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- All HBS Web
(963)
- News (50)
- Research (837)
- Events (1)
- Multimedia (1)
- Faculty Publications (387)
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- May 2012
- Article
Incentive Schemes, Sorting and Behavioral Biases of Employees: Experimental Evidence
By: Ian Larkin and Stephen Leider
We investigate how the convexity of a firm's incentives interacts with worker overconfidence to affect sorting decisions and performance. We demonstrate experimentally that overconfident employees are more likely to sort into a non-linear incentive scheme over a linear... View Details
Keywords: Motivation and Incentives; Performance; Behavior; Prejudice and Bias; Decisions; Employees; Wages
Larkin, Ian, and Stephen Leider. "Incentive Schemes, Sorting and Behavioral Biases of Employees: Experimental Evidence." American Economic Journal: Microeconomics 4, no. 2 (May 2012).
- December 2000 (Revised January 2002)
- Background Note
Incentives and Controllability: A Note and Exercise
By: Brian J. Hall
Describes three performance measures for "plants" or businesses: cost centers, revenue centers, and profit centers. Discusses what should be done if a function outside of the "controllability" of the manager affects the performance measure and therefore compensation. View Details
Keywords: Factories, Labs, and Plants; Cost; Profit; Revenue; Compensation and Benefits; Managerial Roles; Performance Evaluation; Motivation and Incentives
Hall, Brian J. "Incentives and Controllability: A Note and Exercise." Harvard Business School Background Note 801-334, December 2000. (Revised January 2002.)
- 09 Apr 2018
- Sharpening Your Skills
The Dark Side of Performance Bonuses
iPhoto Companies continually test ways to incent employees to perform more effectively, often turning to worker-motivation tools such as bonuses, “up or out” employee ranking tournaments, and employee of the month rewards. Behavioral... View Details
Keywords: by Sean Silverthorne
- 2015
- Working Paper
Incentives versus Reciprocity: Insights from a Field Experiment
By: Doug J. Chung and Das Narayandas
We conduct a field experiment in which we vary the sales force compensation scheme at an Asian enterprise that sells consumer durable goods. With variation generated by the experimental treatments, we model sales force performance to identify the effectiveness of... View Details
Keywords: Sales Force Compensation; Field Experiment; Heterogeneity; Loss Aversion; Reciprocity; Motivation and Incentives; Salesforce Management; Compensation and Benefits
Chung, Doug J., and Das Narayandas. "Incentives versus Reciprocity: Insights from a Field Experiment." Harvard Business School Working Paper, No. 15-084, April 2015. (Revised November 2015.)
- August 2017
- Article
Incentives versus Reciprocity: Insights from a Field Experiment
By: Doug J. Chung and Das Narayandas
We conduct a field experiment in which we vary the sales force compensation scheme at an Asian enterprise that sells consumer durable goods. With variation generated by the experimental treatments, we model sales force performance to identify the effectiveness of... View Details
Keywords: Sales Force Compensation; Field Experiment; Heterogeneity; Loss Aversion; Reciprocity; Salesforce Management; Compensation and Benefits
Chung, Doug J., and Das Narayandas. "Incentives versus Reciprocity: Insights from a Field Experiment." Journal of Marketing Research (JMR) 54, no. 4 (August 2017): 511–524. (Lead article.)
- December 1997 (Revised October 1999)
- Case
Citibank: Performance Evaluation
By: Robert L. Simons and Antonio Davila
Citibank has introduced a new, comprehensive performance-scorecard system. A regional president struggles with a tough decision: how to evaluate an outstanding branch manager who has scored poorly on an important customer satisfaction measure. This case provides a... View Details
Keywords: Performance Evaluation; Balanced Scorecard; Business Strategy; Customer Satisfaction; Performance Expectations; Decisions; Motivation and Incentives; Quality; Banking Industry
Simons, Robert L., and Antonio Davila. "Citibank: Performance Evaluation." Harvard Business School Case 198-048, December 1997. (Revised October 1999.)
