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The Effect of Performance-Contingent Incentives when Task Complexity is Manipulated through Instruction
Journal article   Open access   Peer reviewed

The Effect of Performance-Contingent Incentives when Task Complexity is Manipulated through Instruction

Monte Wynder
Australasian Accounting, Business and Finance Journal, Vol.4(4), pp.51-72
2010
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Abstract

Accounting, Auditing and Accountability performance-contingent incentives standard cost variance analysis employee empowerment problem solving accounting education
When, and how, performance-contingent incentives improve performance is an important question for organisations. Empirical results have been mixed - performance-contingent incentives sometimes increase performance, sometimes decrease performance, and sometimes have no effect. Theorists have called for further research to identify the effect of various moderating variables, including knowledge and task complexity. This study responds by considering the role of instruction in providing the necessary knowledge to reduce task complexity. The results suggest that a performance-contingent penalty can be a particularly effective means of directing effort for a simple task. For a complex task, performance can be improved through instruction. The type of instruction is important - with rule-based instruction effectively directing effort - however principle-based instruction is necessary to facilitate problem investigation and problem-solving.

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