Bonus Payments Research Articles

Motivation of staff at transport enterprises in modern economic conditions

The study is devoted to the actual problem of motivating personnel at transport enterprises, the urgency of which is beyond doubt, since finding ways to solve it is one of the most important issues of improving the economic mechanism. At the current stage, the problem of motivation is of great importance. The majority of Ukrainian enterprises pay significant attention only to material motivation, namely, they use traditional mechanisms of material motivation, i.e. the payment of wages, allowances and one-time bonuses, which in turn devalues the desire of employees for labor competitiveness. Personnel is the most complex and specific type of resources used by the enterprise in its activities. Therefore, the essence of motivation comes down to creating the conditions that denied workers the feeling that they could satisfy their needs with such behavior that ensures the achievement of goals organizations. The efficiency of the enterprise largely depends on the efficiency of the personnel. It is due to the employee's interest in the results of his work, when creating proper working conditions, it is possible to achieve an increase in labor productivity. Motivation is one of the main functions of management at all enterprises, because only under the conditions of effective motivation can the enterprise realize its potential for the highest quality economic growth. That is why the issue of improving the motivation of personnel at transport enterprises is one of the most urgent. The results. Proposals for motivating employees at transport enterprises in modern conditions have been developed. Scientific novelty. It is determined by a set of scientific provisions, conclusions and recommendations of a theoretical nature, aimed at solving the problem of motivating the personnel of transport enterprises.

How Do Primary Care Providers Respond to Reimbursement Cuts? Evidence From the Termination of the Primary Care Incentive Program.

The Primary Care Incentive Payment Program (PCIP) provided a 10% bonus payment for Evaluation and Management (E&M) visits for eligible primary care providers (PCPs) from 2011 to 2015. Using a 2012 to 2017 sample of continuously eligible PCPs (the treatment group) and ineligible specialists with historically similar provision of billed services (the control group), this study is the first to examine how PCPs responded to the program's termination. Using inverse probability of treatment weighted difference-in-differences models that control for inter-temporal changes in provider-specific beneficiary characteristics, individual provider fixed effects, and zip code by year fixed effects, it finds that providers responded to the removal of the 10% bonus payments by increasing their billing of bonus payment eligible E&M relative value units (RVUs) by 3.7%. This response is consistent with supplier-induced demand and suggests a 46% offsetting response consistent with actuarial assumptions by the Centers for Medicare & Medicaid Services when assessing reimbursement reductions.

Progress: Responsiveness Validation of an Electronic Patient Reported Outcome (ePRO) in Adults with Sickle Cell Disease (NCT05407805)

Background: Vaso-occlusive painful crises (VOC) are a hallmark of sickle cell disease (SCD). Historically, efficacy of drugs intended to reduce frequency of VOCs has been evaluated solely on the frequency of VOC that require a medical intervention, such as a visit to the emergency department, an infusion center and/or hospitalization. Several studies (PiSCES, ELIPSIS) have now demonstrated that the majority of painful events are managed in the home setting.1,2 Therefore, accepted measures to evaluate disease burden do not represent the totality of the patient VOC experience. There is a need to improve and expand on existing clinical trial endpoints to capture the totality of the VOC experience. Moreover, participation in clinical trials for patients with SCD faces numerous barriers, such as transportation difficulties, burden to patient's family/work time and recently, concerns about Covid-19 exposure. We aim to quantify daily pain episodes and provide additional evidence supporting validation of responsiveness in a therapeutic setting for a novel SCD electronic patient reported outcomes (ePRO), that may be utilized in a decentralized or traditional study setting. To successfully assess this tool, it is essential that participants comply with the completion of this daily diary. Methods: PROGRESS (NCT05407805) is a prospective study characterizing VOCs in 2 cohorts of patients with HbS/S or S/B0 Thal ≥18 years of age. Group 1, "control" consists of up to 100 patients not on disease modifiers, and group 2," Hydroxyurea" (HU) includes 50 patients on a stable dose of HU. On Day 1, patients have a blood draw for biomarker evaluation and receive training for their SCD diary on an ePRO device. Patient's participation is approximately 7 months. The blood draw and the training on the SCD ePRO device may be performed remotely by a phlebotomist in the patients' home, or at a site. The SCD ePRO diary consists of up to 6 questions and is completed in the evening to reflect the past 24 hours. Strategies to assure the diary is completed include simplification of questions and responses, device alarms, allowance to complete until noon the following day, morning calls to patients if a diary has not been completed the night before and remuneration for the completion of the diary each day. A small bonus payment is provided when 6 or more diaries are completed over a 7-day period, with the bonus increasing during the final 3 months of the study. Results: To date, two sites have screened 15 individuals and enrolled 10 participants. Participants are generally able to complete the diary in approximately 1-2 minutes and the daily diary completion compliance is ~95% over an average of 75 days (range: 9 to 146 days). Discussion: Classical methods for measuring the rate of VOCs, based solely on utilization of medical resources, vastly underestimate the pain burden in SCD; therefore, developing new validated endpoints that measure the totality of pain episodes, including home VOCs is a priority. Demonstration of sustained compliance and responsiveness of a daily diary may provide additional confidence in the use of this tool as an endpoint in broader therapeutic settings.