- October 1989 (Revised June 1993)
- Case
RKO Warner Video, Inc.: Incentive Compensation Plan
By: George P. Baker III
Details the design and implementation of an incentive bonus plan for video store managers. The problem for top management of the chain is to induce the store managers to "sweat the details," to keep the stores neat and well organized, and to deal courteously and... View Details
Keywords: Acquisition; Change; Strategic Planning; Performance Improvement; Sales; Management; Employee Relationship Management; Situation or Environment; Success; Motion Pictures and Video Industry; Entertainment and Recreation Industry
Baker, George P., III. "RKO Warner Video, Inc.: Incentive Compensation Plan." Harvard Business School Case 190-067, October 1989. (Revised June 1993.)
- 2012
- Working Paper
Pay Dispersion and Work Performance
By: Alessandro Bucciol and Marco Piovesan
The effect of intra-firm pay dispersion on work performance is controversial and the empirical evidence is mixed. High pay dispersion may act as an extra incentive for employees' effort or it may reduce motivation and team cohesiveness. These effects can also coexist... View Details
Bucciol, Alessandro, and Marco Piovesan. "Pay Dispersion and Work Performance." Harvard Business School Working Paper, No. 12-075, February 2012.
- Summer 2017
- Article
Performance Feedback in Competitive Product Development
By: Daniel P. Gross
Performance feedback is ubiquitous in competitive settings where new products are developed. This article introduces a fundamental tension between incentives and improvement in the provision of feedback. Using a sample of 4,294 commercial logo design tournaments, I... View Details
Keywords: Feedback; Evaluation; Tournaments; Innovation; Performance Evaluation; Motivation and Incentives; Rank and Position; Product Development; Learning
Gross, Daniel P. "Performance Feedback in Competitive Product Development." RAND Journal of Economics 48, no. 2 (Summer 2017): 438–466.
- January 2020
- Article
The Job Rating Game: Revolving Doors and Analyst Incentives
By: Elisabeth Kempf
Investment banks frequently hire analysts from rating agencies. While many argue that this "revolving door" creates captured analysts, it can also create incentives to improve accuracy. To study this issue, I construct an original dataset, linking analysts to their... View Details
Keywords: Credit Rating Agencies; Investment Banking; Recruitment; Performance Evaluation; Financial Services Industry
Kempf, Elisabeth. "The Job Rating Game: Revolving Doors and Analyst Incentives." Journal of Financial Economics 135, no. 1 (January 2020): 41–67.
- 10 Jan 2013
- Working Paper Summaries
Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions
- September 2007
- Article
Assessing the Performance of Business Unit Managers
By: J. Bouwens and Laurence van Lent
Using a sample of 140 managers, we investigate the use of various performance metrics in determining the periodic assessment, bonus decisions, and career paths of business unit managers. We show that the weight on accounting return measures is associated with the... View Details
Bouwens, J., and Laurence van Lent. "Assessing the Performance of Business Unit Managers." Journal of Accounting Research 45, no. 4 (September 2007): 667–697.
- September 2016
- Case
Designing Performance Metrics at GoDaddy
By: C. Fritz Foley and Michael Lemm
Scott Wagner has recently joined GoDaddy, a leading provider of cloud-based software and services that helped individuals and small businesses establish a web presence, in the dual role of chief operating officer and chief financial officer. One of his first tasks is... View Details
Keywords: Motivation and Incentives; Management Practices and Processes; Performance Evaluation; Compensation and Benefits; Web Services Industry
Foley, C. Fritz, and Michael Lemm. "Designing Performance Metrics at GoDaddy." Harvard Business School Case 217-004, September 2016.
- January–February 2021
- Article
Compensation Packages That Actually Drive Performance
By: Boris Groysberg, Sarah Abbott, Michael R. Marino and Metin Aksoy
By aligning executives’ financial incentives with company strategy, a firm can inspire its management to deliver superior results. But it can be hard to get pay packages right. In this article four experts break down the key elements of compensation and explain how to... View Details
Keywords: Executive Compensation; Compensation and Benefits; Motivation and Incentives; Strategy; Performance
Groysberg, Boris, Sarah Abbott, Michael R. Marino, and Metin Aksoy. "Compensation Packages That Actually Drive Performance." Harvard Business Review 99, no. 1 (January–February 2021): 102–111.
