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Many companies use competition for either monetary or non-monetary rewards to induce employee effort. Pitting employees against each other in a competition could come at a thus far insufficiently considered cost of leading to lower employee cooperation. The authors examine how competition for monetary rewards in the form of tournament incentives or non-monetary rewards in the form of standing in uncompensated public rankings affects employee cooperation with former competitors in a subsequent task where the extent of the cooperation does not affect the welfare or social standing of the person deciding to cooperate. The authors hypothesize that competition in the first task negatively affects cooperation in the second task. The authors further predict that competition leads to psychological pressure, which mediates differences in cooperation. The results support the authors’ hypotheses. In addition, the authors find that the decrease in cooperation results from the behavior of low performers, whereas cooperation by high performers is not affected. The findings are important because they show that inducing effort in one dimension leads to an unintended cost in the form of lower cooperation in another dimension. This cost occurs for both types of competition – competition for monetary payoffs and for non-monetary rewards. Ultimately, the size of this cost depends on the marginal benefit from any cooperation of low performers.

In this chapter, we examine the impact of pay-for-performance incentives on learning-by-doing. We exploit personnel data on fruit pickers paid under two distinct compensation contracts: a standard piece rate plan and one with an extra one-time bonus tied to output. Under the latter, we observe bunching of performance just above the bonus threshold, suggesting workers distort their behavior in response to the discrete bonus. Such bunching behavior increases as workers gain experience. At the same time, the bonus contract induces considerable learning-by-doing for workers throughout the productivity distribution who presumably hope to one day hit the target, and these improvements significantly outweigh the losses to the firm from the bunching. In contrast, under the standard piece rate contract, we find minimal evidence of bunching and only small performance improvements at the bottom of the productivity distribution. Our results suggest that contract design can help foster learning on the job, underscoring the importance of dynamic considerations in principle-agent models.

The purpose of this paper is to examine the joint effects of performance feedback, assigned goal levels and types of compensation schemes (i.e. fixed-pay, piece-rate and goal attainment bonus) on subordinates’ task performance.

A laboratory experiment was employed to collect data. The subjects consisted of a total of 133 Australian business executives. The study used ANCOVA for data analyses, controlling subject’s practice trial scores as covariate.

The results provide strong support for a three-way interaction between performance feedback, assigned goal levels and types of compensation schemes on subordinates’ task performance. Specifically, the results reveal that the reliance of a piece-rate compensation scheme resulted in higher task performance when compared to fixed-pay and goal attainment bonus compensation schemes in the presence of performance feedback and assigned difficult goal levels situations. In addition, the results reveal that a goal attainment bonus compensation scheme leads to higher task performance when compared to a fixed-pay compensation scheme in the presence of performance feedback and assigned difficult goal levels situations.

These findings have important implications for compensation schemes design in firms that aim to achieve higher employees’ performance and organizational effectiveness.

We demonstrate in a laboratory experiment that the effectiveness of performance-contingent incentives is inversely related to risk-aversion levels. For about 16.5% of participants, performance fails to improve under performance-pay, and the probability of such failure increases with risk-aversion. This phenomenon works in part through the reduced effort level of more risk-averse individuals when effort level is positively correlated with risk exposure. It is also associated with higher self-reported levels of stress by more risk-averse people working under performance-contingent pay. We find no evidence of such stress causing decrements in the quality of effort affecting performance after controlling for effort level. However, controlling for effort, more risk-averse participants perform better under a fixed salary, leaving less room for improvement under performance-pay.

Frontline workers (FLWs) constitute a critical part of the implementation cadre within public policies, serving a significant role in the last-mile delivery of public goods and services. FLWs under public programs in low and middle-income countries like India are offered different compensation structures that range from full-time salaries, piece rate honorariums, contractual engagements, to no remuneration. Whilst the rationale for offering different compensations vary, are certain structures more successful in encouraging FLWs to perform a prosocial task? Further, can certain structures encourage FLWs to perform beyond the incentivized policy mandate?

Investigating workers' prosocial effort within policy implementation, the authors conducted a randomized lab-in-the-field inquiry with 344 Anganwadi-based workers (workers under the nutrition policy) in western India. These FLWs were engaged to perform a novel real-effort task that was tied to different incentive structures and their performance was adjudged based on measurable quantity, effort and quality parameters.

Results demonstrate that uncompensated workers invest the greatest amount of effort whilst compromising on task quality, and vice-versa for subjects receiving pay-for-performance compensation. Programs must account for policy focus when offering compensations: volunteer engagement may be counterproductive for quality focus and to the adherence to ancillary task mandates like nature/quality of beneficiary interaction. On the other hand, the distribution of products (like health goods) can rely on volunteer effort.

The study brings together various compensation schemes operating at the field level, under one study using an LFE methodology within the context of policy implementation in India.

This paper provides an overview of the empirical findings on how relative performance information (RPI) affects employee behavior. Additionally, the review identifies future research opportunities based on a systematic analysis of the literature that incorporates findings across several disciplines and provides replicable, extensive coverage.

This paper addresses a research gap via synthesis, drawing on the empirical literature identified and analyzed systematically. A conceptual framework is developed to integrate the studies.

