Author
Listed:
- Ipek Gursel Tapki
(Kadir Has University)
Abstract
We consider the problem of allocating bonuses among workers in companies. For this allocation, most companies use a performance based reward system. At the end of each year, there is a performance appraisal conducted by the Human Resources department of each company. In this process, employers evaluate employees, and employees evaluate superiors. Usually these evaluations are conducted using some quantitative evaluation forms and the average score in the evaluation determines the performance of the workers. Based on their performances, some workers receive bonuses and some do not. Usually companies set an eligibility criterion for bonuses: if a worker?s performance score is above certain level, then he or she is eligible to receive a bonus. It is also true that each company has a limited budget that it would like to allocate among its workers as bonuses. While allocating this budget, no company allocates a bonus of more than some multiple of the monthly salary of the worker. Note that the salaries of the workers may differ: a senior worker most likely receives more salary than a newly employed worker. Therefore, the maximum amount of bonus each worker can receive may differ. We study systematic way of allocating the budget of a company among the workers whose performance was sufficiently good (above the eligibility level). Since within each company there are different departments, and each worker works under a certain department, we can define a two-step procedure for allocating the bonus budget of a company among its workers: first the company allocates the money among departments, and later each department allocates the money it receives among its workers. We call these systematic way of allocations as allocation rule and we consider rules satisfying good properties, such as efficiency, fairness, and strategy proofness. We characterize rules satisfying those properties. JEL classification: D70, D78
Suggested Citation
Ipek Gursel Tapki, 2017.
"Allocation of Bonuses Based on Performance Based Reward System,"
Proceedings of International Academic Conferences
5007600, International Institute of Social and Economic Sciences.
Handle:
RePEc:sek:iacpro:5007600
Download full text from publisher
More about this item
Keywords
;
;
;
;
;
JEL classification:
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
NEP fields
This paper has been announced in the following
NEP Reports:
Statistics
Access and download statistics
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iacpro:5007600. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.