Rewarding Carrots & Crippling Sticks: Eliciting Employee Preferences for the Optimal Incentive Mix in Europe
AbstractA ranking of a variety of incentive devices used by firms according to their perceived effectiveness by employees is identified. The determinants of employee incentive preferences are also investigated, suggesting a ‘menu’ of conditions under which an organization’s personnel policies will have maximum motivational impact on its workforce. Based on the beliefs of a unique sample of workers from seven European countries, the results suggest that (a) the primary determinant of the level of employee effort is the amount of discretion offered at work; (b) pay incentives and ‘gift exchanges’ are the most important motivators; (c) the use of monitoring and Taylor-type assembly lines are the least effective incentives; and (d) the optimal design of incentive strategies by firms is strongly shaped by a host of contextual factors. The expressed desire for autonomy, and distaste for control, by employees gives credibility to the “participative” management approach.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14167.
Date of creation: 19 Mar 2009
Date of revision:
Incentives; effectiveness; effort; attitudes; employees;
Find related papers by JEL classification:
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-28 (All new papers)
- NEP-BEC-2009-03-28 (Business Economics)
- NEP-LAB-2009-03-28 (Labour Economics)
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