Reward Power

The Basic Idea

Do you remember when your parents told you that if you did something you loved, you’d never work a day in your life? The famous saying is comforting in theory, however, most of us probably still feel like we engage in our work for more than just passion. Even if we enjoy it inherently, few people would agree to continue their responsibilities if their salary was taken away.

We are often motivated by reward; thoughts of recognition or compensation push us to work hard. Efficient leadership requires motivating employees to be productive and satisfied at work. One technique to achieve high levels of motivation is called reward power. Reward power is all about harnessing the power of incentives. Incentives can be tangible, such as bonuses, salary increases, promotions, and certificates, or intangible, such as praise and recognition.1

Reward power works through positive reinforcement. According to the behavioral perspective, we learn through our past experiences with stimuli. If producing a high quality of work has previously led to a reward, we come to associate that behavior with the reward and are more likely to repeat it in the future.

An incentive is a bullet, a key: an often tiny object with astonishing power to change a situation.

– American economist Steven Levitt in his book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything 2

Key Terms

Intrinsic Motivation: Being driven by internal factors. The motivation to complete a task comes from within because the task is inherently enjoyable. Example: You’re reading this article because you love behavioral science and find it enjoyable to learn more.

Extrinsic Motivation: Being driven by external factors. It is reward-driven behavior where one engages in a task not for the pleasure of the task itself, but because it will lead to something else that they desire. Example: You’re reading this article because you have to write a paper about leadership styles for your college behavioral science class. Your extrinsic motivation is the desire to receive a good grade.

Operant Conditioning: a learning technique that uses positive and negative reinforcements (rewards or punishments) to influence behavior. Individuals learn to repeat behaviors associated with rewards and cease behaviors associated with punishments.

The Behavioral Perspective: a school of thought that attributes all behavior to operant conditioning. It suggests that our behaviors are results of learned associations with stimuli and the environment.

History

The use of reward to influence behavior was first studied by American psychologist Edward Thorndike in 1898. At this time, psychologists had found that behavior could be influenced by classical conditioning (learned associations between events), but Thorndike took it a step further. He suggested people learned behaviors due to the consequences they associated with them, which meant conditions could be manipulated to influence particular behaviors.3 His now-famous study involved putting cats into a “puzzle box” and timing how long it took them to push the lever to open the box. Initially, the cats only managed to get out when they accidentally pressed the lever, but as Thorndike continued to put the cats in the box, they learned that the lever led to their escape. Thorndike concluded that behavior that is followed by a positive outcome is likely to be repeated, which he called the law of effect.4

Thorndike’s early work in operant conditioning led to research in incentivization. B.F Skinner, known as the father of operant conditioning, introduced a new term to Thorndike’s law of effect: reinforcement. He suggested that behavior that is reinforced through reward is repeated and behavior that is not reinforced tends to die-out.5 Reinforcement could thus be positive or negative. Skinner’s study involved putting a rat in a similar puzzle box that had a lever that would dispense a pellet of food when pressed. He found that the rats continued to press the lever once they had learned the association with the reward of food, demonstrating positive reinforcement. They did not continue pressing the lever if it did not dispense food.5

While Thorndike and Skinner, amongst other psychologists, had long been studying the impact of reward and punishment on behavior, it wasn’t until 1959 that two researchers began to examine how reward could be used by leadership to influence subordinate behavior. In 1959, social psychologists John French and Bertram Raven proposed five forms of power that could be mobilized by leaders, including reward power.6

The five bases of power that French and Raven identified were:

Legitimate: power that comes from subordinates believing that the leader has the formal right to make demands and they comply with the authoritative figure as a result.6

Reward: power that comes from a leader offering compensation in return for compliance.6

Expert: power derived from one’s belief that the leader has extensive knowledge/experience on the matter.6

Referent: power that occurs because subordinates see the leader as a role model. They are seen as worthy of the subordinate’s respect.6

Coercive: power that results from fear of punishments.6

Later, in 1965, Raven added a sixth base of power:

Informational: power that comes from a leader having access to necessary information. Employees must comply with the leader so they can gain access to information necessary to complete their tasks.6

French and Raven’s research was very influential in analysis of social power. At the time, they suggested that reward power was only impersonal and tangible. Examples included salary increases or bonuses. However, later on in 2008, Raven acknowledged in his paper “The Bases of Power and the Power/Interaction Model of Interpersonal Influence” that reward power could also be personal and intangible. 7 Examples included recognition for achievements and praise. According to Herzberg’s motivation theory, these intangible forms of reward could have greater motivational influence than tangible rewards, as they are factors associated with satisfaction, whereas increasing salary only leads to diminished dissatisfaction.

