Int. Journal of Business Science and Applied Management, Volume 17, Issue 1, 2022

Better Leveraging Monetary Rewards in the 21

Century

Workplace Using Self-determination Theory

Anaïs Thibault Landry

Department of Management, John Molson School of Business, Concordia University

1450 Guy St, Montreal, Quebec H3H 0A1, Canada

Tel: 514-466-2005

E-mail: anais.thibaultlandry@gmail.com

Konstantinos Papachristopoulos

Department of Theory, Athens School of Fine Arts

Evelpidon 13, 11362, Athens, Greece

Tel: 30-69443-52029, 30-21088-11686

E-mail: papachristopouloskostas@gmail.com

Yu-Shan Hsu

Department of Management, John Molson School of Business, Concordia University

1450 Guy St, Montreal, Quebec H3H 0A1, Canada

Tel: 514-848-2424 ext.2010

E-mail: yu-shan.hsu@concordia.ca

Yu-Ping Chen

Department of Management, John Molson School of Business, Concordia University

1450 Guy St, Montreal, Quebec H3H 0A1, Canada

Tel: 514-848-2424 ext.2910

E-mail: yu-ping.chen@concordia.ca

Abstract

The purpose of this article is to understand how to better leverage monetary rewards at work using

Self-Determination Theory (SDT). According to SDT research, employees can ascribe different

functional meaning to monetary rewards. When rewards take on an informative meaning, they

positively contribute to employees’ basic psychological needs, leading to greater autonomous

motivation, and better work outcomes, while when presented in a coercive way they negatively

contribute to employees’ basic psychological needs because they lead to greater controlled motivation.

We propose that employers need to better understand employees’ attributes, consider alternative forms

of rewards and provide communication training, in order to better satisfy employees’ psychological

needs and avoid the negative outcomes of controlling monetary rewards. Our research contributes to

the understanding of both employers’ and employees’ experience of workplace cash rewards and

explores theoretical avenues on how rewards in modern work contexts need to be functionally

contextualized by personal, organizational and cultural factors (e.g., the functional meaning of rewards,

basic needs satisfaction).

Keywords: self-determination theory, meaning of monetary rewards, psychological needs, motivation,

work outcomes

Acknowledgement: This publication has received funding from the European Union’s Horizon 2020

research and innovation programme under the Marie Sklodowska-Curie grant agreement No

101028279 (Outgoing Phase in UQAM)

Int. Journal of Business Science and Applied Management / Business-and-Management.org

1. INTRODUCTION: MONETARY REWARDS IN THE 21ST CENTURY

Compensation represents the single largest organizational cost in many industries. To illustrate,

U.S. companies allocate more than one fifth of their budgets to wages and salaries, spending between

$38 and $77 billion on cash rewards and incentives each year (Cancialosi, 2014). In this light,

companies spend a major portion of their operating budget on compensation (salary, benefits, bonuses

and other rewards, etc.) as they seek to attract, motivate, and retain top performing employees (Patnaik

& Suar, 2019). However, human resource managers and reward professionals are often puzzled by the

failure of reward strategies to increase productivity, boost job satisfaction, and enhance company

performance (Kornelakis, 2018). Moreover, while the focus in the past seems to have been solely on

the extrinsic function of money and financial payments, including monetary rewards, it now seems

necessary to adjust perspectives as the new trends on the job markets have gradually turned to an

intrinsic focus on incentives and motivation (Chen & Hsieh, 2006).

While earning a salary is fundamentally the basic premise for employment and monetary rewards

are undeniably an important aspect of any employment relationship, such extrinsic monetary rewards

have been critiqued for their ‘hidden costs’, such as a decline in the quality of the services provided

(Qian & He, 2018), the reduced volitional behavior of intrinsically-motivated workers (Gerhart &

Fang, 2015; Georgellis et al., 2011), and lower satisfaction with the work itself - especially when such

rewards are provided ‘ex-ante’ for attaining specific standards of performance (Balkin et al, 2015).

These findings support the notion of a motivational shift, in which a person’s enjoyment of and interest

in doing work they like (otherwise called intrinsic motivation) is replaced with a less powerful

motivation to do the work in pursuit of an external reward (Frey & Jegen, 2001; Krug & Braver, 2014).

Many studies also suggest that monetary rewards that are contingent on performance enhance

one’s satisfaction with having a job that requires positive customer service (Grandey et al., 2013) and

other studies provide evidence regarding the strong positive effects of extrinsic rewards, including

instances of increased performance quality in complex tasks (e.g. Garbers & Konradt, 2014). On this

point, several meta-analyses provide mixed results, suggesting more nuanced effects of monetary

rewards on employees (e.g., Cerasoli, Nicklin, & Ford, 2014; Jenkins et al., 1998).

