The role of compensation or extrinsic rewards, including pay for performance (PFP), has received relatively little attention in the organizational behavior/psychology literature on work motivation. What attention it has received has often taken the form of raising cautions about the potential harmful effects of PFP on (intrinsic) work motivation, as well as on creativity. We critically assess the theory and evidence that have provided the basis for such arguments and conclude that support for such claims (in workplace settings) is lacking. We seek to provide a more accurate view of how extrinsic rewards such as PFP operate in the workplace and how they influence workplace motivation, creativity, and performance. We document how social determination theory and creativity theory have recently undergone major changes that better recognize the potential positive influence of extrinsic rewards such as PFP. Finally, we identify areas in need of further research.


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