Consequences

Reward power can only be utilized by individuals with high status in a company. They need the authority to give out rewards, which means it is not a suitable base of power for all leaders.

Reward power is supported by learned association; phenomena like operant conditioning and incentivization concur that rewards act as a powerful source of motivation. Reward power informs us that a leader can use external incentives as a form of operant conditioning so that employees have a goal in mind when they conduct their work.

Additionally, Raven’s later revision that rewards need not be tangible nor monetary is important, as some research suggests that these kinds of rewards are not always effective. Reward power supports the Leader-Member Exchange Theory, which suggests that close relationships, formed through recognition and praise, lead to increased productivity. A simple thank-you, or an ‘Employee of the Month’ award, can lead to strengthened relationships between subordinates and leaders and motivate individuals to continue working hard.

Controversies

There is a great deal of controversy over the effectiveness of rewards. Cognitive phenomena differ on how effective rewards are. For example, the motivating uncertainty effect suggests that we’re willing to invest more of our time into achieving uncertain rewards compared to certain rewards. The effect suggests that for reward power to be effective, a manager should not tell employees exactly what the reward will be. Using this effect, they may say that anyone who submits work early will receive a mystery bonus.

Other cognitive biases warn us against the use of external rewards to incentivize individuals. The overjustification effect describes our tendency to become less intrinsically motivated when we are offered an extrinsic motivator like a reward. While we may enjoy the work we do, if our boss attaches that work to a promotion, we can lose our inherent passion for the project. Although we may be motivated to work hard short-term, in the future we are unlikely to complete the same behavior without a reward. SImilarly, a study conducted by psychologist Dr. Robert Eisenberg found that the overjustification effect is less prominent when individuals are rewarded for a successful performance, not for just completing a task.8

Even if reward power is effective, it is not suitable in all instances. Even Raven understood the limitations of reward power, as he recognized that it could only be leveraged when a manager could tell if an individual had completed a task. Employees will only comply if they believe their boss will be able to determine whether compliance has been achieved.7

Moreover, offering one employee a reward for their work and not another could cause the other employee to feel as though they are not recognized for their work, potentially demotivating them.9 Competition for a reward could increase motivation, but there is a thin line between healthy and unhealthy competition. Employees might sabotage one another or diminish their relationships. As Herzberg’s motivation theory identifies, work relationships are an important factor of work satisfaction – negative relationships prompted by competition could have adverse impacts on employee wellbeing.

As these controversies demonstrate, rewards are useful in particular circumstances, but it can be complicated to identify when they will be effective and when they might be detrimental. The reason for reward, as well as the type – tangible or intangible, certain or uncertain – all impact its effectiveness.

Social Exchange Theory and Reward Power

Social exchange theory suggests that behavior is the result of an exchange process. An exchange relationship includes both economic exchanges, like a salary from your boss for completing your work, as well as social-affect exchanges, like respect, support and power. Positive exchanges can therefore increase affective commitment (an individual’s attachment to an organization) and result in increased loyalty and performance from employees.

Rewards are seen as a form of exchange that brings subordinates closer to their leaders. Associate professor of management Dr. Haidi Teimouri believed that when an organization used reward power, employees responded by developing affective commitment.10 These good relations enable employees to have greater access to information, mentorship, resources, and support, which increases productivity and employee effectiveness.

Teimouri wanted to show that managerial power, like reward power, has a positive impact on affective commitment. With her team, Teimouri collected questionnaire responses from line and staff personnel in a Social Security Organization in Iran. The questionnaire asked respondents about the different kinds of power their manager demonstrated and about their own affective commitment.10

Teimouri et al. found that the greater overall power a manager demonstrated – which involved a combination of the five bases of power French and Raven initially identified, the greater attachment employees felt to their organization. Coercive power had the smallest impact on affective commitment and referent power had the greatest positive impact on affective commitment. Reward power fell somewhere in the middle. From these results, Teimouri et al. concluded that managers can improve their employees’ affective commitment by proper and timed use of their bases of power.10 Reward power is one useful tool to mobilize affective commitment.

The Influence of Reward Power in Private and Public Sectors

Using reward to increase motivation only works in specific instances. Cognitive biases like the overjustification effect or the motivating uncertainty effect demonstrate that when used inappropriately, reward power can backfire.

