Abstract:

A large body of evidence indicates that pay for individual performance (PFIP) has a positive impact on workers' performance and productivity, as well as on companies' financial performance. Also, it is recognized that intrinsic motivation contributes to better persistence, performance, and productivity. However, the literature does not offer a solid answer regarding the negative or positive effects of that reward system on intrinsic motivation in the workplace. Seeking to contribute to this debate in the literature, this study aims to understand the effect of PFIP on employees' intrinsic motivation. An empirical research was conducted with 184 professionals working in human resource consulting firms. Data was collected using an online survey and statistically analyzed. The present study confirmed that PFIP has a positive direct effect on individual intrinsic motivation in the context studied. Also, it has a positive indirect effect, partially and sequentially mediated by satisfaction with variable pay and satisfaction of basic psychological needs. From an organizational point of view, the findings suggest that in certain contexts, such as human resource consulting firms, compensation systems that reward individual performance can enhance intrinsic motivation.