Incentives for Helping on the Job: Theory and Evidence

Drago, Robert; Garvey, G. T.

doi:10.1086/209880

Cited by 299 publications

(181 citation statements)

References 36 publications

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“…It shows that the group scheme was considerably less divisive than the individual PRP schemes used in the other organizations. 6 This supports the evidence of Drago and Garvey (1998) that strong individual incentives may diminish helping behavior among colleagues if this gets in the way of individual targets.…”

Section: Regression Results 1: Perceive Incentive and Divisiveness Tasupporting

confidence: 66%

Section: Performance Management As a Means Of Renegotiation: Main Thementioning

confidence: 99%

“…2), and it can also invest in better systems of work design and performance evaluation to improve the correlation between performance measures and effort, and thus strengthen incentive effects (Milgrom and Roberts, 1992: 226). It also warns against the dysfunctions of 4 inappropriate incentives, for example, that individual incentives may discourage cooperation among colleagues (Drago and Garvey, 1998) Expectancy theory, associated for example with Vroom (1964), Porter and Lawler (1968), Lawler (1971, Ch. 6), and Furnham (1997, like agency theory, treats employees as having a degree of choice and places a strong emphasis on the motivational effects of incentives, and the problems posed by poorly defined targets.…”

mentioning

confidence: 99%

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The Role of Performance-Related Pay in Renegotiating the "Effort Bargain": the Case of the British Public Service

Marsden¹

2004

Industrial and Labor Relations Review

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Much of the academic and policy literature on performance related pay (PRP) focuses on its role as an incentive system. Its role as means for renegotiating performance norms has been largely neglected. The study examines the introduction of performance related pay, based mostly on appraisals by line managers, in the British public services during the 1990s. Previous research indicates PRP failed to motivate many of the staff and its operation had been divisive. Nevertheless, other information suggests that productivity rose. This article seeks to resolve the paradox using contract theory to show that performance pay was the instrument of a major renegotiation of performance norms, and that this rather than motivation has been the key story. Goal setting and appraisal by line managers played a key role in this process. 1The role of performance related pay in renegotiating the 'effort bargain': the case of the British public service. 1 There is a paradox to be explained concerning the spread of performance related pay (PRP) in the British public services. In the public policy debate it has been common to associate its introduction with the aim of improving incentives and motivation among public employees (Brown and Heywood, 2002). This has been a key element in government and top management thinking in the British public services, echoed in two recent government reports (Bichard, 1999, Makinson, 2000, and it has been a long-standing interest in the work of the OECD's public management reform program (Maguire, 1993, OECD 2002. It is also a recurrent theme in much of the Personnel Economics and Human Resource Management literature (eg. Lazear 1998, Milkovich and Wigdor 1991, Mitchell et al. 1990, Armstrong and Murlis, 1994. From the late 1980s, the British public services embarked upon the most systematic and sustained policy of extending and developing performance related pay of any OECD country, mostly replacing annual seniority-related pay increments with performance-related ones based on goal setting and appraisals by line-managers, sometimes called 'appraisal-related pay ' (ACAS, 1990). Nevertheless, when surveying both academic research findings and inside management information, the government's Makinson report concluded that performance pay had not motivated public employees in Britain, and its operation had been divisive (Makinson, 2000). Given that the policy has been sustained by three successive prime ministers of quite different political persuasion, two Conservative and one Labor, as well as successive top managers, it is hard to believe its continued use can be explained by political dogma. Likewise, in the face of such evidence, the perseverance of top public management and of successive governments is hard to understand if employee motivation is the main story. We need to look elsewhere for an explanation.In this article, I argue that the alternative explanation can be found in the use of performance pay, and of performance management more widely, to provide a framework for renegotiating...

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Section: Regression Results 1: Perceive Incentive and Divisiveness Tasupporting

confidence: 66%

Section: Performance Management As a Means Of Renegotiation: Main Thementioning

confidence: 99%

mentioning

confidence: 99%

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The Role of Performance-Related Pay in Renegotiating the "Effort Bargain": the Case of the British Public Service

Marsden¹

2004

Industrial and Labor Relations Review

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“…al., 1993, Baker and et. al., 1994, Knoeber and Thurman, 1995, Drago and Garvey, 1998, Eriksson, 1999, Bognanno, 2001, Agrawal and et., al., 2004, and Audas, 2004, we begin with two previously-tested empirical predictions from the tournament model: (i) the prize of the tournament (the salary gap between the top executive and the other contestants) rises with the number of contestants in the tournament pool; and (ii) the prize of the tournament is greater in firms facing more volatile market conditions (and hence managers having less control over their performance). 1 We then examine the effect of ownership structure on the sensitivities of the tournament prize to the size of the contestant pool and market volatility.…”

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confidence: 99%

Tournaments and managerial incentives in China's listed firms: New evidence

Kato

Long

2011

China Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

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“…Yet, empirical studies on profit sharing and helping on the job provide mixed results. Using survey data from Australia, Drago and Garvey (1998) find that individual performance pay reduces helping effort but fail to identify a role for profit sharing in increasing helping effort. Despite numerous theoretical and empirical studies, the economic literature implicitly assumes that reciprocity is unambiguously productive.…”

Section: Setting the Contextmentioning

confidence: 96%

Profit Sharing and Reciprocity: Theory and Survey Evidence

Cornelißen

Heywood²,

Jirjahn³

2010

SSRN Journal

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SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. Department of Economics, University of Wisconsin-Milwaukee Uwe Jirjahn Department of Economics, University of TrierAbstract: The 1/n problem potentially limits the effectiveness of profit sharing in motivating workers. While the economic literature suggests that reciprocity can mitigate this problem, it remains silent on the optimal degree of reciprocity. We present a representative model demonstrating that reciprocity may increase productive effort but may also increase unproductive effort such as socializing on the job. The model implies that reciprocity increases profit up to a point but decreases profit beyond that point. Using detailed survey measures of worker reciprocity, we show that the probability of receiving profit sharing takes an inverse U-shape as reciprocity increases. This supports the general implication of the model and is shown to exist for both positive and negative reciprocity and to remain when a series of ability proxies and detailed industry indicators are included.

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Incentives for Helping on the Job: Theory and Evidence

Cited by 299 publications

References 36 publications

The Role of Performance-Related Pay in Renegotiating the "Effort Bargain": the Case of the British Public Service

The Role of Performance-Related Pay in Renegotiating the "Effort Bargain": the Case of the British Public Service

Tournaments and managerial incentives in China's listed firms: New evidence

Profit Sharing and Reciprocity: Theory and Survey Evidence

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