Thus, it is of relevance to use motivational theories to understand the meaning employees give to

their monetary rewards and how this determines their behavior (Zhang, Hsee, & Yu, 2018). Taking all

these research directions into account, the purpose of this article is twofold: First, we discuss the

motivational power of monetary rewards using the lens of Self-Determination Theory (SDT; Ryan &

Deci, 2000a), a motivational theory positing that if individuals' innate psychological needs for

competence, relatedness, and autonomy are satisfied, optimal functioning and growth are likely to be

achieved. Second, we formulate four suggestions to better align and leverage informative monetary

rewards in the current reality of our 21st century workplace.

Our study contributes to the literature and the application of findings in the following ways. First,

we contribute to the study of rewards in the workplace by providing concrete recommendations that

have taken into account all relevant research studies. SDT research has consistently shown that whether

rewards have a positive effect, no effect, or a negative effect on intrinsic motivation depends on their

functional significance, which is influenced by the type of reward contingency, the type of rewards

(positive feedback versus tangible rewards) and the interpersonal context within which they are

administered (autonomy-supportive versus controlling) (Gerhart & Fang, 2015, Pink, 2009, Gagné &

Forest, 2008; Moller & Deci, 2014; Olafsen et al., 2015; Deci, Olafsen, & Ryan, 2017; Thibault Landry

et al., 2017, 2019) Nevertheless, while this is well documented, organizations have not utilized these

findings since there is a lack of a conceptual framework of what to think and what to do while applying

new approaches to reward strategies. Second, we summarize findings regarding the functional meaning

of rewards, which is a matter of high theoretical and practical importance. A series of findings

suggests that rewards can have a distinct effect on individuals’ motivation and performance, depending

on whether they take on a need‐ supportive or controlling meaning (e.g., Thibault Landry, Forest,

Zigarmi, Houson, & Boucher, 2017; Thibault Landry, Zhang, Papachristopoulos, & Forest, 2019, Black

& Deci, 2000; Grolnick & Ryan, 1989; Joussemet, Koestner, Lekes, & Houlfort, 2004; Soenens,

Vansteenkiste, Duriez, & Goossens, 2006; Williams & Deci, 1996). In this vein, we propose future

avenues in terms of how the functional meaning of rewards can be incorporated in both research efforts

as well as practical implications. Third, we provide a framework on how methodological concerns (e.g.

SDT research to a great extent has solely made use of correlational cross-sectional designs) regarding

rewards and SDT related research can be improved in the future.

Anaïs Thibault Landry, Konstantinos Papachristopoulos, Yu-Shan Hsu and Yu-Ping Chen

2. MONETARY REWARDS THROUGH THE LENS OF SELF-DETERMINATION

THEORY

One possible reason that influences monetary rewards' effect on employees’ work attitudes and

behavior could be that individuals may engage in an activity based on different motivations, either for

the external, financial gain, or for its own sake and enjoyment (Frey & Jegen, 2001; Krug & Braver,

2014). Self-Determination Theory (SDT; Ryan & Deci, 2000a), an empirically derived theory of

human motivation that differentiates motivation in qualitative terms as ranging from autonomous to

controlled, can provide a theoretical lens to guide us in understanding the inconsistencies across

research findings on the effectiveness of monetary rewards on employees’ work outcomes. According

to SDT, autonomous motivation is comprised of intrinsic and identified motivation. Controlled

motivation, on the other hand, is comprised of extrinsic and introjected motivation (Deci & Ryan,

2000). Individuals are said to have autonomous motivation when they partake in an activity for fun

(intrinsic motivation) and when they view it as in line with their values and identity (identified

motivation). The inclusion of identified motivation is especially important when it comes to the

workplace. Indeed, identified motivation (Bureau et al., 2018) would appear to be key when

considering employee motivation since individuals’ work is not solely comprised of tasks that are fun.

On this point, any job is likely to have components that are less fun and intrinsically enjoyable, but

that, nonetheless, are valuable and need to be completed. In this light, it is very likely that individuals

would develop identified motivation for their job. Individuals are said to have controlled motivation

when their participation is externally driven and instrumental in making gains (extrinsic motivation),

avoiding punishment, alleviating feelings of guilt, or satisfying their ego (introjected motivation). The

inclusion of introjected motivation is also important in the context of work, since many individuals on

the job market are likely to take on jobs out of pride and reputation, and judge their work based on ego,

guilt, or shame (Moran, Diefendorff, Kim, & Liu, 2012).

In addition to conceiving motivation in more nuanced, qualitative ways (i.e., autonomous and

controlled motivation), a central assumption of SDT (Deci & Ryan, 2000) is that employee attitudes

and behaviors are dependent on whether the activities they engage in - at work, in this case - contribute

to the satisfaction of their three basic psychological needs for competence, autonomy, and relatedness.