The effect of RPI on performance through enhanced effort is positive; moreover, publicity and performance-dependent compensation strengthen the effect. However, RPI has also been found to increase sabotage among employees, and it can lead to less honest reporting. Future research could examine critical mediators and moderators of the RPI-performance relationship and thus complement the findings. Additionally, the effects of group-based RPI remain underrepresented. Future work could help to assess in greater detail how RPI interacts with culture and norms and whether RPI is due to personal expectations. There is also room for further research regarding the effects of RPI on cooperation, its consequences for learning, how it affects budgeting decisions and its implications for risk taking.

This paper presents the first literature review in the field of RPI. It provides synthesized knowledge about whether RPI is beneficial or detrimental to organizational performance.

Team‐based, performance‐contingent pay plans are designed to increase workers’ motivation and productivity. Evaluates differential performance among 65 workers employed in 20 teamwork groups in a public‐sector organization. Study results are in two directions: first, introduction of an incentive scheme increased productivity by 14 per cent. Second, differential teamwork performance is affected by tenure and education. Finds tenure, which represents “firm‐specific human capital” and years of schooling representing “general human capital”, are positive and significant in both a bivariate Pearson correlation and in multivariate regression analysis. An interaction effect of tenure and education was not found to be significant, probably due to colinearity problems. Discusses results from both labour economics and social psychology perspectives.

It is important to understand why some workers prolong their working life even though they are entitled to statutory pension benefits. This paper aims to investigate whether senior workers are motivated by external factors such as pay and social expectations (extrinsic motivation) or are primarily motivated by internal factors such as job satisfaction (intrinsic motivation). This is a central question for policymakers and social partners when it comes to the design of public pension systems and work organisation.

This study uses a combined longitudinal administrative data and an own-designed postal survey to ask individuals aged 65–76 years to describe their work motivation. Based on the answers, this study constructs an index of autonomous motivation (AM) where a value of zero implies only extrinsic motivation and a value of one implies only intrinsic motivation. The values between zero and one thus imply various grades of AM, where higher values signal motivation that is more autonomous and hence a higher degree of intrinsic work motivation.

The results of the statistical analysis show that the extent of intrinsic motivation is higher among senior workers who retired aged 65 years or older compared to those who retired at 65 years or younger. In addition, this study found that the degree of intrinsic work motivation among senior workers decreases when they face economic and financial constraints. It also found that intrinsic motivation is more prevalent among high-skilled workers.

This study shows that individuals who continue to work after 65 are mostly motivated by the satisfaction they derive from their job. Job satisfaction is strongly related to skill level, job quality, job content and job autonomy. Results indicate that job quality and commitment to work are essential elements for motivating seniors to postpone retirement.

This study contributes to this literature by applying a multidisciplinary approach from organisational psychology and labour economics that considers the potential importance of intrinsic motivation to work after standard retirement age. The authors think that this approach enhances the understanding of the mechanisms behind the lengthening of working life. Finally, this study suggests a simple, but efficient way of empirically measuring the extent of intrinsic motivation among workers.

The purpose of this paper is to examine the current gap between the subjects of business ethics and pre‐1960 management theory.

In an attempt to achieve the objective of the paper, the business ethics content of three leading management theorists during the first half of the 1900s is examined: Frederick Taylor; Chester Barnard; and Peter Drucker.

The paper concludes that there are significant business ethics content as well as ethical implications in the writings of each of the three management theorists.

The analysis focused on only three, albeit significant, management theorists. A more complete discussion would have included other important management theorists as well.

The analysis suggests that management theory should not be taught without discussing both the business ethics implications and the business ethics content inherent in the theory. In addition, failure on the part of business ethics academics to understand early management theory, the ethical ramifications of such theory, and the business ethics issues explicitly discussed by leading management theorists, may lead to teaching and research in a subject without a proper theoretical foundation.

The paper attempts to address a gap in management literature by demonstrating some of the linkages between business ethics and business management thought, and thereby be of value to management theorists as well as business ethicists in their teaching and research efforts.

While much of the literature testing for shirking by professional athletes have used performance metrics, some works have quantified shirking in dollar terms by comparing salary to estimated marginal revenue product (MRP). However, Ordinary Least Squares (OLS) approaches to measuring shirking by comparing salary to MRP have an endogeneity problem, as salary and contract length are determined simultaneously. We test for shirking in Major League Baseball (MLB) using an MRP approach, addressing this potential endogeneity.

This paper uses instrumental variables regression to address potential endogeneity using MLB season-level player and team data from 2010 to 2017.

Using OLS regression, the impact of an additional year of guaranteed contract on shirking is estimated at approximately $1m in 2010 US dollars, and the impact of having a long-term contract is estimated at $5m, estimates comparable to those in the literature. Using instrumental variables regression, these impacts increase to $1.6m and over $9m in 2010 dollars.

Given large, causal shirking estimates, profit maximizing sports organizations should take caution when negotiating long-term contracts. These findings also have important implications for other labor market settings where workers feel job security.

To our knowledge, this is the first work testing for shirking in sports using an MRP approach which uses instrumental variables regression to address potential endogeneity.