Before or after?

: the influence of bonus payment moment on bonus appeal and motivation to work

Abstract

Heuristics and biases bear the potential to increase the efficiency of bonus frameworks. In the research, a bonus framework where a bonus is prepaid with an obligation to reimburse the payment in case a predefined target is not met is compared to a framework, where the bonus is paid out after the fact. In a literature review, the influence of a present bias on the perceived appeal of bonuses before signing an offer is evaluated. Furthermore, the impact of both frameworks on motivation is analyzed for the period where the target can be achieved and the period subsequently to not achieving the target. An empirical study is utilized to compare both frameworks using a between-subject design. It provides empirical evidence that bonus frameworks where a bonus is prepaid are perceived as more appealing, compared to a framework, where the bonus is paid out after the fact. Furthermore, it demonstrates that an obligation to reimburse a bonus leads to a lower motivation level in case the target is not achieved.

Date of Award	26 Jan 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Filipa de Almeida (Supervisor)