For competence, individuals must feel that they have all the skills required so as to influence their

environment and achieve their goals (Deci & Ryan, 2000a). For autonomy, individuals have to feel that

the activity they are pursuing is congruent with their personal values and have a sense of volition when

exercising it (Sheldon & Bettencourt, 2002). For relatedness, individuals need to feel that they are and

can be emotionally connected to other people in their (work) environment (Baumeister & Leary, 1995).

According to the theory, and supported by much empirical evidence collected over the span of 40

years across the globe, these three basic psychological needs can be more or less fulfilled depending on

the context, and greater satisfaction of these needs generally leads to better outcomes (Ryan & Deci,

2008). Existing research conducted with workers occupying a wide range of positions in a variety of

organizations and industries throughout the world supports SDT and shows that greater psychological

need satisfaction at work is associated with more optimal functioning, as indicated by greater

autonomous motivation, performance, affective commitment, job satisfaction, and psychological health

(e.g., Ryan, Bernstein, & Brown, 2010; Trépanier, Forest, Fernet, & Austin, 2015; Vansteenkiste et al.,

2007; Van den Broeck et al., 2008; Van den Broeck et al., 2016).

On the flip side of need satisfaction is need frustration. Studies investigating the role of

psychological needs in individuals’ lives also point to the finding that active infringement of these

needs, otherwise called psychological need frustration, in any given setting, including the workplace, is

associated with suboptimal functioning (e.g., Shuck et al., 2015; Vansteenkiste & Ryan, 2013). Indeed,

when individuals’ basic psychological needs are actively thwarted, whether this is due to them feeling

incompetent at what they are doing (i.e., competence need frustration), being coerced into behaving in

a certain way (i.e., autonomy need frustration), or being rejected by their peers (i.e., relatedness need

frustration), they typically experience more negative and suboptimal functioning. At work, employees

who experience greater psychological need frustration report more controlled motivation and

psychological ill-being, as well as less affective commitment and job satisfaction (Gillet et al., 2012;

Trépanier et al., 2015; Van den Broeck et al., 2010). These negative employee attitudes in turn lead to

negative employee behaviors, including lower performance (Van den Broeck et al., 2010), greater

deviant behavior (Bureau et al., 2018), fewer prosocial, collaborative, and extracurricular efforts, such

as lending assistance to colleagues, sharing information and knowledge, volunteering at the office, and

participating in team initiatives (e.g., Bureau et al., 2018; Thibault-Landry et al., 2017).

SDT assumes that factors which facilitate need satisfaction may help mitigate the undermining

effect of monetary rewards, creating the appropriate supportive conditions in which performance-

contingent rewards can enhance, rather than crowd out, intrinsic motivation (Ryan & Deci, 2018). Such

Int. Journal of Business Science and Applied Management / Business-and-Management.org

supportive factors include, but are not limited to, perceived organizational support (Gillet et al., 2012),

perceived supervisor autonomy support (Gillet et al., 2012), and the perceived meaning and usefulness

of the job (Kosfeld, Neckermann, & Yang, 2017).

According to SDT, on the one hand, when employees feel their needs are satisfied satisfied, they

are likely to be motivated and demonstrate desirable attitudes and behaviors. On the other hand, when

employees feel their needs are frustrated, they are less likely to be motivated and demonstrate

suboptimal attitudes and behaviors. So, the question becomes, when employees are presented with

monetary rewards, do these rewards satisfy or thwart their needs and, as a result, lead to different

attitudes and behaviors at work, thus explaining the inconsistent findings observed in the compensation

literature so far? Research has shown that monetary rewards could have different functional meanings.

Monetary rewards can be perceived as informative when presented in a supportive way so as to

encourage individuals’ efforts and participation in the activity, and convey appreciation and

acknowledgement of their contribution. Thus, when monetary rewards are perceived as informative,

they may positively contribute to employees’ psychological needs (Gagné & Deci, 2005; Moller &

Deci, 2014; Thibault-Landry et al., 2017; 2019a; Tremblay, Blanchard, Taylor, Pelletier, & Villeneuve,

2009). Conversely, monetary rewards can be perceived as controlling when presented in an oppressive,

constraining way that pressures employees and emphasizes the performance goals that need to be

reached (Deci et al., 1989; Kuvaas, Buch, & Dysvik, 2018). Hence, when monetary rewards are

perceived as controlling, they may hamper psychological needs.

