Collective Pay for Performance: A Cross-Disciplinary Review and Meta-Analysis

Abstract

Rewarding collective outcomes has become an increasingly important strategic motivational tool for driving collective success, reflecting the insight that paying employees for individual contributions does not always optimize performance in collective endeavors. Research into different types of collective pay for performance (PFP), or pay that is contingent on collective outcomes, has been studied in diverse academic fields (e.g., economics, strategy, psychology), but the compartmentalization between these academic disciplines hinders conceptual coordination. To advance this research and its related insights, this article provides a review of the theory and evidence pertaining to the relationships between different collective PFP types and collective outcomes. We also provide a meta-analysis that shows that collective PFP has desirable outcomes (e.g., meta-analysis shows an overall ρ = 0.11; p < .001), substantiating the value of studying collective PFP separately from individual PFP. The review also reveals a lack of empirical and theoretical development and highlights the need for a comprehensive theory of collective PFP. Our cross-disciplinary review of 106 empirical articles builds a foundation for advancing common pursuits, integrating knowledge, and creating theory. The consolidated perspectives point to promising directions for future research.