Incomplete Incentives, Task Temporality, and Effort Spillover in a Multitask Environment

Abstract

Incomplete incentive contracts in multitask environments present a significant control challenge of ensuring that employees expend sufficient effort towards all assigned tasks, particularly those that are not directly incentivized. Prior research finds that the severity of this agency issue depends on task temporality such that it is less problematic when the tasks are performed concurrently as opposed to sequentially. I extend the literature by examining how incentive type, task temporality, and performance feedback influence effort spillover onto a second, unincentivized task. Specifically, I predict that goal-based incentives and positive performance feedback on an incentivized task will lead to a stronger positive affective response, which will induce greater effort spillover onto an unincentivized task, under sequential multitasking relative to concurrent multitasking. To test my predictions, I employ a 2 x 2 between-subjects experimental design, where I manipulate the type of incentive contract used for the incentivized task between goal-based or piece-rate incentives and task temporality between concurrent or sequential. Participants complete two real-effort tasks where Task 1 performance is incentivized, and Task 2 performance is unincentivized. I examine the impact of my manipulations on participants’ affective responses to performance feedback on the incentivized task and their performance on the unincentivized task, which proxies for task effort, as my dependent variables of interest. I find that goal-based incentives under sequential multitasking following goal attainment does lead to greater effort spillover onto an unincentivized task under sequential multitasking compared to concurrent multitasking. Consistent with my theory, I find that positive affect from performance feedback is positively associated with effort spillover onto an unincentivized task. I further predict that goal-based incentives and negative performance feedback on an incentivized task is associated with a stronger negative affective response, which will induce lower effort spillover onto an unincentivized task under sequential multitasking relative to concurrent multitasking. However, I do not find support for the prediction. Specifically, I do not find evidence that negative affect following negative performance feedback is associated with negative effort spillover onto an unincentivized task. The findings from this study highlight the importance of examining how features of the management control system (i.e., incentive type, performance feedback, and job design) can help to address a costly agency problem in multitask environments.