[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/v27y2009i1p49-82.html
   My bibliography  Save this article

Performance Pay and Managerial Experience in Multitask Teams: Evidence from within a Firm

Author

Listed:
  • Rachel Griffith
  • Andrew Neely
Abstract
This article exploits a quasi-experimental setting to estimate the impact that a commonly used performance-related pay scheme had on branch performance in a large distribution firm. The scheme, which is based on the Balanced Scorecard, was implemented in all branches in one division but not in another. Branches from the second division are used as a control group. Our results suggest that the Balanced Scorecard had some impact but that it varied with branch characteristics, and, in particular, branches with more experienced managers were better able to respond to the new incentives. (c) 2009 by The University of Chicago. All rights reserved.

Suggested Citation

  • Rachel Griffith & Andrew Neely, 2009. "Performance Pay and Managerial Experience in Multitask Teams: Evidence from within a Firm," Journal of Labor Economics, University of Chicago Press, vol. 27(1), pages 49-82, January.
    • Handle: RePEc:ucp:jlabec:v:27:y:2009:i:1:p:49-82
    DOI: 10.1086/596324
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/596324
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1086/596324?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thomas Lemieux & W. Bentley MacLeod & Daniel Parent, 2009. "Performance Pay and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 1-49.
    2. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    3. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    4. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2017. "Incentives in the Public Sector: Evidence from a Government Agency," Economic Journal, Royal Economic Society, vol. 127(605), pages 117-141, October.
    5. Daron Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizio Zilibotti, 2007. "Technology, Information, and the Decentralization of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1759-1799.
    6. Edward P. Lazear & Kathryn L. Shaw, 2007. "Personnel Economics: The Economist's View of Human Resources," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 91-114, Fall.
    7. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
    8. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    9. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    10. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 339-376.
    11. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    12. repec:bla:jfinan:v:59:y:2004:i:4:p:1619-1650 is not listed on IDEAS
    13. Batra, Rajeev & Ray, Michael L, 1986. "Situational Effects of Advertising Repetition: The Moderating Influence of Motivation, Ability, and Opportunity to Respond," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 12(4), pages 432-445, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Uwe Jirjahn & Jens Mohrenweiser, 2019. "Performance Pay and Applicant Screening," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 540-575, September.
    2. Fuhai Hong & Tanjim Hossain & John A. List & Migiwa Tanaka, 2018. "Testing The Theory Of Multitasking: Evidence From A Natural Field Experiment In Chinese Factories," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 511-536, May.
    3. Lucie Sychrová, 2013. "Measuring the effectiveness of marketing activities use in relation to company size," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(2), pages 493-500.
    4. Aydemir, Abdurrahman B. & Kırdar, Murat G., 2017. "Quasi-experimental impact estimates of immigrant labor supply shocks: The role of treatment and comparison group matching and relative skill composition," European Economic Review, Elsevier, vol. 98(C), pages 282-315.
    5. Fu, Xiaolan & Fu, Xiaoqing (Maggie) & Ghauri, Pervez & Hou, Jun, 2022. "International collaboration and innovation: Evidence from a leading Chinese multinational enterprise," Journal of World Business, Elsevier, vol. 57(4).
    6. Claudio Lucifora, 2015. "Performance-related pay and labor productivity," IZA World of Labor, Institute of Labor Economics (IZA), pages 152-152, May.
    7. Ittner, Christopher D., 2014. "Strengthening causal inferences in positivist field studies," Accounting, Organizations and Society, Elsevier, vol. 39(7), pages 545-549.
    8. Bogaard, Hein & Svejnar, Jan, 2018. "Incentive pay and performance: Insider econometrics in a multi-unit firm," Labour Economics, Elsevier, vol. 54(C), pages 100-115.
    9. Bartel, Ann P. & Freeman, Richard B. & Ichniowski, Casey & Kleiner, Morris M., 2011. "Can a workplace have an attitude problem? Workplace effects on employee attitudes and organizational performance," Labour Economics, Elsevier, vol. 18(4), pages 411-423, August.
