Communicated Values as Informal Controls: Promoting Quality While Undermining Productivity?

Abstract

We find that the effectiveness of piece-rate compensation relative to fixed pay in a laboratory letter-search task hinges on the presence or absence of a nonbinding statement to participants that the experimenter values correct responses. In the absence of the value statement, participants with piece-rate rewards for correct responses generate more correct and incorrect responses than do their counterparts with fixed pay, correcting errors as they go along to maximize compensation. Essentially, piece-rate compensation acts as an output control, incentivizing participants to maximize correct responses through a "produce-and-improve" strategy. The value statement suppresses this strategy because participants appear to perceive it as an input constraint, prompting greater initial care at the expense of lower overall productivity. As a result, the value statement eliminates the gains in correct responses that piece-rate incentivized participants otherwise realize. Thus, in settings in which individuals can gain efficiency by working expeditiously and improving quality when necessary, our results suggest the possibility that organizations could be better off just letting incentive schemes operate, rather than emphasizing quality in ways that could overly constrain productivity.Les valeurs communiqu ees a titre de contrôles informels : promouvoir la qualit e au prix de l' erosion de la productivit e?

Recognizing the Best: The Productive and Counterproductive Effects of Relative Performance Recognition

“… Variations of the letter‐search task have been used in accounting studies to examine the effects of different management control and incentive systems on task performance (e.g., Sprinkle, Williamson, and Upton ; Webb, Williamson, and Zhang ; Kachelmeier, Thornock, and Williamson ). …”

Me vs. We: The Effect of Incomplete Team Member Feedback on Cooperation of Self-Regarding Individuals

“…For the remainder of this study, we use a computerized version of the letter search task used in Kachelmeier, Thornock, & Williamson (2016) to elicit participant effort. This task is sensitive to effort and allows for differences in ability and natural team heterogeneity.…”

Motivating Unrewarded Task Performance: The Dual Effects of Incentives and an Organizational Value Statement in a Multitask Setting

“…Extant research suggests informal controls, implicit structures adopted by management to align employees' actions with organizational goals, also play an important and complementary role in motivating employee effort (Berry, Coad, Harris, Otley, and Stringer 2009;Chenhall and Moers 2015). Informal controls that are congruent with formal controls can effectively integrate with financial incentives in a multitask setting to achieve performance objectives (Brüggen and Moers 2007); however, informal controls that are not in alignment on a given task may impede the viability of formal controls (Kachelmeier, Thornock, and Williamson 2016;Akinyele, Arnold, and Sutton 2020).…”

“…An organizational value statement is a commonly used informal management control (Kachelmeier et al 2016) that guides the behaviors, attitudes, and character that management is trying to promote among employees (Highhouse, Hoffman, Greve, and Collins 2002;Urbany 2005; Wenstøp and Myrmel 2006;Akinyele et al 2020). Hannan (2016) notes that value statements are ubiquitous in today's work environment.…”