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Although compensation specialists generally argue for incentive systems that link rewards to performance, self-determination theory argues that such contingent rewards can have detrimental effects on autonomous motivation. The authors present a model of the motivational effects of compensation systems that attempts to reconcile the self-determination theory view and the literature on compensation. This model evaluates how compensation system characteristics, such as the amount and variability of pay, can influence the satisfaction of the needs for autonomy, competence, and relatedness, which in turn influence autonomous work motivation.
Keywords: self-determination theory, compensation, rewards, incentives, organizational justice
Self-determination theory (SDT; Deci & Ryan, 1985, 2000) has been used only occasionally to understand organizational behavior, despite the fact that the theory offers tremendous potential to study organizational processes and outcomes. We will briefly review organizational research that has been conducted with selfdetermination theory, and identify gaps in our knowledge of organizational behavior that could be filled by using this framework. We will concentrate especially on the field of compensation.
SDT distinguishes between intrinsic motivation and extrinsic motivation. Intrinsic motivation refers to doing an activity for its own sake, because one finds the activity inherently interesting and satisfying. In contrast, extrinsic motivation refers to doing an activity for an instrumental reason. There are different types of extrinsic motivation that can be relatively controlled by external factors, or that can be relatively autonomous, that is, regulated through a person's acquired goals and values. These types of motivation can be aligned along a continuum representing the degree to which they have been internalized. Internalization is defined as "the active assimilation of behavioral regulations that are originally alien or external to the self (Ryan, 1995, p. 405). At the low-end lies external regulation, which refers to doing an activity solely to obtain rewards or to avoid punishments. Next, introjected regulation refers to the regulation of behavior through self-worth contingencies like ego-involvement and guilt. It involves taking in a regulation so that it becomes internally pressuring, and thus involves only partial internalization that remains controlled, not volitional. Next, identified regulation refers to doing an activity because one identifies with its value or meaning, and accepts it as one's own, which means that it is autonomously regulated. Finally, integrated regulation refers to identifying with...