Prior commitment and the merit pay allocation process

Merit pay plans are often used by companies as a way to motivate and reward employees. While several theories of motivation suggest that rewarding employees for individual accomplishments will produce positive results, there are potential threats that may lead to negative outcomes. Research in psychology and organizational behavior suggests that personal involvement in a decision‐making process can influence current and future behavior. This paper reports the results of an experiment examining individuals’ tendencies to overcommit to a previous decision. Results show that when an individual is personally involved in both the hiring and subsequent merit allocation process for an employee, this prior commitment has a significant effect on the amount of money allocated relative to an individual participating in the merit allocation decision but not the hiring process. Personal involvement with an employee leads to an increase in the merit allocation despite evidence that the individual did not meet the standards for merit pay.