 Watching or not watching?Brice Corgnet (),
Roberto Hernán-González,
Jordi Brandts,
José Mª Ortiz and
Carles Solà
Post-Print from HAL Abstract: A common rationale for the use of salary contracts is that they can produce substantial incentive effects when coupled with firing threats. However, enforcing firing threats may require close supervision of employees, thus possibly offsetting the very reasons salaries are commonly used, such as lowering monitoring costs and granting autonomy to employees. We design a series of experiments to study the effectiveness of firing threats when only limited information is available to supervisors. We show that light and unobtrusive supervision can produce large incentive effects. Compared to salary contracts, firing threats based on observing organizational performance alone increase employees' output by 70% whereas only observing how long an employee works doubles output. These findings show that salaries can produce large incentive effects even in the absence of intensive supervision. Finally, we show that salary contracts with firing threats perform at least as well as other popular incentive schemes, such as bonuses, individual and team incentives, that rely on a similar amount of information about employees. Keywords: Personnel Economics; organizational behavior (search for similar items in EconPapers) Published in Journal of Economic Behavior and Organization, 2021, pp.672 - 685. ⟨10.1016/j.jebo.2021.07.019⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05635796 DOI: 10.1016/j.jebo.2021.07.019 Access Statistics for this paper More papers in Post-Print from HAL |
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