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Building on economic and psychological ownership theories, this study investigates whether group incentives can reduce shirking because these practices enable employees to feel psychological ownership that motivates them to prevent their own and coworkers shirking in a collective work setting. We analyzed a sample of 38,475 employees in eight companies that participated in the survey administered by the National Bureau of Economic Research (NBER) in 2005. Our findings reveal that (1) short-term-oriented group incentives (STOGIs) and long-term-oriented group incentives (LTOGIs) are positively related to self-shirking regulation and coworker-shirking intervention; (2) STOGIs have stronger relationships with these anti-shirking outcomes than LTOGIs; and (3) the interaction between LTOGIs and formal training is positively related to these anti-shirking outcomes. Although some scholars are concerned about the free rider problem in the collective working and rewarding structure, our work demonstrates how and why employee shirking may be mitigated in such settings.

This study aims to examine the effect of faultline based on job responsibility and their interaction with the incentive scheme on knowledge-sharing behavior.

This research is an experimental study with a 2 × 2 factorial design between subjects. Faultline and incentive schemes are manipulated into two groups (strong faultline–weak faultline and group incentive–individual incentives). This study involved 89 undergraduate accounting students as participants.

This research shows that a strong faultline created a strong social identity effect. Hence, the knowledge-sharing behavior among group members tends to be lower than the weak faultline. Knowledge-sharing behavior tends to be higher in group incentive schemes than individual ones. However, there is no support for interactions between incentive schemes and faultline effects on knowledge-sharing behavior. The results indicate that forming a working subgroup based on informational characteristics attributes reduces cooperative behavior and knowledge sharing between groups.

This study adds a new addition to faultline literature by examining the effect of faultline and incentive schemes on knowledge-sharing behavior based on informational characteristics attributes. Previous research on faultline and knowledge sharing was limited and primarily focused on faultlines created by demographic attributes. This study also enriches faultline literature on knowledge-sharing behavior using an experimental design.

Simons (1995b) suggests that most writing on empowerment often fails to recognize that empowerment requires greater control. Accordingly, we investigate the type of control via rewards and punishment systems, which fits best in the context of empowered work teams. Specifically, we hypothesized that empowerment will lead to improvement in manufacturing performance only when rewards are based on group performance, i.e. a situation where the collective benefit of both individual team members and those of the firm are maximized. Utilizing a survey methodology, four compensation types were examined, including fixed pay, fixed+non-monetary incentives, individual-based incentives, and group-based incentives. Results show that the favorable effect of work team empowerment was not observed under fixed-pay, fixed+non-monetary incentives, or individual-based incentives. In many instances, fixed-pay or individual-based incentives interact with work team empowerment to produce a negative effect on manufacturing cost, manufacturing lead time, or non-value-added-activities. On the other hand, manufacturing plants which use group-based incentives were able to reap the benefit of work team empowerment and translate that into enhanced performance.

It is widely agreed that employees’ attitudes towards pay incentives are an important determinant of their effectiveness. The perceived fairness of pay incentives and their determinants are examined. Based on theories dealing with the fairness evaluation of rewards, a number of hypotheses are formulated proposing that employees’ judgements of the fairness of pay incentives will be partly determined by their attitudes towards work and certain situational and personal background factors. The findings generally support these hypotheses. They indicate that the fairness judgements of pay incentive schemes and the considerations underlying such judgements are determined, among other things, by work motivation and by personal background characteristics such as age, education, number of dependants, organisational tenure and country of origin.

This paper aims to interpret and compare managerial intentions for and employee perceptions of group-based incentive systems.

The data comprise interviews with managers and employees in four Finnish firms with experience of company-wide incentive systems involving profit-sharing and team-based rewards. Benefitting from social exchange theory, managers’ intentions and employees’ perceptions are examined.

Managers’ and employees’ views resemble each other concerning profit-sharing as reflecting reciprocity rooted in perceived distributive fairness, whereas examination of the team-based rewards revealed impediments in reciprocity. While managerial intentions for team-based rewards refer to social exchange with economic intensity via selection of controllable performance measurements aimed at making individual-level effort count, the employees’ perceptions deem such metrics non-controllable, reflecting perceived distributive and procedural unfairness.

Profit-sharing seems to create fair social obligation and goal congruence between managers and employees, whereas team-based incentives easily suffer from unfairness, reducing their effectiveness.

Distinguishing between managerial intentions and employee perceptions pertaining to incentive systems facilitated in-depth exploration of the social exchange inherent in them, conceptualized in terms of economic intensity, fairness and controllability. With this lens, qualitative analysis revealed differences in interpretations of controllability and fairness between the managerial intentions and employee perceptions. The central contribution to scholarship takes the form of interpretations reflecting upon these key findings.

The purpose of this paper is to provide novel and rigorous evidence on the productivity effect of varying attributes of performance-related pay (PRP) and shows that the details of PRP indeed matter.

In doing so, the authors exploit the panel nature of the Finnish Linked Employer–Employee Data on the details of PRP.

