Talking about Performance or Paying for it? Evidence from a Field Experiment

Kathrin Manthei (), Dirk Sliwka () and Timo Vogelsang
Additional contact information
Kathrin Manthei: RFH Koeln
Dirk Sliwka: University of Cologne

No 12446, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate the causal effect of conversations about performance and performance pay implementing a 2x2 field experiment in a retail chain. In the performance pay treatments, managers receive a bonus for profit increases. In the performance review treatments, managers have regular meetings with their supervisors discussing their activities to increase profits. We find that review conversations raise profits by 7%-8%. However, when additionally receiving performance pay this effect vanishes. Analyzing an extension of Bénabou and Tirole (2006), we rationalize this effect formally and provide empirical evidence that the use of performance pay changes the nature of conversations undermining their value.

Keywords: field experiment; feedback; monitoring; performance reviews; performance pay; management practices (search for similar items in EconPapers)
JEL-codes: C93 J3 L2 M5 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2019-06
New Economics Papers: this item is included in nep-eur, nep-exp, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as 'Talking About Performance or Paying for It? A Field Experiment on Performance Reviews and Incentives' in: Management Science, 2023, 69 (4), 2198-2216

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