Incentivizing Team Leaders: A Firm-Level Experiment on Subjective Performance Evaluation of Leadership Skills

Thomas Gall, Xiaocheng Hu () and Michael Vlassopoulos
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Xiaocheng Hu: University of Exeter

No 16123, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In teamwork settings, providing effective leadership can be challenging for team leaders due to multitasking and the difficulty in measuring and rewarding leadership input. These challenges might lead to underprovision of leadership activities, which can ultimately impede the productivity of the team. To address this problem, we conduct a field experiment at a manufacturing firm, introducing a relative subjective performance evaluation of team leaders' leadership activities by their managers, coupled with bonuses based on their leadership rank among all leaders. Our intervention increased worker productivity by approximately 7%, while leaving team leaders' productivity unchanged, and was profitable for the firm. During the intervention, we observe a positive correlation between the evaluations of team leaders and the productivity of team members, suggesting that the subjective evaluation indeed increased leadership activities and thus productivity.

Keywords: multitasking; subjective evaluation; teamwork; incentive schemes; productivity; leadership (search for similar items in EconPapers)
JEL-codes: C93 J24 J33 M52 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2023-05
New Economics Papers: this item is included in nep-eff, nep-exp, nep-hrm and nep-lma
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