Thibault-Landry and her colleagues (2017; 2019a; 2019b) empirically tested these SDT-

postulates, exploring the functional meaning of monetary rewards, and investigating how and why

monetary rewards perceived as having an informative meaning and those perceived as having a

controlling meaning could lead to different employee psychological experiences and functioning at

work. They found empirical evidence that when it comes to informative monetary rewards, perceiving

monetary rewards as informative appeared to be associated not only with feeling meaningfully

connected, competent, and (even more so) autonomous at work, but they could potentially buffer

against feelings of incompetence, oppression, and rejection in the workplace, thus leading to optimal

functioning at work (Thibault-Landry et al. 2019a). When it comes to controlling rewards, their results

suggest that perceiving monetary rewards as controlling is associated with more negative psychological

experience in the workplace, beyond feeling restricted, to feeling actively pressured and coerced into

behaving in certain ways at work, thus leading to suboptimal functioning at work (Thibault-Landry et

al., 2019a). As explained by Ryan and Deci (2018), “performance-contingent rewards have a strong

risk of having controlling functional significance insofar as one feels pressured to meet an externally

specified standard to get the reward” (p.133). This type of controlling significance implies that

employees no longer feel in control of the tasks that they consider important, but rather begin to shift

their attention to those tasks that would dictate their reward allocation.

In the same stream of research, Thibault-Landry and her colleagues (2017; 2019a) found evidence

of a significant association between the functional meaning of monetary rewards and employees’

psychological needs, including specifically the need for relatedness. This suggests that monetary

rewards can have an effect on one’s sense of belonging and connection to others at work. This is

consistent with past research findings linking monetary rewards with collaboration and teamwork,

helping explain why, under some circumstances. That is, when perceived as controlling, monetary

rewards can be associated with less cooperation amongst peers and colleagues, as well as a lower

likelihood of engaging in pro-social behaviors like helping others. Further corroborating this,

Papachristopoulos and Xanthopoulou (2019) found that relatedness need satisfaction moderated the

relation between the informative and controlling meaning of rewards and deviant behavior in such a

way that both meanings of monetary rewards related positively to deviant behavior under conditions of

low relatedness need satisfaction, while they were unrelated to deviant behavior under conditions of

high relatedness need satisfaction.

This emphasizes the point that offering a monetary reward, as well as any other type of rewards,

occurs within the context of a social exchange between a giver and a recipient, and that, as a result, this

reward can take on different meanings for the recipients based on their perceptions of the giver’s

intention. More specifically, together, these findings suggest that it is the functional meaning

(informative or controlling) and the recipient’s interpretation of the reward, not the reward itself, which

can have motivating or de-motivating effects (Thibault-Landry et al., 2017; 2019b). Hence, for

monetary rewards to be efficient tools to motivate employees in healthy and optimal ways, there has to

be a genuine intent on behalf of the giver (i.e., the employer or the manager), and such an intent needs

to be perceived by the recipient (i.e., the employees).

Anaïs Thibault Landry, Konstantinos Papachristopoulos, Yu-Shan Hsu and Yu-Ping Chen

Figure 1: An SDT model explaining how to better leverage monetary rewards

3. THE NATURE OF REWARDS AND WORK OUTCOMES: SOME THEORETICAL

AND PRACTICAL PROPOSALS

Monetary rewards can bring optimal or sub-optimal outcomes from employees based on the

functional meaning of rewards for employees. How can organizations ensure that the monetary rewards

they offer to employees are perceived as informative, and not controlling, in order to achieve the

optimal outcomes? Such factors or boundary conditions may stem from the giver, the receiver or the

social contexts. In Figure 1 a summary is provided regarding the research findings above as well as the

potential factors and boundary conditions for the effectiveness of rewards.

3.1 The Employee

Given that employees' perceptions determine the functional meaning of monetary rewards, it is

important to understand employees' predispositions, biases, and personality traits as they may influence

whether employees perceive monetary rewards as informative or controlling. Indeed, given the same

culture and the same organization, employees tend to interpret external events differently based on their

personality, beliefs, values, and orientations (Jacobsen et al., 2014).

For example, personality traits such as individual trait competitiveness (the enjoyment of

interpersonal competition and the desire to win and be better than others; Gläser & Van Quaquebeke,

2017; Spence & Helmreich, 1983), and beliefs such as the financial contingency of self-worth (the

extent to which individuals base their self-worth on their financial success; Park, Ward, & Naragon-

Gainey, 2017) and self-efficacy beliefs (the extent to which individuals believe in their own abilities to

overcome situations; Bandura, 2010) may influence the way employees perceive and interpret the

monetary rewards presented to them. On this point, research has shown that employees’ self-efficacy

beliefs positively affect the way they perceive their workplace monetary rewards (Bandura, 2010).

