Editing Principal–agent problem (section)

===Non-financial compensation===
Part of this variation in incentive structures and supervisory mechanisms may be attributable to variation in the level of intrinsic psychological satisfaction to be had from different types of work. Sociologists and psychologists frequently argue that individuals take a certain degree of pride in their work, and that introducing [[performance-related pay]] can destroy this "psycho-social compensation", because the exchange relation between employer and employee becomes much more narrowly economic, destroying most or all of the potential for social exchange. Evidence for this is inconclusive—Deci (1971), and Lepper, Greene and Nisbett (1973) find support for this argument; Staw (1989) suggests other interpretations of the findings.

Incentive structures as mentioned above can be provided through non-monetary recognition such as acknowledgements and compliments on an employee (agent) in place of employment. Research conducted by Crifo and Diaye (2004) <ref>{{cite web |last1=Crifo |first1=Patricia |title=INCENTIVES IN AGENCY RELATIONSHIPS: TO BE MONETARY OR NON-MONETARY? |url=https://d1wqtxts1xzle7.cloudfront.net/41461726/INCENTIVES_IN_AGENCY_RELATIONSHIPS_TO_BE20160123-17475-j6j93s.pdf?1453537375=&response-content-disposition=inline%3B+filename%3DINCENTIVES_IN_AGENCY_RELATIONSHIPS_TO_BE.pdf&Expires=1603959797&Signature=JaMU2eevkTupkP2pc-GCkii1AH-0ai63RTCR81tQuey9vJdSzOrNrabxAU7XRcYLRPczwQ4JYQhBJxdsBHjQc8LhE7I6L5kdp6Kv28eyHbXs2pzsyiTbkask8wq~NBhFgbq3YMxxPXXTMSMUyRdkx9f~5I8sQ9D5rp2p1VbNfx6bUwX4NUgD4bKaTiQc9nWg4IEGwkTm3Qs2sH94pnsHbMxUWQHANyWgpEzHhieO0YcVzkYaQdpv6vx-ug85-3kYMOAjZylJ9ewcjeh0hV~qlyYDa8w6GZ8jGwyVG3WrgYpA3iAz1aHhwTxeUSup1GG-Qqv0YR~ltxJkXYbWDVrSzw__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA |access-date=29 October 2020}}{{dead link|date=May 2021|bot=medic}}{{cbignore|bot=medic}}</ref> mentioned that agents who receive compensations such as praises, acknowledgement and recognition help to define intrinsic motivations that increase performance output from the agents thus benefiting the principal.

Furthermore, the studies provided a conclusive remark that intrinsic motivation can be increased by utilising the use of non-monetary compensations that provide acknowledgement for the agent. These higher rewards, can provide a principal with the adequate methodologies to improve the effort inputs of the agent when looking at the principal agent theory through an employer vs employee level of conduct.