The authors first establish that the omitted variable bias is serious, which makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, the authors find: (first, group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; second, group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; third, when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and fourth, PRP with greater power of incentives (the share of PRP in total compensation) results in greater productivity gains, and returns to power of incentives diminishes very slowly.

Much of the empirical literature on PRP focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter.

Incentives are effective at enhancing productivity, but research also suggests that performance incentives can have “unintended negative consequences” including increases in hazard/injuries, increases in errors, and reduction in cooperation, prosocial behaviors, and creativity. Relatively overlooked is whether, when, and how incentives can be designed to prevent such negative consequences. The authors review literature in several disciplines (construction, healthcare delivery, economics, psychology, and [some] management) on this issue. This chapter, in toto, sheds a generally positive light and suggests that, beyond productivity, incentives can be used to improve other outcomes such as safety, quality, prosocial behaviors, and creativity, particularly when the incentives are thoughtfully designed. The review concludes with several potential fruitful areas for future research such as investigations of incentive-effect duration.

The purpose of this study is to examine whether the use of money, social recognition, and feedback have a similar impact on employee performance in the context of a modern Korean broadband internet service firm.

The study design was a quasi‐field experiment (with control group). First, the leaders of this Korean firm were trained in behavioral performance management. Following the steps of organisational behaviour modification (O.B. Mod.) they identified, measured, and analyzed critical performance behaviors and then intervened with the following reward incentives: money (n=38), social recognition and caring attention (n=41), and objective feedback only (n=31). The main dependent variable was overall performance, and this was also broken down into quantity and quality dimensions.

As hypothesized, money and social recognition had a significant impact on performance outcomes, but feedback did not result in as strong a result. When compared to the control group (n=23), all three reward incentives showed significantly more improvement of overall performance. These findings also indicated, as hypothesized, that the impact of this behavioral management approach on Korean employees did not appear as robust as previous meta‐analytic research based on samples of US employees. Finally, although in the predicted direction, the hypothesis that social recognition would have a relatively stronger impact than money and feedback in this context was not statistically supported.

The major limitation concerns generalizability of the findings. However, the experimental design provides support for internal validity.

The study results have practical implications for the value of behavioral performance management, but also that cultural contingencies should also be considered for successful application.

This study contributes preliminary evidence for O.B. Mod to have applicability across cultures.

This paper, in fact is the saga of turnaround of an ailing PSU plant, which in spite of all kinds of improvements measures taken up by the Company had never seen productivity beyond 65 percent of installed capacity. The purpose of this paper is also to showcase the amazing power of financial incentives in enhancing productivity, if rightly designed. On the other hand, it will also serve a lesson of caution to the users by highlighting the extent of damages what a faulty incentive plan can cause.

The methodology of Lean Six Sigma helped analyzing and improving the problem and tools like “Fishbone diagram” and “Analytical Hierarchy process” were very handy in identifying root causes for this complex problem and prioritization of those, respectively.

Root cause of low productivity being identified as “demotivated workforce on account of poor incentive earnings”, the existing financial incentive plans were given a relook. LSS tools like SIPOC, “heijunka”, “brainstorming” etc. were applied for revealing critical faults in the existing financial incentive schemes. Some unorthodox and very common methods were adopted in modifications and implementation of incentive plans.

Modification of incentive scheme involving labor union bargain is commonly resisted by both the parties, i.e. labor unions as well as the management. Although their interest behind the same remains different. One fears to loose, while other is afraid of conceding more. This case study was not an exception too.

Expecting resistances, a good and thorough Shadow working with all kinds of “extremities tests” were prepared. This along with complete transparency followed by well explanations made both the parties happy. Accordingly, the modified incentive plans were agreed upon and subsequently were approved by the management for implementation. Few other remedies and countermeasures suggested were also implemented.

The entire workforce was extremely happy and highly motivated. Provisions of equal incentive weightage with ample individual scope of earnings for both rival production groups in the modified incentive scheme successfully converted the inter-group hatred into healthy completion. Both the groups were gearing for much higher performance and earn more. Self-motivations were turned into group motivation, which is always a blessings for any incentive scheme.

Post-implementation period results were extra ordinary and unprecedented. Productivity was significantly enhanced to 15 percent in first six months, which increase up to 39 percent next year. Customer order and quality fulfillment met for the first time, relieving the management from great embarrassment. The annual incremental financial gain was more than Rs 1,000 millions. The methodology of identification of the root causes and the unique style of finding the solution are original in nature and would be helpful and guide for students, professionals of financial incentive designers, industrial engineers, managers and entrepreneurs.

Most research on worker participation treats it as an establishment-level phenomenon even though it is seldom used on an establishment-wide basis. This paper, however, examines how three forms of incentive compensation are used at the job level, and it assesses the potential ramifications for inequality. I find that the use of incentive compensation reflects the gender composition, unionization, and functional role of jobs. Jobs with many full-time women, for instance, are less likely to use group incentives and profit sharing because they are less likely to play central or managerial roles in establishments. This suggests that incentive compensation may increase inequality.