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Team incentives and performance: Evidence from a retail chain

Author

Listed:
  • Friebel, Guido
  • Heinz, Matthias
  • Krueger, Miriam
  • Zubanov, Nikolay

Abstract

In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3%. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2% while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus, treatment and control shops’ performance converge, suggesting long-term stability of the treatment effect.

Suggested Citation

  • Friebel, Guido & Heinz, Matthias & Krueger, Miriam & Zubanov, Nikolay, 2017. "Team incentives and performance: Evidence from a retail chain," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168285, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168285
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    More about this item

    Keywords

    management practices; randomized controlled trial (RCT); field experiment; insider econometrics; wage inequality;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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