Talking About Performance or Paying for It? A Field Experiment on Performance Reviews and Incentives

Published Online:https://doi.org/10.1287/mnsc.2022.4431

References

  • Alfitian J, Sliwka D, Vogelsang T (2021) When bonuses backfire: Evidence from the workplace. Working paper, University of Cologne, Germany.Google Scholar
  • Ali SN, Bénabou R (2020) Image versus information: Changing societal norms and optimal privacy. Amer. Econom. J. Microeconom. 12(3):116–164.CrossrefGoogle Scholar
  • Antonakis J, d’Adda G, Weber R, Zehnder C (2021) Just words? Just speeches? On the economic value of charismatic leadership. Working paper, University of Lausanne, Switzerland.Google Scholar
  • Ariely D, Bracha A, Meier S (2009) Doing good or doing well? Image motivation and monetary incentives in behaving prosocially. Amer. Econom. Rev. 99(1):544–555.CrossrefGoogle Scholar
  • Ashraf N, Bandiera O, Jack K (2014) No margin, no mission? A field experiment on incentives for public service delivery. J. Public Econom. 120:1–17.CrossrefGoogle Scholar
  • Athey S, Imbens G (2017) The econometrics of randomized experiments. Banerjee A, Duflo E, eds. Handbook of Field Experiments, vol. 1 (Elsevier, North Holland, Amsterdam), 73–140.CrossrefGoogle Scholar
  • Bandiera O, Barankay I, Rasul I (2007) Incentives for managers and inequality among workers: Evidence from a firm-level experiment. Quart. J. Econom. 122(2):729–773.CrossrefGoogle Scholar
  • Bandiera O, Barankay I, Rasul I (2011) Field experiments with firms. J. Econom. Perspect. 25(3):63–82.CrossrefGoogle Scholar
  • Bandiera O, Prat A, Hansen S, Sadun R (2020) CEO behavior and firm performance. J. Political Econom. 128(4):1325–1369.CrossrefGoogle Scholar
  • Banker RD, Fang S, Lee S-Y (2018) Conflict between supervisory monitoring and monetary incentives: Evidence from a high-end retail store. Working paper, Fox School of Business, Temple University, Philadelphia.Google Scholar
  • Banker RD, Lee S-Y, Potter G, Srinivasan D (2000) An empirical analysis of continuing improvements following the implementation of a performance-based compensation plan. J. Accounting. Econom. 30(3):315–350.CrossrefGoogle Scholar
  • Barankay I (2012) Rank incentives: Evidence from a randomized workplace experiment. Working paper, The Wharton School, University of Pennsylvania, Philadelphia.Google Scholar
  • Belot M, Schröder M (2016) The spillover effects of monitoring: A field experiment. Management Sci. 62(1):37–45.LinkGoogle Scholar
  • Bénabou R, Tirole J (2003) Intrinsic and extrinsic motivation. Rev. Econom. Stud. 70(3):489–520.CrossrefGoogle Scholar
  • Bénabou R, Tirole J (2006) Incentives and prosocial behavior. Amer. Econom. Rev. 96(5):1652–1678.CrossrefGoogle Scholar
  • Bénabou R, Tirole J (2011) Laws and norms. National Bureau of Economic Research No. w17579.Google Scholar
  • Bender S, Bloom N, Card D, Van Reenen J, Wolter S (2018) Management practices, workforce selection, and productivity. J. Labor Econom. 36(1):371–409.CrossrefGoogle Scholar
  • Bertrand M, Schoar A (2003) Managing with style: The effect of managers on firm policies. Quart. J. Econom. 118(4):1169–1208.CrossrefGoogle Scholar
  • Blader S, Gartenberg C, Prat A (2020) The contingent effect of management practices. Rev. Econom. Stud. 87(2):721–749.Google Scholar
  • Blanes i Vidal J, Nossol M (2011) Tournament without prizes: Evidence from personnel records. Management Sci. 57(10):1721–1736.LinkGoogle Scholar
  • Bloom N, Van Reenen J (2007) Measuring and explaining management practices across firms and countries. Quart. J. Econom. 122(4):1351–1408.CrossrefGoogle Scholar
  • Bloom N, Eifert B, Mahajan A, McKenzie D, Roberts J (2013) Does management matter? Evidence from India. Quart. J. Econom. 128(1):1–51.CrossrefGoogle Scholar