Rank-based alternatives to mean-based ensemble models of satisfaction with earnings: Comment on Putnam-Farr and Morewedge (2020).

How much satisfaction do we derive from a new salary or from receiving a bonus payment in an experiment? People do not judge monetary amounts in isolation but compare them to other amounts-judgments are context sensitive. A key question is, however, how context affects judgment. Across eight experiments, Putnam-Farr and Morewedge (2020) showed that people's self-reported satisfaction with a sum of money is predicted by the difference between that amount and the highest or lowest amount received by others. The authors found no evidence that people's judgments are sensitive to the ranked position of a monetary amount among other rewards. Putnam-Farr and Morewedge explained their results with reference to the ensemble representation literature, which shows that people can accurately estimate summary statistics, such as the maximum or mean, of stimulus distributions. In this commentary, we argue that their proposed interpretation is inconsistent with extensive theoretical and empirical research showing that judgments of stimuli reflect the relative ranked position of those stimuli within a comparison context. Building on this research, we show that the experimental results reported by Putnam-Farr and Morewedge can be explained on the assumption that people use contextual information to infer a distribution of monetary amounts and judge individual amounts by their relative ranked position within that inferred distribution. This inferred distribution theory accounts for empirical results reported in the original study while remaining consistent with the general and well-established principle of rank-based judgment. (PsycInfo Database Record (c) 2022 APA, all rights reserved).

Rewards for information provision in patient referrals: A theoretical model and an experimental test

We study whether bonus payments for information provision can improve the information flow between physicians. A primary care physician (PCP) decides on the provision of information of varying qualities to a specialist while referring a patient. Our theoretical model, which includes altruism and loss aversion, predicts that bonus payments increase the provision of both high- and low-quality information. Running a controlled laboratory experiment we find support for this prediction. If the beneficiary of information provision receives a higher payoff than the PCP, we observe that PCPs more often pass on high-quality information when the beneficiary is a patient. If the beneficiary receives a lower payoff than the PCP, the type of the beneficiary (specialist or patient) does not affect the provision of high-quality information.

Game-Theoretic Approach to Modeling Collective Labor Incentives for Regional Civil Servants in Russia

Currently, a number of external factors (in particular, sanctions pressure from the US and EU countries, the pandemic of a new coronavirus infection) have a strong negative impact on the socio-economic development of the constituent entities of the Russian Federation. Therefore, the head of almost any Russian region is forced to perform the functions of an anti-crisis manager. The modern system of stimulating the work of civil regional employees can help improve the efficiency of public administration, and as a result, ensure the socio-economic development of a constituent entity of the Russian Federation. The author's approach to this issue is based on the simultaneous application of a number of modern scientific methods, namely index, neural network technologies and mathematical game theory. The use of neural network technologies makes it possible to objectively assess the achieved level of socio-economic development of a constituent entity of the Russian Federation. Taking into account the positive foreign (Singapore and South Korean) experience in the field of civil service reform, it is proposed to make the amount of collective incentive payments (bonus fund) of regional civil servants directly dependent on the achieved level of socio-economic development of the subject of the Russian Federation. In turn, this implies the development of a hierarchical system of collective-individual stimulation of the work of regional civil servants. During the construction of the game-theoretic model, the correct establishment of the relationship between the level of collective incentive payments to regional civil servants and the socio-economic development of a constituent entity of the Russian Federation is ensured. After experimental refinement of the parameters of the game-theoretic model, there is a possibility of its practical application to stimulate the work of regional civil servants in Russia. The introduction of the author's approach into the practice of regional management, firstly, will allow coordinating the activities of ministries and departments, and secondly, will strengthen control over the targeted spending of budgetary funds on bonus payments to civil civil servants.

