A significant two-way interaction between self-set goal level instructions (an instruction given to subjects to set hard, easy, or any goals) and methods of payment (straight piece-rate, differential piece-rate with goal attainment step bonus, and hourly flat rate) in influencing personal goals, subsequent personal goals, and goal valences was found. The highest level of personal goals was set under straight piece-rate (pay for performance) in which self-set hard goal instructions were given. In addition, goal valences were found to partially mediate the interactive effects of methods of payment and self-set goal level instructions on personal goals. Furthermore, personal goals were found to: (1) completely mediate the effects of goal valences on performance; and (2) completely mediate the main effects of self-set goal level instructions—as well as the interactive effects of both self-set goal level instructions and methods of payment—on subsequent personal goals. This research sheds light on the determinants, process, and consequences of personal goals and performance and shows that organizational contextual variables such as the reward systems and instructions to choose goals of a certain level significantly interact to influence personal goals, subsequent personal goals, and goal valences.
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