Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202792 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12446
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
performance pay
performance reviews
monitoring
feedback
field experiment
management practices
JEL: 
J3
L2
M5
C93
Document Type: 
Working Paper

Files in This Item:
File
Size
1.38 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.