Team Structure and the Effectiveness of Collective Performance Pay
The adoption of performance related pay schemes has become increasingly popular in the public sector of several countries. In the UK, the scheme designers favoured collective performance pay with the aim to foster cooperation across offices. The resulting team structure included several offices (subteams) within the same team, defined by the remuneration scheme. In this paper we analyse the strategic interactions across subteams created by a two-level team structure, in order to assess whether rewarding collective performance necessarily promotes cooperation. We show that such team structure creates conflicting incentives to free-ride across and within subteams. Moreover, the relative size of subteams can be a powerful means to deliver incentives when funds for performance rewards are limited. Using data for one of the incentive schemes piloted in the UK, we analyse the role of the target level and of the relative size of subteams on subteams' performance.
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| Length: | 29 pages |
| Date of creation: | Jul 2012 |
| Date of revision: | |
| Handle: | RePEc:iza:izadps:dp6747 |
| Contact details of provider: | Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany Phone: +49 228 3894 223 Fax: +49 228 3894 180 Web page: http://www.iza.org
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References listed on IDEAS
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- Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2004.
"Incentives in the Public Sector: Evidence from a Government Agency,"
The Centre for Market and Public Organisation
04/103, Department of Economics, University of Bristol, UK.
- Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2011. "Incentives in the Public Sector: Evidence from a Government Agency," The Centre for Market and Public Organisation 11/265, Department of Economics, University of Bristol, UK.
- Burgess, Simon & Propper, Carol & Ratto, Marisa & Tominey, Emma, 2012. "Incentives in the Public Sector: Evidence from a Government Agency," CEPR Discussion Papers 9071, C.E.P.R. Discussion Papers.
- Burgess, Simon & Propper, Carol & Ratto, Marisa & Tominey, Emma, 2012. "Incentives in the Public Sector: Evidence from a Government Agency," IZA Discussion Papers 6738, Institute for the Study of Labor (IZA).
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