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

Listed author(s):
  • Rachel Griffith
  • Andrew Neely

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.

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File URL: http://dx.doi.org/10.1086/596324
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 27 (2009)
Issue (Month): 1 (01)
Pages: 49-82

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Handle: RePEc:ucp:jlabec:v:27:y:2009:i:1:p:49-82
Contact details of provider: Web page: http://www.journals.uchicago.edu/JOLE/

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  1. Paul Oyer, 2004. "Why Do Firms Use Incentives That Have No Incentive Effects?," Journal of Finance, American Finance Association, vol. 59(4), pages 1619-1650, 08.
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  5. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
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  8. 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, Oxford University Press, vol. 117(1), pages 339-376.
  9. 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.
  10. D, Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizzio Zilibotti, 2006. "Technology, Information and the Decentralization of the Firm," Working Papers 2006-12, Centre de Recherche en Economie et Statistique.
  11. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  12. 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, Oxford University Press, vol. 122(4), pages 1759-1799.
  13. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
  14. 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, Oxford University Press, vol. 12(4), pages 432-445, March.
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