  • Boly A (2011) On the incentive effects of monitoring: Evidence from the lab and the field. Experiment. Econom. 14(2):241–253.CrossrefGoogle Scholar
  • Bonferroni CE (1935) Il calcolo delle assicurazioni su gruppi di teste. Studi in Onore del Professore Salvatore Ortu Carboni, 13–60.Google Scholar
  • Bradler C, Dur R, Neckermann S, Non A (2016) Employee recognition and performance: A field experiment. Management Sci. 62(11):3085–3099.LinkGoogle Scholar
  • Brynjolfsson E, Milgrom P (2012) Complementarity in organizations. Gibbons R, Roberts J, eds. Handbook of Organizational Economics (Princeton University Press, Princeton, NJ), 11–55.Google Scholar
  • Buckingham M, Goodall A (2015) Reinventing performance management. Harvard Bus. Rev. 93(4):40–50.Google Scholar
  • Burgess S, Rawal S, Taylor ES (2021) Teacher peer observation and student test scores: Evidence from a field experiment in English secondary schools. J. Labor Econom. 39(4):1155–1186.Google Scholar
  • Bursztyn L, Jensen R (2015) How does peer pressure affect educational investments? Quart. J. Econom. 130(3):1329–1367.CrossrefGoogle Scholar
  • Cai J, Wang S-Y (2020) Improving management through worker evaluations: Evidence from auto manufacturing. NBER Working Paper No. 27680, National Bureau of Economic Research, Cambridge, MA.Google Scholar
  • Campbell D, Epstein MJ, Asis Martinez-Jerez F (2011) The learning effects of monitoring. Accounting Rev. 86(6):1909–1934.CrossrefGoogle Scholar
  • Cappelli P, Conyon MJ (2018) What do performance appraisals do? Indust. Labor Relations Rev. 71(1):88–116.CrossrefGoogle Scholar
  • Cappelli P, Tavis A (2016) The performance management revolution. Harvard Bus. Rev. 94(10):58–67.Google Scholar
  • Cardinaels E, Yin H (2015) Think twice before going for incentives: Social norms and the principal’s decision on compensation contracts. J. Accounting Res. 53(5):985–1015.CrossrefGoogle Scholar
  • Casas-Arce P, Lourenço SM, Asis Martínez-Jeres F (2017a) The performance effect of feedback frequency and detail: Evidence from a field experiment in customer satisfaction. J. Accounting Res. 55(5):1051–1088.CrossrefGoogle Scholar
  • Casas-Arce P, Martínez-Jeres FA, Moran J (2019) Motivating through managing by walking around. Working paper, Arizona State University, Tempe, AZ.Google Scholar
  • Casas-Arce P, Martínez-Jeres FA, Narayanan VG (2017b) The impact of forward-looking metrics on employees’ decision-making: The case of customer lifetime value. Accounting Rev. 92(3):31–56.CrossrefGoogle Scholar
  • Cassar L, Meier S (2018) Nonmonetary incentives and the implications of work as a source of meaning. J. Econom. Perspect. 32(3):215–238.CrossrefGoogle Scholar
  • Christ MH (2013) An experimental investigation of the interactions among intentions, reciprocity, and control. J. Management Accounting Res. 25(1):169–197.CrossrefGoogle Scholar
  • Delfgaauw J, Dur R, Sol J, Verbeke W (2013) Tournament incentives in the field: Gender differences in the workplace. J. Labor Econom. 31(2):305–326.CrossrefGoogle Scholar
  • DiDonato T (2014) Stop basing pay on performance reviews. Harvard Bus. Rev. Accessed January 1, 2014, https://hbr.org/2014/01/stop-basing-pay-on-performance-reviews.Google Scholar
  • Ellingsen T, Johannesson M (2007) Paying respect. J. Econom. Perspect. 21(4):135–150.CrossrefGoogle Scholar
  • Ellingsen T, Johannesson M (2008) Pride and prejudice: The human side of incentive theory. Amer. Econom. Rev. 98(3):990–1008.CrossrefGoogle Scholar
  • Eyring H, Narayanan VG (2018) Performance effects of setting a high reference point for peer‐performance comparison. J. Accounting Res. 56(2):581–615.CrossrefGoogle Scholar
  • Eyring H, Ferguson PJ, Koppers S (2021) Less information, more comparison, and better performance: Evidence from a field experiment. J. Accounting Res. 59(2):657–711.CrossrefGoogle Scholar
  • Falk A, Kosfeld M (2006) The hidden costs of control. Amer. Econom. Rev. 96(5):1611–1630.CrossrefGoogle Scholar
