Publications

July 2016
Case

'Golden Leash' Pay for Directors at The Dow Chemical Company

By: Ian Gow, Suraj Srinivasan and Neeraj Goyal

In November 2014, The Dow Chemical Company was faced with the prospect of a proxy battle with prominent hedge fund and activist investor Third Point Management. The activist had criticized Dow’s recent performance and advocated that the company split itself to maximize... View Details

Keywords: Motivation and Incentives; Governing and Advisory Boards; Executive Compensation; Investment Activism; Chemical Industry

Educators

21 Apr 2010
Working Paper Summaries

Why Do Firms Use Non-Linear Incentive Schemes? Experimental Evidence on Sorting and Overconfidence

Keywords: by Ian Larkin & Stephen Leider

2011
Article

Incentive Compensation and the Likelihood of Termination: Theory and Evidence from Real Estate Organizations

By: Christopher Parsons, G. Hallman and J. Hartzell

We analyze two managerial compensation incentive devices: the threat of termination and pay for performance. We first develop a simple model predicting that these devices are substitutes: when termination incentives are low, optimal contracts provide stronger... View Details

Keywords: Motivation and Incentives; Resignation and Termination; Compensation and Benefits; Real Estate Industry

01 Nov 2022
Research & Ideas

A Penny for Your Thoughts? For Big-Picture Ideas, the Right Pay Structure Matters

Want employees to think outside the box? Start by taking a good, hard look at how you’re paying them. That’s the implication of new research examining the impact of different compensation structures on employee innovation. While there is... View Details

Keywords: by Scott Van Voorhis

June 2000 (Revised December 2001)
Case

Performance Pay at Safelite Auto Glass (B)

By: Brian J. Hall, Edward Lazear and Carleen Madigan

Supplements the (A) case. View Details

Keywords: Motivation and Incentives; Performance Productivity; Change; Compensation and Benefits; Service Industry; Auto Industry

Educators

March 2014
Article

Cheating More for Less: Upward Social Comparisons Motivate the Poorly Compensated to Cheat

By: Leslie K. John, George Loewenstein and Scott Rick

Intuitively, people should cheat more when cheating is more lucrative, but we find that the effect of performance-based pay rates on dishonesty depends on how readily people can compare their pay rate to that of others. In Experiment 1, participants were paid 5 cents... View Details

Keywords: Dishonesty; Social Comparison; Pay Secrecy; Motivation and Incentives; Fairness; Decision Making; Compensation and Benefits

Read Now

winter 1994
Article

Creating Pay for Performance in Troubled Companies

By: S. C. Gilson and M. R. Vetsuypens

Keywords: Performance; Business Ventures; Motivation and Incentives

06 Jul 2016
What Do You Think?

How Do We Pay for the Costs of Globalization?

result in mounting and ultimately unsustainable costs over the long term.” Nello set forth the simplest and most direct form of incentive to address the issue, saying “How about reducing corporate taxes to 15% for companies that have 70%... View Details

Keywords: by James L. Heskett; Manufacturing

Research Summary

Wage Policies and Incentives to Invest in Firm-Specific Human Capital (joint with George Baker and Nancy Dean Beaulieu)

The accumulation of firm-specific knowledge improves firm productivity and employee reten-tion, by creating a wedge between what the employee is worth inside and outside the firm. How does the firm create incentives for investment in firm-specific human capital when... View Details

2020
Working Paper

Paying It Backward and Forward: Expanding Access to Convalescent Plasma Therapy Through Market Design

By: Scott Duke Kominers, Parag A. Pathak, Tayfun Sönmez and M. Utku Ünver

COVID-19 convalescent plasma (CCP) therapy is currently a leading treatment for COVID-19. At present, there is a shortage of CCP relative to demand. We develop and analyze a model of centralized CCP allocation that incorporates both donation and distribution. In order... View Details

Keywords: COVID-19; Convalescent Plasma; Vouchers; Health Pandemics; Health Care and Treatment; Resource Allocation; Market Design

Read Now

2025
Working Paper

Better Keep the Twenty Dollars: Incentivizing Innovation in Open Source

By: Annamaria Conti, Vansh Gupta, Jorge Guzman and Maria P. Roche

Open source is key to innovation yet is assumed to be done largely through intrinsic motivation. How can we incentivize it? In this paper, we examine the impact of a program providing monetary incentives to motivate innovators to contribute to open source. The Sponsors... View Details

Keywords: Open Source; Innovation; Incentives; Financial Rewards; Crowding Out; Open Source Distribution; Innovation and Invention; Motivation and Incentives; Technology Industry

Read Now

April 2008
Case

Engstrom Auto Mirror Plant: Motivating in Good Times and Bad

By: Michael Beer and Elizabeth Collins

In May 2007, the Engstrom Auto Mirrors plant, a relatively small supplier based in Indiana, faces a crisis. The business was in the second year of a downturn. Sales had started to decline in 2005; a year later, plant manager Ron Bent had been forced to lay off more... View Details

Keywords: Organizational Behavior; Human Resource Management; Incentives; Motivation; Manufacturing; Leadership; Change Management; Employees; Motivation and Incentives; Goals and Objectives; Manufacturing Industry; Indiana

Educators

11 Jun 2020
Working Paper Summaries

Paying It Backward and Forward: Expanding Access to Convalescent Plasma Therapy Through Market Design

Keywords: by Scott Duke Kominers, Parag A. Pathak, Tayfun Sönmez, and M. Utku Ünver; Health

November 2009
Article

Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry

By: Dennis Campbell, Srikant M. Datar and Tatiana Sandino

Many companies operate units that are dispersed across different types of markets, and thus serve significantly diverging customer bases. Such market-type dispersion is likely to compromise the headquarter's ability to control its local managers' behavior and satisfy... View Details

Keywords: Market Dispersion; Decentralization; Incentives; Business Headquarters; Geographic Location; Governance Controls; Distribution; Organizational Design; Franchise Ownership; Retail Industry

November 2020 (Revised March 2022)
Teaching Note

Social Salary Setting at Spiber

By: Ashley Whillans and John Beshears

Teaching Note for HBS Case No. 920-050. The case tells the story of Spiber, a Japanese technology start-up company. To reflect the company’s values, the leadership team implemented a new and unique salary-setting process: each employee had the authority to choose their... View Details

Keywords: Compensation; General Management; Employee Benefits; Incentives; Motivation; Compensation and Benefits; Fairness; Motivation and Incentives; Management; Happiness; Negotiation; Cross-Cultural and Cross-Border Issues; Japan