A recent trend in organizations is to motivate employees with goal‐based prosocial rewards, whereby employees must donate their rewards to charities upon goal attainment. We examine the motivational effects of goal‐based prosocial rewards versus cash rewards under different levels of goal difficulty. We develop our hypotheses based on affective valuation theory, which posits that when valuing uncertain outcomes by affect rather than calculation, individuals are largely insensitive to changes in probability of the outcomes, including probability of goal attainment. Experiment results support our hypotheses. Specifically, we find that employees who are rewarded with prosocial (vs. cash) goal‐based rewards are more likely to adopt an affective valuation approach. Consequently, when employees are assigned either an easy goal or a stretch goal, their effort is higher when incentivized with a goal‐based prosocial reward than a cash reward. Furthermore, there is a less curve‐linear relationship between goal difficulty and effort with prosocial (vs. cash) goal‐based rewards. These findings highlight for incentive system designers the motivational advantage of goal‐based prosocial rewards relative to traditional cash rewards. Furthermore, we extend the academic literature by showing how affect‐rich rewards such as prosocial rewards can influence employees' assessment of the probability of goal attainment.

Recent management trends highlight two techniques firms use to motivate employee effort: (1) fostering employees' organizational identification (OI) and (2) offering employees tangible rewards such as gift cards instead of cash rewards. We use three studies to examine how OI affects employees' reward valuation and how such effects differ depending on the reward type. Study 1 is an experiment, demonstrating that increasing OI increases the emphasis participants place on a reward's symbolic value, which then increases the total value of the reward—to a larger extent when the reward is tangible than when it is cash. Study 2 is an experiment, providing evidence that Study 1 results are robust to using a tangible reward that is not socially consumed, that is selected either by the firm or by the employee, and that is either a good or poor fit with the employee's personal preference. Finally, Study 3 is a survey, asking respondents about actual rewards they received from their current employer and capturing their actual OI with their current employer. Results in Study 3 are inferentially similar to those in Study 1 and Study 2, albeit stronger for rewards of smaller monetary value. Collectively, these results highlight the particular benefit of strong OI on how employees value tangible rewards relative to cash rewards, which should be of interest to incentive system designers.