Intrinsic motivations may be more important in a wage rate system than in a piece rate system at generating employee effort.

Question

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In a wage rate system, employees are paid a fixed amount regardless of their level of output, while in a piece rate system, employees are paid according to the number of units they produce. Therefore, in a wage rate system, intrinsic motivations such as job satisfaction and sense of achievement become more important in generating employee effort since there is no direct relationship between effort and pay. In contrast, in a piece rate system, extrinsic motivations such as pay become the primary motivator for employee effort.

Intrinsic Motivations May Be More Important in a Wage Rate