IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 46, NO. 1, FEBRUARY 1999 47 Do Rewards Benefit the Organization? The Effects of Reward Types and the Perceptions of Diverse R&D Professionals Chao C. Chen, Cameron M. Ford, and George F. Farris, Member, IEEE Abstract— Previous compensation research has focused pri- marily on individual benefits derived from monetary rewards and has tacitly assumed that diverse organization members hold similar beliefs regarding the efficacy of specific rewards. This article compares the beliefs held by members of diverse demo- graphic groups in R&D organizations regarding the extent to which different types of rewards produce organizational benefits. Results based on evaluations from over 1000 R&D scientists and engineers across 30 companies found that intrinsic rewards and salary increases were widely believed to provide benefits to an organization. Individual cash rewards were generally seen as providing the fewest benefits. However, members of different ethnic groups and genders held different beliefs about the utility of several rewards. The article concludes by suggesting how similarities and differences in beliefs across a diverse group of employees could affect the management of rewards in R&D settings. Index Terms—Collective and individual rewards, demographic diversity, fixed and variable rewards, foreign-born scientists and engineers, intrinsic and extrinsic rewards, monetary and nonmon- etary rewards, organizational (net) benefits, R&D professionals, reward types, socioemotional rewards, women scientists and en- gineers. I. INTRODUCTION H IGH-TECHNOLOGY organizations have been cited as models for using rewards and recognition to attract scarce knowledge specialists (e.g., R&D scientists and engi- neers), reduce high turnover, and stimulate innovation and productivity [4], [20]. Recently, however, researchers and practitioners have been reexamining the ability of reward systems to accommodate the preferences of diverse R&D professionals and align their efforts with the organization’s strategic priorities [15], [19], [32], [34]. The interest in how rewards affect the productivity of a diverse R&D work force has been bolstered by several trends. For example, global competition and faster technological ad- vancements are forcing R&D managers to align R&D activities more closely with strategically valuable core competencies. This has placed a greater burden on R&D professionals to Manuscript received May 2, 1996; revised January 27, 1997. Review of this manuscript was arranged by Department Editor R. Balachandra. This work was supported in part by the Technology Management Research Center, Rutgers University. C. C. Chen and G. F. Farris are with the Faculty of Management, Rutgers University, Newark, NJ 07102 USA. C. M. Ford is with the Management Department, University of Central Florida, Orlando, FL 32816-1400 USA. Publisher Item Identifier S 0018-9391(99)00653-4. justify their work in terms of a firm’s business priorities. Team-based restructuring in R&D settings has also placed more emphasis on cooperation and team cohesiveness. These changes have led human resources managers to rethink how various individual and group rewards contribute to the overall goals of an R&D organization [3], [33]. For instance, highly in- dividualized reward systems characteristic of traditional R&D organizations may have detrimental side effects that limit the effectiveness of teams. Furthermore, U.S. R&D organizations are in the midst of a dramatic shift in the demographic composition of their technical work force [54], [55]. Although there is a con- tinued under-representation of women and minorities in sci- ence and engineering, recent entrants are more likely to be nontraditional; specifically, women, U.S.-born minorities, and immigrants represent an increasing proportion of newly hired R&D professionals. According to a 1989 report to the National Science Foundation (NSF) by the Commission on Professionals in Science and Technology, in the past two decades there has been a steady increase in both the numerical and proportionate representation of women among science doctoral graduates. There has also been a small increase in science enrollments of American minority members and a rapid and substantial increase in foreign graduates. These trends contrast with a considerable decrease in science degrees awarded to American white men. This NSF report predicted that the next decade will require an increased emphasis on the need to educate and utilize an American work force that includes characteristically fewer white non-Hispanic men, more women of all races, more minority men, and increasing numbers of immigrants. One challenge demographic diversity presents to R&D human resource management is the need to create reward systems that accommodate different beliefs held by members of different demographic groups [31], [34]. Unfortunately, previous studies of rewards in R&D contexts provide limited guidance to human resource professionals interested in configuring compensation systems that spur the productivity of a diverse work force. The orientation of prior research is not well suited to addressing this issue for three reasons. First, most studies have focused only on one type of compensation; individual performance-based monetary re- wards [23]. This approach ignores a broad array of alternative group-based, organization-based, and nonmonetary rewards. Second, previous research is oriented toward assessing the effectiveness of reward systems in terms of the benefits derived 0018–9391/99$10.00  1999 IEEE