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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," 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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    References listed on IDEAS

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    Cited by:

    1. Englmaier, Florian & Grimm, Stefan & Schindler, David & Schudy, Simeon, 2018. "The Effect of Incentives in Non-Routine Analytical Team Tasks - Evidence From a Field Experiment," Rationality and Competition Discussion Paper Series 71, CRC TRR 190 Rationality and Competition.
    2. Julia Müller & Thorsten Upmann, 2017. "Eigenvalue Productivity: Measurement of Individual Contributions in Teams," CESifo Working Paper Series 6679, CESifo Group Munich.
    3. Friebel, Guido & Heinz, Matthias & Zubanov, Nick, 2016. "The Effect of Announced Downsizing on Workplace Performance: Evidence from a Retail Chain," IZA Discussion Papers 9739, Institute for the Study of Labor (IZA).
    4. Patrick Kampkötter & Dirk Sliwka, 2016. "The Complementary Use of Experiments and Field Data to Evaluate Management Practices: The Case of Subjective Performance Evaluations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 364-389, June.
    5. Delfgaauw, Josse & Dur, Robert & Souverijn, Michiel, 2017. "Team Incentives, Task Assignment, and Performance: A Field Experiment," IZA Discussion Papers 11228, Institute for the Study of Labor (IZA).
    6. Hoffman, Mitchell & Burks, Stephen V., 2017. "Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training," IZA Discussion Papers 10835, Institute for the Study of Labor (IZA).
    7. Gall, Thomas & Hu, Xiaocheng & Vlassopoulos, Michael, 2016. "Dynamic Incentive Effects of Team Formation: Experimental Evidence," IZA Discussion Papers 10393, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    management practices; randomized controlled trial (RCT); field experiment; insider econometrics; wage inequality;

    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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