction and frustration, whereby
their perception of their competency need,
whether it is its satisfaction or its frustration, is
partly contingent on what they think and feel
about themselves and their abilities.107-110
In summary, there definitely is a necessity
for additional research investigating the par-
ticular mechanism whereby each psychologi-
cal need is affected by cash rewards and their
functional significance. Nonetheless, this
research provides preliminary support for the
importance of the specific meaning of rewards
emerging from the design, implementation
and communication of financial incentives
and compensation plans to employees, includ-
ing the intent, or at least the perceived intent,
behind their use by employers.111-114 This
research suggests that it is not using money
per se to reward employees that is detrimental
and that money in and of itself that is negative
or evil, but that it is how it is used and how
individuals perceive it—the subjective mean-
ing employers and employees attribute to it—
that matter.115,116 Most importantly, it raises
the question as to whether or not some com-
pensation practices may give rise to less
favorable or beneficial outcomes if not well-
intended, well-communicated or well-
received by the workforce.117 Our research
bridges the gap between two distinct litera-
tures, from social psychology and from the
organizational incentive community,118-120 and
compels researchers to rethink their concep-
tion of cash rewards and investigate them with
the new focus to understand how to better
leverage the objective and subjective compo-
nents of compensations systems in place to
bring employees to perform more and be more
healthily motivated.
Limitations and Future Research
Notwithstanding its contribution to the issue
of using financial incentives in the workplace,
this research presents some limitations worth
noting, including the fact that its findings are
based on cross-sectional study designs with
self-reported measures exclusively. As such,
the cumulative effect of perceiving cash
rewards as informational or controlling should
be investigated in longitudinal study designs
with repetitive measures to better assess if
perceiving cash rewards as informational
leads to healthier motivation in the long run,
and confers an objective advantage to employ-
ees’ psychological health and ultimately per-
formance. Moving beyond a cross-sectional
design relying on participants’ reported inten-
tions and supplementing this with objective
data would allow to strengthen the present
results by examining, for example, if the
12 Compensation & Benefits Review 00(0)
informational meaning of cash rewards is
associated with fewer days of sick leave, med-
ical bills and health insurance claims, thus
indicating better general health. The func-
tional significance of cash rewards could also
be linked back to objective qualitative and
quantitative performance measures to further
validate the finding that perceiving cash
rewards as informational leads to greater work
intentions. In this vein, deeper investigation
using objective data and longitudinal or
experimental designs could help determine
whether, with time, informational cash
rewards increases autonomous motivation and
results in not only increased levels of perfor-
mance but also better quality of job output.
In a similar line of idea, future research
should also address more specifically the vari-
ous compensation practices and compensation
plans currently used on the market to deter-
mine if some pay strategies, for example, all-
commission based pay, are inherently
experienced as more controlling than others.
This may especially be the case and worth
exploring by type of industries (e.g., produc-
tion and manufacturing vs. sales and customer
service, private vs. public) as compensations
practices are often said to reflect crucial job
requirements. Job realities may have led to the
emergence and predominant adoption of cer-
tain types of compensation structures that lead
to less optimal functioning and increase the
risk of detrimental consequences on the work-
force in the long run.121
Finally, when taking into account indus-
tries and activity sector in relation to compen-
sation practices, it may be worth looking at
the interaction with individual preferences
and styles such as extrinsic orientation and
self-efficacy beliefs. For example, individuals
with lower self-efficacy beliefs may experi-
ence cash rewards as more controlling com-
pared to individuals with greater self-efficacy
beliefs, regardless of the actual structure of
their organizations’ compensation plans.
Conclusion
The current research explored whether cash
rewards are intrinsically good or bad for
employees’ functioning at work, and showed
in a set of two studies that their effect on
employees’ motivation varies according to the
functional meaning employees attribute to
them. On the one hand, informational cash
rewards, that is, those that are presented in a
supportive way and perceived by employees
as contributing to the satisfaction of their psy-
chological needs for competence and auton-
omy, motivate employees in healthy ways,
leading them to experience greater psycho-
logical well-being, commitment and engage-
ment in their work. On the other hand,
controlling cash rewards, that is, those pre-
sented in a pressuring way and perceived by
employees as thwarting their psychological
needs, accentuate the notion of reward contin-
gencies, thus motivating employees in less
healthy ways and leading them to feel more
psychologically distressed, less committed to
their workplace and more tempted to engage
in organizationally deviant behavior.
These findings stress the importance of well
positioning any type of compensation practice
as to ensure that it only reinforces the desired
behavior and to avoid any unwarranted effects
on employees. Practitioners and researchers
alike are encouraged to carefully consider the
diverse compensation practices existing in the
workplace and take into account the specifici-
ties of each in relation with the targeted work-
force and the job design to leverage cash
reward plans in ways that are better aligned
with the organizational culture and values they
seek to put forth. Alternatives to cash rewards
in all shapes and forms, including noncash
rewards and benefit programs, such as paid
vacations or time-saving coupons122-130 should
also be researched and encouraged as they may
provide a healthier and beneficial venue to
motivating employees and ensuring an engaged
and committed workforce.
Declaration of Conflicting Interests
The authors declared no potential conflicts of inter-
est with respect to the research, authorship, and/or
publication of this article.
Funding
The authors received no financial support for the
research, authorship, and/or publication of this
article.
Thibault Landry et al. 13
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Author Biographies
Anaïs Thibault Landry is a fifth-year doctoral
student in organizational psychology at Université
du Québec à Montréal (UQAM). Her primary
research focus is on the effects of compensation
practices, including cash and non-cash rewards, on
employees’ motivation, performance, and psycho-
logical health. She has also worked on projects
examining the associations between preferences
and motivations for making money and psycho-
logical well-being.
Jacques Forest is a licensed psychologist and
Certified Human Resources Professional (CHRP)
as well as a professor-researcher at ESG UQAM.
His primary research interests pertain to the ante-
cedents and consequences of motivation in the
workplace using SDT. Dr. Forest has done research
on the impact of compensation strategies, strengths
management, job design and leadership on work-
place motivation, all in the aim of knowing how it
is possible to simultaneously increase performance
and well-being.
Drea Zigarmi is the Director of Research for the
Ken Blanchard companies, has published five
books on leadership and authored numerous arti-
cles in various academic journals. He also teaches
at the University of San Diego in the Masters of
Science in Executive Leadership Program.
Dobie Houson is the Director of Marketing
Research for The Ken Blanchard Companies and is
responsible for competitive, market, and customer
intelligence. She is one of the researchers for the
development of the Employee Work Passion
Assessment and was instrumental in its develop-
ment. Her work has been released in numerous
industry and academic publications.
Étienne Boucher, MSc, MEd, CHRP, is a partner
and the practice leader of the compensation team at
Normandin Beaudry, a consulting firm specializing
in total rewards. He has worked in human resources
for more than 15 years, conducting several total
compensation and employee engagement studies for
many organizations and specialized groups and
guiding a number of organizations through projects
aligned with the principles of Self-Determination
Theory to optimize employee experience.
