The impact of performance pay on sales and fundraising
Maurice Bun () and
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Leo Huberts: University of Amsterdam
No 16-01, UvA-Econometrics Working Papers from Universiteit van Amsterdam, Dept. of Econometrics
In recent years there has been wide criticism of bonuses and performance pay in different forms. This can often be traced back to the recent financial crisis. Empirical evidence on the effects of bonuses and performance related pay is increasing. We contribute to the discussion by analyzing the impact of changes in the payment structure of a large Dutch marketing company. Specifically, we investigate the consequences for company sales of higher fixed pay in combination with lower bonuses. Exploiting shift level data of individual workers we find that average productivity decreases when the pay structure shifts more to fixed pay. Further analysis shows that this is a pure incentive effect and not due to sorting.
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