The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.

Not Only Money – Meanings of Group-Based Incentives in the Light of Reflection Theory

Anu Hakonen

Doctoral dissertation for the degree of Doctor of Philosophy to be presented with due permission of the School of Science for public examination and debate in Auditorium TU1 at the Aalto University School of Science (Espoo, Finland) on the 27th of April 2012 at 12 noon.

Dissertation in PDF format (ISBN 978-952-60-4571-9)   [3418 KB]
Dissertation is also available in print (ISBN 978-952-60-4570-2)

Note: The language of the dissertation is Finnish.


Motivating employees with pay for performance schemes has become increasingly popular. This thesis focuses on group-based incentives. It is still unclear when and under which conditions they affect work performance. Reflection theory of pay was developed to explain the psychological processes related to pay and its effects on individual performance.

Reflection theory is grounded on the proposition that pay is meaningful to individuals because it communicates information about domains which are important to them. This dissertation studied the different meanings of pay to persons who belong to group-based incentive systems. It also explores whether incentives have other positive meanings beyond those suggested in reflection theory, whether they can be meaningless, and whether the meaning can be negative. Reflection theory argues that the relationship between the structure of reward system and the way it is used, and its performance outcomes are mediated by meanings given to it. These mediation effects were also studied.

Five sub-studies were conducted to answer the research questions outlined above. These sub-studies consisted of four data sets consisting of interviews and questionnaire responses of individuals who belong to group-based incentive systems. Also documents and information on the structure of these reward systems, on the way they were developed, and on their connection to the organization's strategy were utilized. The data were analyzed using both qualitative and quantitative methods.

The key results of this thesis were: group-based incentives have two kinds of meanings to employees; monetary and symbolic. Symbolic meaning consisted of feedback and control meanings as reflection theory proposes. However, a new symbolic meaning of respect, which incentives communicate, was found. The results suggest that the effects of incentives on performance were mediated by meanings associated with them. Furthermore, the relationship between symbolic meaning and performance was stronger than the relationship between monetary meaning and performance.

The fundamental assumptions of reflection theory were supported in this thesis. All meanings of pay suggested to exist by reflection theory were found in group-based incentive systems. The novel finding, that is respect meaning, complements the theory. Reflection theory was supported through the results, which disclose the mediation mechanisms between rewards system structure, its use, and individual work performance. Finally, two alternative motivational models were suggested explaining symbolic meanings: basic psychological needs outlined in self-determination theory, and group engagement model based on social identity approach.

Keywords: meaning of pay, group-based incentives, reflection theory, individual performance

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© 2012 Aalto University

Last update 2012-10-31