Because much of work incentives are provided through promotions, their effectiveness depends to a large extent on the structure of the organization's hierarchy. Here, we investigate the impact of the incentive motive on the optimal hierarchy using the Auriol-Renault  framework which highlights the role of recognition in the work place. This framework provides a rationale for using promotions as an incentive device which relies on a complementarity between recognition and income: those who earn more should also earn more recognition. We identify factors which affect the hierarchy in terms of number of ranks, population size at each rank and the extent of the differentiation between ranks. We show that the harder it is for an employee to improve performance through effort the more pyramid-like is the hierarchy, with a small group of successful individuals at the top earning high income and recognition. If a high performance may be easily achieved, a seniority based promotion system may be optimal.
(This abstract was borrowed from another version of this item.)
|Date of creation:||2000|
|Date of revision:||2001|
|Publication status:||Published in Annales d'Économie et de Statistique, n°63-64, Institut national de la statistique et des études économiques, Paris, juillet-décembre 2001, p. 261-282.|
|Contact details of provider:|| Postal: Manufacture des Tabacs, Aile Jean-Jacques Laffont, 21 Allée de Brienne, 31000 TOULOUSE|
Phone: +33 (0)5 61 12 85 89
Fax: + 33 (0)5 61 12 86 37
Web page: http://www.idei.fr/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ide:wpaper:783. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.