Group Goal Difficulty and Shirking : The Moderating Role of Group Identity

Goal-setting is a common practice to motivate effort. However, little is known about the effectiveness of group goal difficulty on shirking depends on team dynamics, such as group identity. We study the question under a mixed incentives setting where a combination of a tournament incentive and a group-based pay is offered as such an incentive setting is widely used in practice. Using a real-effort experiment, we predict and find that group goal difficulty has a negative effect on shirking when group identity is strong but has a positive effect when group identity is weak. That is, in strongly identified groups, increasing group goal difficulty motivates shirking. Yet, in weakly identified groups, increasing group goal difficulty reduces shirking. The reason is that when group identity is weak, group members focus on individual interests and compete for a larger tournament incentive. When group identity is strong, group members focus on the group's common good. Failing to reach group goals weakens the strong group identity and, therefore, demotivates effort. The study suggests that given the wide use of mixed incentives in practice, organizations need to form teams carefully as team dynamics may adversely affect the influence of the control mechanism on effort