Implementation fidelity in a multifaceted program to foster rational antibiotics use in primary care: an observational study

BackgroundThe ARena study (Sustainable Reduction of Antimicrobial Resistance in German Ambulatory Care) is a three-arm, cluster randomized trial to evaluate a multifaceted implementation program in a German primary care setting. In the context of a prospective process evaluation conducted alongside ARena, this study aimed to document and explore fidelity of the implementation program.MethodsThis observational study is based on data generated in a three-wave survey of 312 participating physicians in the ARena program and attendance documentation. Measures concerned persistence of participation in the ARena program and adherence to intervention components (thematic quality circles, e-learning, basic expenditure reimbursements, additional bonus payments and a computerized decision support system). Participants’ views on five domains of the implementation were also measured. Binary logistic and multiple linear regression analyses were used to explore which views on the implementation were associated with participants’ adherence to quality circles and use of additional bonus compensation.ResultsThe analysis of fidelity showed overall high persistence of participation in the intervention components across the three intervention arms (90,1%; 97,9%; 92,9%). 96.4% of planned quality circles were delivered to study participants and, across waves, 30.4% to 93% of practices participated; 56.1% of physicians attended the maximum of four quality circles. 84% of the practices (n = 158) with a minimum of one index patient received a performance-based additional bonus payment at least once. In total, bonus compensation was triggered for 51.8% of affected patients. Participation rate for e-learning (a prerequisite for reimbursement of project-related expenditure) covered 90.8% of practices across all intervention arms, with the highest rate in arm II (96.5%). Uptake of expenditure reimbursement was heterogeneous across study arms, with a mean rate of 86.5% (89.1% in arm I, 96.4% in arm II and 74.1% in arm III). Participants’ views regarding participant responsiveness (OR = 2.298) 95% CI [1.598, 3.305] and Context (OR = 2.146) 95% CI [1.135, 4.055] affected additional bonus payment. Participants’ views on participant responsiveness (Beta = 0.718) 95% CI [0.479, 0.957], Context (Beta = 0.323) 95% CI [0.055, 0.590] and Culture of shared decision-making (Beta = -0.334) 95% CI [-0.614, -0.053] affected quality circle attendance.ConclusionThis study showed an overall high fidelity to the implementation program. Participants’ views on the implementation were associated with degree of intervention fidelity.Trial registrationISRCTN, ISRCTN58150046.

Medicare Advantage Financing and Quality in Puerto Rico vs the 50 US States and Washington, DC

More than 70% of Medicare beneficiaries in Puerto Rico are enrolled in a Medicare Advantage (MA) plan. Evidence of MA plan payments and quality in Puerto Rico compared with the 50 US states and Washington, DC (hereafter referred to as US mainland), is lacking, notably after implementation of the Patient Protection and Affordable Care Act (ACA). To compare MA plan payments and quality in Puerto Rico with those in the US mainland and to evaluate how differences between MA plans in Puerto Rico and the US mainland changed after ACA implementation. This cohort study used publicly available data on MA plans from January 1, 2006, to December 31, 2019, from the Centers for Medicare & Medicaid Services. Data analysis was performed from October 2019 to February 2022. Medicare Advantage plans in Puerto Rico and implementation of the ACA. Primary outcomes were risk-standardized federal benchmark payments (the amount offered by the federal government for insuring a beneficiary of average risk), risk-standardized plan bids (a plan's asking price for a beneficiary of average risk), and rebates received by plans. Additional outcomes included risk-adjusted benchmarks, risk-adjusted bids, actual plan payment, and aggregate plan quality ratings (star ratings). A difference-in-differences analysis examined differential changes in plan payments in Puerto Rico vs the US mainland after ACA implementation. Before ACA implementation, 211 MA plans in Puerto Rico and 13 899 plans in the US mainland were included. After ACA implementation, 433 MA plans in Puerto Rico and 29 515 plans in the US mainland were included. Before ACA implementation, risk-standardized benchmarks were 33% lower for MA plans in Puerto Rico than plans in the US mainland ($556.73 [95% CI, $551.82-$561.64] vs $831.15 [95% CI, $828.55-$833.75] per beneficiary per month [PBPM]). This gap increased to 38% after ACA implementation ($540.58 [95% CI, $536.86-$544.32] vs $869.31 [95% CI, $868.21-$870.42] PBPM). Risk-standardized plan bids in Puerto Rico were 46% lower before ACA implementation and 43% lower after ACA implementation compared with those in the US mainland. Rebates in Puerto Rico decreased from $168.50 (95% CI, $163.57-$173.42) PBPM before ACA implementation to $93.39 (95% CI, $89.51-$97.27) PBPM after ACA implementation, a decrease of $75.11 PMPM compared with a decrease of $2.05 PMPM in the US mainland. Plans in Puerto Rico received increased quality bonus payments, and the mean (SD) risk score for plans in Puerto Rico increased to 1.55 (0.31) after ACA implementation, which increased risk-adjusted benchmarks and actual plan payments, offsetting the widening payment disparity. This cohort study found that after implementation of the ACA, federal benchmark payment amounts decreased in Puerto Rico compared with the US mainland. Responses by MA plans in Puerto Rico, including increased quality bonus payments and risk scores, offset this payment reduction, although actual plan payments in Puerto Rico were lower than those in the US mainland.

