Rewards Work? Researching the Relation Between Monetary Reward and Employee Innovativeness

As organizations try to steer and direct the behaviour of employees, they frequently introduce reward schemes to align the employee behaviour with the companies interests. Yet, while these reward schemes can result in people working hard, the question is whether they also enable employees to work smart. In this paper we therefore study the relation between two different sort of financial reward schemes (individual and collective based) and their relation with the Innovative Work behaviour (IWB) of employees. Building on job design and intrinsic motivation literature, we expect to find both positive and negative relations, depending on the work context of the employee. Using survey data on 927 employees from five Belgian industries, we find that indeed individual financial rewards are both associated with more and less IWB, depending on the degree of autonomy of the employee. Rewards work in poor autonomy jobs, but have a negative association with IWB in high autonomy jobs. As for collective rewards, the faint positive relation is greatly enhanced when group-communication is effective. We conclude that reward systems for innovation are no quick win and that the work organization should be taken into account.