  • Fama EF (1980) Agency problems and the theory of the firm. J. Political Econom. 88(2):288–307.CrossrefGoogle Scholar
  • Fehr E, List JA (2004) The hidden costs and returns of incentives—trust and trustworthiness among CEOs. J. Eur. Econom. Assoc. 2(5):743–771.Google Scholar
  • Fehr E, Rockenbach B (2003) Detrimental effects of sanctions on human altruism. Nature 422(6928):137–140.CrossrefGoogle Scholar
  • Ferreira A, Otley D (2009) The design and use of performance management systems: An extended framework for analysis. Management Accounting Res. 20(4):263–282.CrossrefGoogle Scholar
  • Floyd E, List JA (2016) Using field experiments in accounting and finance. J. Accounting Res. 54(2):437–475.CrossrefGoogle Scholar
  • Friebel G, Heinz M, Zubanov N (2022) Middle managers, personnel turnover, and performance: A long‐term field experiment in a retail chain. Management Sci. 68(1):211–229.LinkGoogle Scholar
  • Friebel G, Heinz M, Krüger M, Zubanov N (2017) Team incentives and performance: Evidence from a retail chain. Amer. Econom. Rev. 107(8):2168–2203.CrossrefGoogle Scholar
  • Genschow O, Schuler J, Cracco E, Brass M, Wänke M (2020) The effect of money priming on self-focus in the imitation-inhibition task. Experiment. Psych. 66(6):423–436.CrossrefGoogle Scholar
  • Gibbons R, Murphy KJ (1992) Optimal incentive contracts in the presence of career concerns: Theory and evidence. J. Political Econom. 100(3):468–505.CrossrefGoogle Scholar
  • Gibbons R, Roberts J (2012) Economic theories of incentives in organizations. Gibbons R, Roberts J, eds. Handbook of Organizational Economics (Princeton University Press, Princeton, NJ), 56–99.Google Scholar
  • Gneezy U, Rustichini A (2000a) Pay enough or don’t pay at all. Quart. J. Econom. 115(3):791–810.CrossrefGoogle Scholar
  • Gneezy U, Rustichini A (2000b) A fine is a price. J. Legal Stud. 29(1):1–17.CrossrefGoogle Scholar
  • Gneezy U, Meier S, Rey-Biel P (2011) When and why incentives (don’t) work to modify behavior. J. Econom. Perspect. 25(4):191–210.CrossrefGoogle Scholar
  • Gosnell GK, List JA, Metcalfe RD (2020) The impact of management practices on employee productivity: A field experiment with airline captains. J. Political Econom. 128(4):1195–1233.CrossrefGoogle Scholar
  • Grabner I, Moers F (2013) Management control as a system or a package? Conceptual and empirical issues. Accounting Organ. Soc. 38(6–7):407–419.CrossrefGoogle Scholar
  • Hanna R, Mullainathan S, Schwartzstein J (2014) Learning through noticing: Theory and evidence from a field experiment. Quart. J. Econom. 129(3):1311–1353.CrossrefGoogle Scholar
  • Harrison GW, List J (2004) Field experiments. J. Econom. Literature 42(4):1009–1055.CrossrefGoogle Scholar
  • Hoenig JM, Heisey DM (2001) The abuse of power: The pervasive fallacy of power calculations for data analysis. Amer. Statist. 55(1):19–24.CrossrefGoogle Scholar
  • Hoffman M, Tadelis S (2021) People management skills, employee attrition, and manager rewards: An empirical analysis. J. Political Econom. 129(1):243–285.CrossrefGoogle Scholar
  • Holmström B (1999) Managerial incentive problems: A dynamic perspective. Rev. Econom. Stud. 66(1):169–182.CrossrefGoogle Scholar
  • Holmström B (2017) Pay for performance and beyond. Amer. Econom. Rev. 107(7):1753–1777.CrossrefGoogle Scholar
  • Hossain T, List JA (2012) The behavioralist visits the factory: Increasing productivity using simple framing manipulations. Management Sci. 58(12):2151–2167.LinkGoogle Scholar
  • Ichino A, Muehlheusser G (2008) How often should you open the door? Optimal monitoring to screen heterogeneous agents. J. Econom. Behav. Organ. 67(3–4):820–831.CrossrefGoogle Scholar
  • Ichniowski C, Shaw K, Prennushi G (1997) The effects of human resource management practices on productivity: A study of steel finishing lines. Amer. Econom. Rev. 87:291–313.Google Scholar