Greater self-efficacy beliefs could buffer against perceiving monetary rewards as controlling, thus

mitigating against the potential negative effects of such a practice (Park & Yang 2017). Research has

also shown that employees with high financially contingent self-worth experienced less autonomy at

work and perceived financial problems more negatively and employees with such beliefs may perceive

monetary rewards to be more controlling (Park et al., 2017). On a related note, Gläser and Van

Quaquebeke (2017) argued that pay for performance may increase employees’ interpersonal deviance,

particularly when employees are high in individual competitiveness

Organizations should also take into account employees’ personal characteristics, such as their

extrinsic or intrinsic work values, and their causality orientations (the tendency to perceive actions as

originating from the self) (Deci & Ryan, 1985). Extrinsic work values focus on the consequences or

outcomes of work—the tangible rewards external to the individual, such as income, advancement

opportunities, and status. In contrast, intrinsic work values focus on the process of work—the

intangible rewards that reflect the inherent interest in the work, the learning potential, and the

opportunity to be creative. (Ryan & Deci, 2000; Kasser, 2016; Twenge, Campbell, Hoffman, & Lance,

2010). Studies have reported that person-specific orientations towards autonomy and self-initiation tend

to protect employees from the negative impact of performance-contingent rewards on intrinsic

motivation (Hagger & Chatzisarantis, 2011, p.485). As such, Hagger and Chatzisarantis (2011) showed

that causality orientations towards autonomy - as opposed to control - could effectively mitigate against

the risk of suboptimal work behavior upon the use of rewards.

Int. Journal of Business Science and Applied Management / Business-and-Management.org

Last but not least, in light of today’s increasingly age-diverse workforces, organizations face the

challenges of fostering job satisfaction among both younger and older workers. Due to age-related

differences in motives and career goals, younger versus older employees’ job satisfaction vary

differently in line with monetary rewards (Kollmann, Stöckmann, Kensbock, & Peschl, 2020).

Kollmann and his colleagues (2020) suggest that there can be no “one size fits all” monetary reward

approach to satisfy both younger and older employees (cf., Hornung, Rousseau, Weigl, Mueller, &

Glaser, 2014). Researchers (Kollmann et al., 2020; Stone & Deadrick, 2015) have further indicated that

based on the differential value and interpretation that younger and older employees place on monetary

and non-monetary rewards, aligning reward and compensation systems with the values of the age-

diverse workforces can be an effective way for organizations to attract, motivate, and retain age-diverse

workforces.

3.2 The Type of Rewards

Employees nowadays put considerable thought into why they are working, what they are working

in, and where they are working, as they have become more critical of their career choice and are

looking for deeper and more personal sources of motivation (Ibarra, 1999; Iyengar, Wells, & Schwartz,

2006; Shamir, 1991). This is especially the case for younger professionals entering the job market, who

care not only about the monetary rewards they get from their work (e.g., the annual bonuses and spot

awards), but also the non-monetary rewards, such as additional time off, vacations, skill training, and a

sense of meaning and purpose (Schweyer, Thibault-Landry, & Whillans, 2018. ; Esfahani Smith &

Aaker, 2013; Whillans et al., 2016). While younger employees value recognition from peers and

organizations, they also highly value autonomy at work and they might perceive the contingencies for

some type of rewards as more controlling (Morell & Abston, 2018). Therefore, organizations should try

to consider alternative forms of rewards that fulfill employees’ needs for competence, autonomy, and

relatedness. For example, organizations may leverage other types of rewards that are not necessarily

based on money or that have a value that extends beyond money, as these may be more likely to be

perceived as conveying genuine recognition and appreciation. Non-monetary rewards such as flexible

work hours, paid and unpaid leave, skill development, a choice of assignments can thus be considered

to avoid the drawbacks that come with more traditional forms of monetary rewards and may better

fulfill their basic psychological needs (Thibault-Landry & Whillans, 2018).

Recent studies looking at non-monetary rewards, including gift certificates, travel, and luxury

goods and products, suggest that they may better convey appreciation and sincerity than monetary

rewards (e.g., Kelly, Presslee, & Webb, 2017). These forms of rewards are said to avoid “mental

accounting” (Thaler, 1999), in which employees subconsciously deposit monetary rewards into

“mental” accounts to pay routine bills, as these non-monetary rewards are consumed in fun, memorable

ways, creating positive associations with the giver – the employer- which triggers a reciprocity effect,

causing higher engagement and commitment to the organization. Of course, the efficiency of non-

monetary rewards to palliate some of the problems associated with monetary rewards applies only to

the extent that these non-monetary rewards are used in a different way, and not simply as an alternative

commodity prone to the same setbacks as cash (such as in points systems). If used in a similar tit-for-tat

mentality, non-monetary rewards based on points systems rewarding “good” behavior may have the

same effect as monetary rewards used as carrots. Hence, replacing one with the other would most

probably not solve the problems encountered when rewarding specific behaviors at work with money.

