Performance contingent pay and autonomy: Implications for facilitating extra-role creativity

• A model identifies four moderating factors that allow performance contingent pay to sustain employee autonomy.
• Pay practices are identified that allow performance contingent pay to be used without undermining extra-role creativity.
• Extra-role creativity is defined and examples of it are provided which differentiate it from in-role creativity.

This paper applies self-determination theory and motivation crowding theory to identify specific conditions where performance contingent pay for in-role job performance can be used while at the same time preserving or enhancing perceived autonomy to facilitate extra-role creativity. We formulate theoretical propositions that identify several factors that positively moderate the relationship between performance contingent pay and autonomy so that perceived autonomy is increased rather than decreased. The moderating factors are (1) ex-post basis of pay, (2) generalized performance outcomes, (3) employee choice over amount and timing of pay, and (4) low intensity pay. Finally, we offer theoretical contributions for scholars and implications for managers of pay systems.