Groupcentric budget goals, budget-based incentive contracts, and additive group tasks

Jonathan Farrar, Theresa Libby, Linda Thorne
  • Review of Accounting and Finance, May 2015, Emerald
  • DOI: 10.1108/raf-12-2013-0141

Can Individual Goals Motivate Group Performance? The Answer Depends on the Type of Individual Goal

What is it about?

When a group's work is organized so that group performance is the sum of individual performance, prior research indicates individual goals motivate better than a group goal. We examine whether the type of individual goal matters. We compare group performance when each individual is assigned a goal customized to their own capability (i.e., egocentric goals), when each group member is assigned the same individual goal that is based on the average capability of the whole group (i.e., groupcentric goals) and when the group is assigned a goal for the group as a whole. We find that group performance is higher when groupcentric individual goals are assigned than when egocentric individual goals are assigned.

Why is it important?

Our findings are important given prior research suggesting when group performance is important, organizations should motivate their employees using group rather than individual goals. When the group's work is additive, free-riding can occur when group goals are assigned (i.e., some group members exert less effort than others). We find that assigning individual goals that reference the average performance of the group is viewed as more consistent with the objective of raising group performance and thus, motivate higher group performance.

Perspectives

Dr Theresa Libby
University of Waterloo

Groupcentric goals have been shown to motivate performance for other types of group tasks, but we were unsure whether we would see an effect with an additive task. It seems that consistent communication that "you are a group and should work as a group" through both task and incentive design are important in motivating group performance

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http://dx.doi.org/10.1108/raf-12-2013-0141

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