Presented more appropriately as a gift, non-monetary rewards may help foster stronger, positive

associations between the employer and the employee, by creating opportunities for greater emotional

attachment to the organization (Kelly et al., 2017). In a similar vein, researchers (e.g., Frey & Gallus,

2017; Gallus & Frey, 2017) also argue that rewards, ranging from the “employee of the month” title to

prizes, decorations, orders, and other honors, even if they are purely symbolic without having

significant monetary value, can significantly raise employee performance. Indeed, Bruni, Pelligra,

Reggiani, and Rizzolli (2019) found that while both monetary and non-monetary rewards can increase

employees’ motivation to perform when presented publicly, only non-monetary rewards crowd-in

intrinsic motivation and promote virtuous attitudes. Thus, organizations should leverage other types of

rewards that are not necessarily based on cash or that have a value that extends beyond money and

research should be conducted to test how different types of rewards can take on either informative or

controlling meanings. This would help organizations, as increasing numbers of workers report their

interest in both the tangible and financial benefits they get from their work (e.g., their salary), and the

intangible benefits and rewards such as career advancement and promotions, meaning and purpose, a

positive workplace culture, and alignment with their own values, aspirations and identities (Thibault-

Landry et al., 2019b).

Anaïs Thibault Landry, Konstantinos Papachristopoulos, Yu-Shan Hsu and Yu-Ping Chen

3.3 The Organizational Context

Most importantly, giving monetary rewards in a way that conveys recognition and appreciation is

a complex relational task (White, 2017). Thus, the key players in the allocation and distribution of

monetary rewards are the managers (as the givers). This points to the importance of managers in

representing the organization. They act as significant leaders in their workplace, department, or unit, to

whom employees turn in order to decipher and understand the norms, and rules of conduct (Bass,

1999). As such, they embody organizational values and build the workplace culture (e.g. Danna &

Griffin, 1998; Rynes, Gerhart & Parks, 2005). Managers thus need be mindful of the way they treat

their employees, given that this could have a considerable impact at different scales, including on the

unit’s work climate, the organization’s culture, and, more broadly, the employer’s image (Bass, 1990).

This points to the importance of providing managers with the appropriate training and resources to be

able to take on what has been described as a “critical” role, and convey genuine appreciation and

recognition when leading reward initiatives (Gostick & Elton, 2009).

Much research underscores the importance of employees’ relationships with their immediate

supervisors, whether it be in their daily experience of the workplace, or ultimately, in their decision to

commit to and stay in the organization. For example, employees who experience more positive

relationships with their managers report greater commitment to their organization and are less likely to

quit their job, whereas the opposite appears to be true for employees who experience more negative

relationships with their managers (Kang, Gatling, & Kim, 2015). Many studies corroborate this,

showing that employees’ trust in their managers, and positive perceptions of their treatment at work,

are positively associated with their commitment to the organization and well-being at work, thus

indicating how crucial managers are in how employees perceive rewards (e.g., Kelley et al., 2017;

Wang & Yang, 2016).

From this perspective, similar to sports, where coaches’ styles influence athletes’ outcomes, in

education, where parents and teachers influence children’s behavior, and in healthcare, where

caregivers, doctors, nurses and the like have a direct effect on patients’ health and treatment adherence,

managers have a direct influence on how monetary rewards are communicated and presented to

employees, that is, in an autonomy-supportive or controlling way, and thus they significantly influence

their perceptions of such rewards. Hence, it would be important to train managers to adopt an

autonomy-supportive communication style – rather than a controlling one: take into account

employees’ psychological needs (Aguinis, Joo, & Gottredson, 2013) and foster quality relationships

with their employees, so that employees are more likely to perceive the functional meaning of

monetary rewards as informative rather than controlling.

Research from SDT offers guidelines in terms of the behaviors and attitudes for managers to adopt

when seeking an autonomy-supportive communication style, as opposed to a controlling style. This

includes: fostering inner sources of motivation, relying on non-controlling language, providing

explanation and rationales, and acknowledging and accepting negative experiences and affect (e.g.,

Deci et al., 1989; Hardré & Reeves, 2009). In the specific case of reward programs, managers can

support employees’ psychological needs for autonomy by asking them for their perspective and

providing a meaningful rationale when alternative choices are not possible. They can also support

employees’ need for competence by setting an optimal level of challenge (i.e., a realistic level aligned

with employees’ skills) without just focusing on ex-ante bonuses. On the other hand, by setting

unrealistically high expectations, managers can undermine employees’ sense of competence, even

when rewards are possible and/or of high value. Managers can also support employees’ relatedness

needs by acknowledging feelings that are associated with rewards (e.g., “Do you feel fairly paid?”) and

by creating a context that does not threaten their need for connection (e.g., heightened competition, low

transparency, fairness, or controllability). So far, the studies conducted in the workplace show that

training managers is possible and leads managers to exhibit a more autonomy-supportive style, which

then leads employees to report more autonomous motivation and workplace engagement (e.g., Deci et

al., 1989; Hardré & Reeves, 2009). Ensuring that managers get adequate training and use an

autonomy-supportive communication style with their employees can thus be a useful tool to create the

necessary conditions for performance-contingent rewards to enhance, rather than crowd out, intrinsic

motivation (Ryan and Deci, 2018).