- June 2000 (Revised December 2001)
- Case
Performance Pay at Safelite Auto Glass (A)
By: Brian J. Hall, Edward Lazear and Carleen Madigan
Describes a company's changing of its compensation and incentive plan. In particular, it shows how a change from hourly pay to piece rate pay (for windshield installers) affected productivity, pay, and turnover. View Details
Keywords: Motivation and Incentives; Performance Productivity; Change; Compensation and Benefits; Service Industry; Auto Industry
Hall, Brian J., Edward Lazear, and Carleen Madigan. "Performance Pay at Safelite Auto Glass (A)." Harvard Business School Case 800-291, June 2000. (Revised December 2001.)
- July 2010
- Article
Is a Higher Calling Enough? Incentives Effects in the Church
By: Christopher Parsons, J. Hartzell and D. Yermack
We study the compensation and productivity of more than 2,000 Methodist ministers in a 43‐year panel data set. The church appears to use pay‐for‐performance incentives for its clergy, as their compensation follows a sharing rule by which pastors receive approximately... View Details
Keywords: Motivation and Incentives; Organizations; Religion; Performance Evaluation; Compensation and Benefits
Parsons, Christopher, J. Hartzell, and D. Yermack. "Is a Higher Calling Enough? Incentives Effects in the Church." Journal of Labor Economics 28, no. 3 (July 2010): 509–538.
- July 2012
- Case
Performance Management at Vitality Health Enterprises, Inc.
By: John Bingham and Michael Beer
Vitality Health Enterprises, a medium-sized firm that manufactures health and personal care products, has experienced six straight quarters of strong revenue growth. James Hoffman, the new Senior Vice President of Human Resources, fears that the chain of success is... View Details
Keywords: Performance Evaluation; Motivation and Incentives; Compensation and Benefits; Talent and Talent Management; Health Industry; Consumer Products Industry; Manufacturing Industry; United States
Bingham, John, and Michael Beer. "Performance Management at Vitality Health Enterprises, Inc." Harvard Business School Brief Case 913-501, July 2012.
- January 2010 (Revised April 2013)
- Case
Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A)
By: Paul Healy, Clayton S. Rose and Aldo Sesia
Aubrey McClendon, founder and CEO of Chesapeake Energy, was, according to Fortune Magazine, the highest paid U.S. CEO in 2008 receiving over $100 million in total compensation. McClendon received this compensation despite a significant drop in the company's stock price... View Details
Keywords: Financial Statements; Financial Reporting; Price; Stock Options; Valuation; Joint Ventures; Business Growth and Maturation; Economic Growth; Growth and Development Strategy; Change Management; Energy Industry; United States
Healy, Paul, Clayton S. Rose, and Aldo Sesia. "Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A)." Harvard Business School Case 110-047, January 2010. (Revised April 2013.)
- May 2011
- Article
Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis
By: Kevin J. Boudreau, Nicola Lacetera and Karim R. Lakhani
Contests are a historically important and increasingly popular mechanism for encouraging innovation. A central concern in designing innovation contests is how many competitors to admit. Using a unique data set of 9,661 software contests, we provide evidence of two... View Details
Keywords: Motivation and Incentives; Problems and Challenges; Risk and Uncertainty; Innovation and Invention; Management Analysis, Tools, and Techniques; Value; Applications and Software; Competition; Performance; Theory; Practice
Boudreau, Kevin J., Nicola Lacetera, and Karim R. Lakhani. "Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis." Management Science 57, no. 5 (May 2011): 843–863.
- 2014
- Teaching Note
Fine Harvest Restaurant Group
By: Clara X. Chen, Kenneth A. Merchant, Tatiana Sandino and Wim Van der Stede
The Fine Harvest Restaurant Group cases A and B examine a company's design of a new system to evaluate the performance (and determine the bonuses) for its restaurant managers. Fine Harvest had traditionally evaluated restaurant managers based on store margins and had... View Details