    10. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    11. Gall, Thomas & Hu, Xiaocheng & Vlassopoulos, Michael, 2023. "Incentivizing Team Leaders: A Firm-Level Experiment on Subjective Performance Evaluation of Leadership Skills," IZA Discussion Papers 16123, Institute of Labor Economics (IZA).
    12. Ann P. Bartel, 2017. "Multitasking at work: Do firms get what they pay for?," IZA World of Labor, Institute of Labor Economics (IZA), pages 362-362, May.
    13. Nicholas Bloom & Erik Brynjolfsson & Lucia Foster & Ron Jarmin & Megha Patnaik & Itay Saporta-Eksten & John Van Reenen, 2019. "What Drives Differences in Management Practices?," American Economic Review, American Economic Association, vol. 109(5), pages 1648-1683, May.
    14. Nishani Bourmault & Jordan Siegel, 2022. "Why Local Adaptation Sometimes Fails to be Effective for MNEs: Exploring the Dynamics of Collective Bonuses, Egalitarianism, and Informal Norms," Journal of Management Studies, Wiley Blackwell, vol. 59(4), pages 886-924, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    2. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    3. Brent Boning & Casey Ichniowski & Kathryn Shaw, 2007. "Opportunity Counts: Teams and the Effectiveness of Production Incentives," Journal of Labor Economics, University of Chicago Press, vol. 25(4), pages 613-650.
    4. Luis Garicano & Richard A. Posner, 2005. "Intelligence Failures: An Organizational Economics Perspective," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 151-170, Fall.
    5. Kathrin Manthei & Dirk Sliwka & Timo Vogelsang, 2021. "Performance Pay and Prior Learning—Evidence from a Retail Chain," Management Science, INFORMS, vol. 67(11), pages 6998-7022, November.
    6. Luis Garicano & Luis Rayo, 2016. "Why Organizations Fail: Models and Cases," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 137-192, March.
    7. Fuhai Hong & Tanjim Hossain & John A. List & Migiwa Tanaka, 2018. "Testing The Theory Of Multitasking: Evidence From A Natural Field Experiment In Chinese Factories," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 511-536, May.
    8. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    9. Sendil K. Ethiraj & Daniel Levinthal, 2009. "Hoping for A to Z While Rewarding Only A: Complex Organizations and Multiple Goals," Organization Science, INFORMS, vol. 20(1), pages 4-21, February.
    10. Alberto Bayo-Moriones & Jose E. Galdon-Sanchez & Sara Martinez-de-Morentin, 2017. "Performance Measurement and Incentive Intensity," Journal of Labor Research, Springer, vol. 38(4), pages 496-546, December.
    11. Tomasz Obloj & Peter Zemsky, 2015. "Value creation and value capture under moral hazard: Exploring the micro-foundations of buyer– supplier relationships," Strategic Management Journal, Wiley Blackwell, vol. 36(8), pages 1146-1163, August.
    12. Sinan Aral & Erik Brynjolfsson & Lynn Wu, 2012. "Three-Way Complementarities: Performance Pay, Human Resource Analytics, and Information Technology," Management Science, INFORMS, vol. 58(5), pages 913-931, May.
    13. Konstantinos Pouliakas, 2010. "Pay Enough, Don't Pay Too Much or Don't Pay at All? The Impact of Bonus Intensity on Job Satisfaction," Kyklos, Wiley Blackwell, vol. 63(4), pages 597-626, November.
    14. Christian Zehnder & Holger Herz & Jean-Philippe Bonardi, 2016. "A Productive Clash of Cultures: Injecting Economics into Leadership Research," CESifo Working Paper Series 6175, CESifo.
    15. Heinz, Matthias & Khashabi, Pooyan & Zubanov, Nick & Kretschmer, Tobias & Friebel, Guido, 2017. "Heterogeneous Effects of Performance Pay with Market Competition: Evidence from a Randomized Field Experiment," CEPR Discussion Papers 12474, C.E.P.R. Discussion Papers.
    16. Ann Bartel & Brianna Cardiff-Hicks & Kathryn Shaw, 2013. "Compensation Matters: Incentives for Multitasking in a Law Firm," NBER Working Papers 19412, National Bureau of Economic Research, Inc.
    17. Kevin J. Stiroh, 2007. "Playing For Keeps: Pay And Performance In The Nba," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 145-161, January.
    18. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    19. Kathryn Shaw, 2004. "The Human Resources Revolution: Is It a Productivity Driver?," NBER Chapters, in: Innovation Policy and the Economy, Volume 4, pages 69-114, National Bureau of Economic Research, Inc.
    20. Shandana Shoaib & Bahaudin G. Mujtaba, 2018. "Perverse Incentives and Peccable Behavior in Professionals - A Qualitative Study of the Faculty," Public Organization Review, Springer, vol. 18(4), pages 441-459, December.
    21. Mirella Damiani & Andrea Ricci, 2012. "The role of education of entrepreneurs on adoption of different contingent pay schemes: evidence from Italian firms," Quaderni del Dipartimento di Economia, Finanza e Statistica 116/2013, Università di Perugia, Dipartimento Economia.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:27:y:2009:i:1:p:49-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JOLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.