3.4 The Cultural Context

Having established the interactional nature between employers as reward givers and employees as

reward receivers, factors related to the workplace itself could influence the extent to which employees

perceive rewards as informative or controlling (e.g., Cerasoli et al., 2014; Deci et al., 1999a; Deci &

Ryan 1980; Gagné & Forest, 2008; Olafsen et al., 2015). Indeed, a study completed under an Incentive

Research Foundation (IRF) grant (Kelly, Presslee, & Webb, 2017) studied the effects of performance-

Int. Journal of Business Science and Applied Management / Business-and-Management.org

contingent monetary rewards presented within distinct workplace culture conditions in organizations.

Where monetary rewards were used in positive workplace cultures featuring employee inclusion, high

trust, and autonomy, the rewards were perceived more positively, thus suggesting an informative

meaning. On the other hand, where the workplace culture was less progressive, and even coercive (i.e.,

command & control style management, hierarchical, distrusting), the rewards were perceived more

negatively, thus suggesting a manipulative and controlling meaning.

In a similar vein, the workplace culture could further encompass justice perceptions related to the

process of reward allocation and distribution. To this end, one way to ensure procedural justice and

thus increase the probability that monetary rewards are perceived as informative, rather than

controlling, would be to maintain a credible linkage between performance and rewards. Employees

want to know what to expect, and how fairness will be ensured (Rasher, 2014). Research shows that

when employees are involved in the planning process and their opinions are considered, especially

when problems surface, they are more likely to feel performance expectations are fair, feel committed

to achieving the plans and look for constructive feedback and advice as the year unfolds (Rasher,

2014). This thus prevents any negative expectations or surprises at the end of the year - as the notion of

procedural justice encompasses the entire process from the beginning of the year when performance

plans are elaborated until the year-end discussion of development plans, salary increases, and bonus

awards. In doing so, employees’ needs for competence, relatedness, and autonomy are more likely to

be satisfied and, as a result, monetary rewards are more likely to be perceived as informative.

The workplace culture can further be tainted by the glocalization of the organization. National

culture might thus influence the degree to which monetary rewards are perceived as informative or

controlling, since research shows that cultural dimensions systematically relate to differences in

preferences for reward types, systems, and criteria as well as the occurrence of practices (Papalexandris

& Panayotopoulou, 2004; Schuler and Rogovsky, 1998; Chiang & Birtch, 2007). For example,

Nadeem, Raza, Kayani, Aziz, and Nayab (2018) indicated that monetary rewards, especially contingent

compensation, are perceived differently by employees in different cultures. Similarly, rewards based on

individual performance were found to be favored and perceived as self-fulfilling (informative) in

cultures with high individualism and high-performance orientation (Chiang, Lemanski, & Birtch,

2017). Workplace rewards may also be perceived differently based on the distribution of power and/or

the power-distance cultural background of the employees (e.g., Hofstede, 1980; Moe et al. 2018).

Hence, cross-cultural scholars (e.g., Gelfand, Aycan, Erez, & Kwon, 2017) have recently urged both

researchers and practitioners to explore the meaning of “universal” (i.e., etics) versus “culturally

embedded” (i.e., emics) HR practices, as employees may attribute different meaning toward the same

HR practices (i.e., rewards and compensation, performance evaluation). On this point, the motivational

effects of pay systems should further be considered in a poly-contextual approach since cultural

differences may also be confounded with the national legal restrictions and the economic/ institutional

context (Tsui et al., 2007).

Finally, the organization’s culture can reflect the nature of the organization, whether it is for profit

or not-for-profit, and this is likely to have an impact on the use and perception of monetary rewards

(Vansteenkiste, Ryan, & Soenens, 2020). Indeed, studies have shown that employees in public

organizations tend to value lower-powered incentive structures and intrinsic rewards to a greater extent

than those in the private sector (Crewson,1997; Perry et al., 2010). Illustrating this, in for-profit

organizations, compensation is more likely to be based on the entire organization’s performance, and

promotion is more likely to be based on the unit’s performance, which may increase the expectation

that managers will be aggressive in pushing their people to accomplish organizational goals (Bailey &

Risher, 1996).

