Goals (th)at Work – Goals, Monetary Incentives, and Workers’ Performance

Sebastian Goerg and Sebastian Kube

No 2012_19, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: In a randomized field experiment, we investigate the connection between work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple, but effort-intense task. Output is perfectly observable and workers are paid for performance. While a regular piece-rate contract serves as a benchmark, in some treatments workers are paid a bonus conditional on reaching a pre-specified goal. We observe that the use of personal work goals leads to a significant output increase. The positive effect of goals not only prevails if they are self-chosen by the workers, but also if goals are set exogenously by the principal – although in the latter case, the exact size of the goal plays a crucial role. Strikingly, the positive effect of self-chosen goals persists even if the goal is not backed up by monetary incentives. We propose a novel incentive contract where – through the choice of a personal work goal – workers themselves determine the risk and the size of their bonus payment at the same time.

Keywords: Field experiment; Goal setting; monetary incentives; bonus payments; pay-for-performance contracts; workplace behavior (search for similar items in EconPapers)
JEL-codes: A12 C93 D01 D03 D24 J24 J33 M52 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hrm, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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