  1. Faiz, a political researcher in Pakistan, conducted a study that showed that the effectiveness of reward power and coercive power is different in public and private sectors.11 He identified that these two bases of power were the most common types managers used in order to nudge employees to be obedient and responsible. In particular, Faiz examined the correlation between employee satisfaction and these two bases of power by surveying employees working in public colleges and employees working in private colleges. He was interested in the differentiation because in Pakistan, public and private sectors exhibit very different practices, especially when it comes to their Human Resource and Management policies.11

Faiz collected data from 130 respondents working in these two sectors to test whether employees’ perception of manager’s reward power would have a positive effect in both the private and public sector, and whether employees’ perception of manager’s coercive power would have a negative effect in both the private and public sector.11

Faiz found that there were notable differences between the two sectors. Employees working in private colleges and universities reported that their managers exercise more supervisory powers and have more control over their subordinates. Supervisory powers like reward power had a positive correlation to employee job satisfaction in the private sector. Alternatively, employees working in public colleges and universities reported that reward power had a negative impact on their job satisfaction. Faiz speculated that these results might reflect the fact that individuals in the private sector often change jobs more frequently than individuals in the public sector, as the public sector offers job security to their employees. Research has shown that when rewards are used for a long period of time, they are less effective and can lead to employees feeling manipulated. Coercive power was shown to have a negative effect on employee satisfaction in the public sector but was found to be neutral or inconclusive in the private sector.11

As Faiz’s study demonstrates, rewards are finicky and can have different effects depending on the sector in which they are used. Reward power must be used tactically and sparingly.

Related TDL Content

The Science of Reward

Rewards are tricky. Sometimes, they lead to increased job satisfaction, yet other times, they cause employees to be less motivated. Since there are so many different variables that can influence whether a reward is a beneficial tactic for leaders to use, The Decision Lab decided to tackle the science behind monetary rewards. In this article, we look at the social context of rewards, the advantages of performance-related pay, amongst other advantages and disadvantages of monetary rewards.

Can Money Buy Good Health? RCT of Financial Incentives for Weight Loss

For rewards to be effective, they often need to closely follow the task that is being rewarded so that an association can be formed. That means when it comes to losing weight, the reward of being healthy and fit isn’t usually enough of a motivator, because the reward seems too far away. Day-today monetary incentives for losing weight could instead provide a solution to the concerning levels of obesity in the U.S. In this article, our writer Maral Yeganeh outlines a study that examined the effectiveness of financial incentives on losing weight.

Sources

  1. Grimsley, S. (n.d.). Reward Power in Leadership: Definition & Example. Study.com. Retrieved June 8, 2021, from https://study.com/academy/lesson/reward-power-in-leadership-definition-example-quiz.html
  2. Steven D. Levitt Quotes. (n.d.). Goodreads. Retrieved June 8, 2021, from https://www.goodreads.com/quotes/734906-an-incentive-is-a-bullet-a-key-an-often-tiny
  3. Mcleod, S. (2018). Edward Thorndike: The Law of Effect. Simply Psychology. https://www.simplypsychology.org/edward-thorndike.html
  4. Incentivization. (2021, January 25). The Decision Lab. https://thedecisionlab.com/biases/incentivization/
  5. McLeod, S. (2007, February 5). What Is Operant Conditioning and How Does It Work? Simply Psychology. https://www.simplypsychology.org/operant-conditioning.html
  6. French and Raven’s Five Forms of Power. (n.d.). Mind Tools. Retrieved June 8, 2021, from https://www.mindtools.com/pages/article/newLDR_56.htm
  7. Raven, B. H. (2008). The bases of power and the power/Interaction model of interpersonal influence. Analyses of Social Issues and Public Policy, 8(1), 1-22. https://doi.org/10.1111/j.1530-2415.2008.00159.
  8. Overjustification effect. (2020, September 28). The Decision Lab. https://thedecisionlab.com/biases/overjustification-effect/
  9. Denis. (2017, July 25). Reward Power in the Workplace. Expert Program Management. Retrieved June 8, 2021, from https://expertprogrammanagement.com/2017/07/reward-power-in-the-workplace/
  10. Teimouri, H., Izadpanah, N., Akbariani, S., Jenab, K., Khoury, S., & Moslehpour, S. (2015). The effect of managerial power on employees’ affective commitment: Case study. Journal of Management Policies and Practices, 3(2). https://doi.org/10.15640/jmpp.v3n2a3
  11. Faiz, N. (2013). Impact of Manager’s Reward Power and Coercive Power on Employee’s Job Satisfaction: A Comparative Study of Public and Private Sector. Journal of International Management, 3(4), 383-392. https://doi.org/10.15640/jmpp.v3n2a3

Read Next