To be competitive, for profit organizations are more likely to signal controlling monetary rewards

instead of informative monetary rewards. On the other hand, not-for-profit organizations are more

likely to offer rewards that fulfill individual values and psychological needs. For example, for-profit

organizations may be more likely to utilize monetary and/or tangible rewards, such as prizes and

money, to reinforce the importance of performance and achievement, while not-for-profit organizations

may be more likely to use non-monetary and/or intangible rewards, such as social impact, distinctions,

and honors. The not-for-profit sector typically operates under different missions, motives and values,

and realities than for-profit organizations. For example, they are usually devoted to social goals that

diverge from those of for-profit organizations, and they may not face the competitive pressures felt by

for-profit organizations. In short, practitioners in for-profit organizations may want to pay more

attention to the above proposals to avoid the pitfalls of monetary rewards given the riskier landscape

and different competitive environment of for-profit organizations. See Figure 2 for a summary of our

suggestion about how to carefully elaborate reward programs.

Anaïs Thibault Landry, Konstantinos Papachristopoulos, Yu-Shan Hsu and Yu-Ping Chen

Figure 2. Proposals for leveraging informative monetary rewards

4. FUTURE RESEARCH AVENUES

This current article has provided some suggestions both on a theoretical and practical level

regarding a more functional way of providing rewards in the light of SDT related research findings.

Recent articles (e.g., Olafsen & Deci, 2020, Deci, Olafsen & Ryan, 2017) have made suggestions for

future research in terms of rewards strategy (e.g., examining how tangible rewards and pay affect the

internalization of regulations for work behaviors) and in this current study we aimed at integrating

these aspects in both a theoretical and applied way. In the previous section we highlighted the four

pillars that future research and practice need to focus on so that rewards can play their role in an ever-

changing work environment. With a more horizontal approach, this research suggests that more

intervention studies (e.g., Lundmark, von Thiele Schwarz, Hasson, Stenling, & Tafvelin, 2018, Kuvaas

et al., 2016) should be applied in the rewards domain in order to relate the functional significance of

various pay contingencies to motivations and work outcomes. Moreover, future research needs to

reconcile inconsistencies in the literature by considering particular conditions under which performance

contingent incentives may effectively sustain motivation in the workplace (Corduneanu, Dudau &

Kominis, 2020). On the same lines, since the functional meaning of rewards concept has lately

attracted a great deal of interest (Thibault Landry et al., 2019, 2017) more research in the field is

needed to investigate how monetary rewards are presented in the workplace, including how

organizations present reward programs to their employees and to identify the best way to leverage

monetary rewards to foster an informative meaning and intrinsic as well as identified motivation. Last

but not least, SDT scholars should contribute so that the basic SDT model for rewards in the workplace

should gain more confidence and nuance as well as theoretical establishment, with longitudinal studies

(e.g, Fernet et al., 2019), multilevel studies (e.g., Gagné, Morin, et al., 2019) and relevant meta-

analyses and metanalytic reports (e.g., Slemp et al., 2018, Deci, Olafsen & Ryan, 2017).

5. CONCLUSION

The current article aimed at strengthening the general claim that money in and of itself has little

value when taken in isolation, and that it is the social construct surrounding it, that is, its meaning, that

provides it with a desirable nature. As such, we reviewed evidence for organizations to help better

leverage their reward initiatives, and ensure that the rewards they offer to their employees are perceived

as informative, rather than controlling. We argue that by better understanding employees’ attributes,

considering alternative forms of rewards, providing communication training to managers, and being

mindful of the workplace and national context, organizations will be more likely to address employees’

desires, drive optimal workplace functioning, and face the reality of the 21st century. Indeed, the reality

of the workplace is becoming increasingly complex as there exists a broad spectrum of workplace

tangible and intangible, monetary and non-monetary rewards. Reward programs in modern society are

fast evolving and can now include much more solely base pay and monetary rewards like bonuses and

stock options, but also cash-like rewards such as gift cards, non- monetary tangible rewards like luxury

goods, and intangible rewards such as flexible work options.

Int. Journal of Business Science and Applied Management / Business-and-Management.org

With so many components, offering any type of reward, irrespective of its form or value, would

appear to be no simple task, there is a growing need to better study, identify, understand, and

implement specific organizational practices when giving out rewards at work to improve the likelihood

of them being perceived by employees as informative. To remain on top of our field, we need to study

these total reward strategies to help organizations best choose the specific types of rewards to include

in their reward programs, and more importantly to ensure that these rewards are perceived as

informative, contribute to satisfying employees’ psychological needs, and, ultimately, generate a

healthily motivated workforce.

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