The Impact of Compensation Framing on Work Relationships

This paper attempts to understand the effects of compensation framing on performance, work relationships, and organizational citizenship behavior. 108 study participants worked under either a bonus or penalty framed contract to complete an effort-based task. The results of the study indicate that employees will exert more effort to get to know their supervisor and demonstrate more good behavior under a bonus frame versus a penalty frame. These findings are important for companies to recognize how different compensation structures impact their employees. Companies can be more successful if they put in more time and effort to better understand their employees

From Crowds to Collaborators: Initiating Effort & Catalyzing Interactions Among Online Creative Workers

Online collaborative platforms have emerged as a complementary approach to traditional organizations for coordinating the collective efforts of creative workers. However, it is surprising that they result in any productive output as individuals often work without direct monetary incentives while collaborating with unknown others. In this paper, we distinguish the conditions necessary for eliciting effort from those affecting the quality of interdependent teamwork. We consider the role of incentives versus social processes in catalyzing collaboration. We test our hypotheses using a unique data set of 260 individuals randomly assigned to 52 teams tasked with developing working solutions to a complex innovation problem over 10 days, with varying monetary incentives. We find that levels of effort are driven by cash incentives and the presence of other interacting teammates. The level of collaboration, by contrast, was not sensitive to cash incentives. Instead, individuals increased their communication if teammates were also actively participating. Additionally, team performance is uniquely driven by the level of emergent interdependence, as indexed by the diversity of topics discussed and the temporal coordination of activity in short focused time periods. Our results contribute to the literature on how alternative organizational forms can be designed to solve complex innovation tasks

Team Incentives, Social Cohesion, and Performance::A Natural Field Experiment

We conduct a field experiment in a Dutch retail chain of 122 stores to study the interaction between team incentives, team social cohesion, and team performance. Theory predicts that the effect of team incentives on team performance increases with the team's social cohesion, because social cohesion reduces free-riding behavior. In addition, team incentives may lead to more co-worker support or to higher peer pressure and thereby can affect the team's social cohesion. We introduce short-term team incentives in a randomly selected subset of stores and measure for all stores, both before and after the intervention, the team's sales performance, the team's social cohesion as well as co-worker support and peer pressure. The average treatment effect of the team incentive on sales is 1.5 percentage points, which does not differ significantly from zero. In line with theory, the estimated treatment effect increases with social cohesion as measured before the intervention. Social cohesion itself is not affected by the team incentives

Indirect Higher Order Beliefs and Cooperation

This paper experimentally examines why communication may matter for inducing cooperation in strategic interactions involving intermediaries. We consider a three-player centipede game in which the first and the third players do not interact sequentially, but only through the second player. We posit that the third player's decision to cooperate depends on his indirect higher order belief, that is, his belief about what the first player believes the second player would choose. The evidence demonstrates that communication between the first and the third player can effectively induce cooperation from the third player through shaping his indirect higher order belief

Indirect Higher Order Beliefs and Cooperation

This paper experimentally examines why communication may matter for inducing cooperation in strategic interactions involving intermediaries. We consider a three-player centipede game in which the first and the third players do not interact sequentially, but only through the second player. We posit that the third player's decision to cooperate depends on his indirect higher order belief, that is, his belief about what the first player believes the second player would choose. The evidence demonstrates that communication between the first and the third player can effectively induce cooperation from the third player through shaping his indirect higher order belief

Team Incentives and Lower Ability Workers: An Experimental Study on Real Effort Tasks

Team incentives are important in many compensation systems that pay workers according to the output of their team as well as to their own output, with team bonuses often depending on whether the team meets or exceeds specified thresholds. Yet little is known about how team members with different abilities respond to compensation rules and thresholds. We contrast the performance of lower ability participants and higher ability participants in an experiment with three distribution schemes – equal sharing, piece rate sharing, and tournament style winner-takesall – in settings with and without a team threshold. Workers randomly assigned to equal sharing had higher productivity than those assigned to winner-takes-all and had similar productivity to workers in piece-rate scheme. Output under equal sharing was boosted by the higher productivity of less able workers, possibly motivated by a desire to avoid guilt feelings about letting down their partners, per models of guilt aversion. Given a choice of distribution schemes, participants selected piece rate over equal sharing and favored both of these over winner-takes-all; in addition, a team threshold induced more concern about cooperation and thus greater preference for equal sharing. The findings suggest that organizations with teams of workers with varying abilities are likely to do better if the organization can consider lower ability workers’ responsiveness to sharing in rewards, e.g., to have an equal sharing component in its compensation system when they are strongly guilt averse

“Coopetition” in the presence of team and individual incentives: Evidence from the advice network of a sales organization

Team and individual incentives are ubiquitous in sales, but little is known about their impact on collaboration when they are applied simultaneously. The presence of both types of incentives creates a “coopetitive” environment, where forces of collaboration and competition coexist. We examine how such environments impact the likelihood (Study 1) and the effectiveness (Study 2) of collaboration in the form of advice exchange. Exponential random graph modeling (ERGM) of network data of 540 salespeople reveals that individual incentives promote advice seeking but discourage advice giving, and team incentives stimulate advice giving but reduce advice seeking (Study 1). We also find that the effectiveness of advice depends on advice givers (Study 2). In particular, when advice givers have diverse team incentives, the advice is more effective and the need for additional advice is reduced, but when advice givers have diverse individual incentives, the advice is less effective and additional advice helps

Why join a team?

We present experiments exploring why high ability workers join teams with less able co-workers when there are no short-term financial benefits. We distinguish between two explanations: pro-social preferences and expected long-term financial gains from teaching future teammates. Participants perform a real-effort task and decide whether to work independently or join a two-person team. Treatments vary the payment scheme (piece rate or revenue sharing), whether teammates can communicate, and the role of teaching. High ability workers are more willing to join teams in the absence of revenue sharing and less willing to join teams when they cannot communicate. When communication is possible, the choice of high ability workers to join teams is driven by expected future financial gains from teaching rather than some variety of pro-social preferences. This result has important implications for the role of adverse selection in determining the productivity of teams