  • Kvaløy O, Nieken P, Schöttner A (2015) Hidden benefits of reward: A field experiment on motivation and monetary incentives. Eur. Econom. Rev. 76:188–199.CrossrefGoogle Scholar
  • Lazear EP (2000) Performance pay and productivity. Amer. Econom. Rev. 90(5):1346–1361.CrossrefGoogle Scholar
  • Lazear EP (2018) Compensation and incentives in the workplace. J. Econom. Perspect. 32(3):195–214.CrossrefGoogle Scholar
  • Lazear EP, Oyer P (2012) Personnel economics. Gibbons R, Roberts J, eds. Handbook of Organizational Economics (Princeton University, Princeton, NJ), 479–519.CrossrefGoogle Scholar
  • Lazear EP, Shaw KL, Stanton CT (2015) The value of bosses. J. Labor Econom. 33(4):823–861.CrossrefGoogle Scholar
  • Levitt SD, Neckermann S (2015) What field experiments have and have not taught us about managing workers. Oxford Rev. Econom. Policy 30(4):639–657.CrossrefGoogle Scholar
  • List JA, Rasul I (2011) Field experiments in labor economics. Ashenfelter O, Card D, eds. Handbook of Labor Economics, vol. 4 (Elsevier), 103–228.CrossrefGoogle Scholar
  • Lourenço SM (2016) Monetary incentives, feedback, and recognition—Complements or substitutes? Evidence from a field experiment in a retail service company. Accounting. Rev. 91(1):279–297.CrossrefGoogle Scholar
  • Manthei K, Sliwka D, Vogelsang T (2021) Performance pay and prior learning: Evidence from a retail chain. Management Sci. 67(11):6998–7022.LinkGoogle Scholar
  • Manthei K, Sliwka D, Vogelsang T (2022) Information, incentives, and attention: A field experiment on the interaction of management controls. IZA Discussion Paper, Rheinische Fachhochschule Cologne, University of Applied Sciences, Köln, Germany.Google Scholar
  • Milgrom P, Roberts J (1990) The economics of modern manufacturing: Technology, strategy, and organization. Amer. Econom. Rev. 80(3):511–528.Google Scholar
  • Milgrom P, Roberts J (1995) Complementarities and fit strategy, structure, and organizational change in manufacturing. J. Accounting Econom. 19(2–3):179–208.CrossrefGoogle Scholar
  • Nagin DS, Rebitzer JB, Sanders S, Taylor LJ (2002) Monitoring, motivation, and management: The determinants of the opportunistic behavior in a field experiment. Amer. Econom. Rev. 92(4):850–873.CrossrefGoogle Scholar
  • Prendergast C (1999) The provision of incentives in firms. J. Econom. Literature 37(1):7–63.CrossrefGoogle Scholar
  • Rebitzer JB, Taylor LJ (2011) Extrinsic rewards and intrinsic motives: Standard and behavioral approaches to agency and labor markets. Ashenfelter O, Card D, eds. Handbook of Labor Economics, vol. 4 (Elsevier), 701–772.Google Scholar
  • Sandvik J, Saouma R, Seegert N, Stanton CT (2020) Workplace knowledge flows. Quart. J. Econom. 135(3):1635–1680.CrossrefGoogle Scholar
  • Sliwka D (2007) Trust as a signal of a social norm and the hidden costs of incentive schemes. Amer. Econom. Rev. 97(3):999–1012.CrossrefGoogle Scholar
  • Sprinkle GB, Williamson MG (2006) Experimental research in managerial accounting. Chapman C, Hopwood A, Shields M, eds. Handbooks of Management Accounting Research, vol. 1, 451–444.Google Scholar
  • Tran A, Zeckhauser R (2012) Rank as an inherent incentive: Evidence from a field experiment. J. Public Econom. 96(6):645–650.CrossrefGoogle Scholar
  • Vohs KD (2015) Money priming can change people’s thoughts, feelings, motivations, and behaviors: An update on 10 years of experiments. J. Experiment. Psych. General 144(4):e86.CrossrefGoogle Scholar
  • Vohs KD, Mead NL, Goode MR (2006) The psychological consequences of money. Science 314(5802):1154–1156.CrossrefGoogle Scholar
  • Wu CFJ (1986) Jackknife, bootstrap and other resampling methods in regression analysis (with discussions). Ann. Statist. 14:1261–1350.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.