The Effectiveness of Bonus Payment as a Financial Incentive for Top Management

Employees are important for the company’s success. Top management not only performs functional duties, but also makes strategic and operational decisions. The aim of the study is to determine the impact of bonus payments as a means of material motivation on the top managers’ performance. The authors of this study surveyed 147 top managers of 70 Ukrainian IT product companies using a pre-developed questionnaire. The method of pairwise comparisons was used to establish the priority forms of motivating and demotivating factors. The impact of payment of material incentives in the form of bonuses to top managers on the achievement of such performance indicators as company profit, total revenue, ROI, performance indicators of individual departments and personal performance indicators of top managers was established and confirmed. There is a 96% correlation between the amount of additional bonus payments and the motivation of top managers. The reliability of the regression model of the impact of additional bonuses on the level of motivation of top managers is 92%. The results indicate the ability of company owners to influence the motivation of top managers through the introduction of bonus payments or increasing their size. A high level of efficiency of bonuses as financial incentives to motivate top managers to achieve the established KPIs has also been established and proven. The vast majority of top managers are willing to increase the number or value of already established KPIs to receive additional bonuses. The results of the study confirm the importance and effectiveness of financial incentives for top managers.

Changes in spending, utilization, and quality of care among Medicare accountable care organizations during the COVID-19 pandemic.

The COVID pandemic disrupted health care spending and utilization, and the Medicare Shared Savings Program (MSSP), Medicare’s largest value-based payment model with 11.2 million assigned beneficiaries, was no exception. Despite COVID, the 513 accountable care organizations (ACO) in MSSP returned a program record $1.9 billion in net savings to Medicare in 2020. To understand the extent of COVID’s impact on MSSP cost and quality, we describe how ACO spending changed in 2020 and further analyze changes in measured quality and utilization. We found that non-COVID per capita spending in MSSP fell by 8.3 percent from $11,496 to $10,537 (95% confidence interval(CI),-1,223.8 to-695.4, p<0.001), driven by 14.6% and 7.5% reductions in per capita acute inpatient and outpatient spending, respectively. Utilization fell across inpatient, emergency, and outpatient settings. On quality metrics, preventive screening rates remained stable or improved, while control of diabetes and blood pressure worsened. Large reductions in non-COVID utilization helped ACOs succeed financially in 2020, but worsening chronic disease measures are concerning. The appropriateness of the benchmark methodology and exclusion of COVID-related spending, especially as the virus approaches endemicity, should be revisited to ensure bonus payments reflect advances in care delivery and health outcomes rather than COVID-related shifts in spending and utilization patterns.

Implications of the Merit-Based Incentive Payment System for Urology Practices

To determine the implications of the merit-based incentive payment system (MIPS) for urology practices. MIPS is a Medicare payment model that determines whether a physician is financially penalized or receives bonus payment based on performance in four categories: quality, practice improvement, promotion of interoperability, and spending. We performed a cross-sectional analysis of urologist performance in MIPS for 2017 and 2019 using Medicare data. Urologist practice organization was categorized as single-specialty (small, medium, large) or multispecialty groups. MIPS scores were estimated by practice organization. Logistic regression models were used to examine the association between urology practice characteristics, including proportion of dual eligible beneficiaries, and bonus payment adjustment as defined by Medicare methodology. Rates of consolidation (movement from smaller to larger practices) between 2017 and 2019 were compared between those who were and those who were not penalized in 2017. Urologists in small practices performed worse in MIPS and had a significantly lower adjusted odds ratio of receiving bonus payments in both 2017 and 2019 compared to larger group practices (odds ratio [OR] 0.04, 95% confidence interval [95%CI] 0.03-0.05 in 2017 and OR 0.37, 95%CI 0.30-0.47 in 2019). Increasing percent of dual eligible beneficiaries within a patient panel was associated with decreased odds of receiving bonus payment in both performance years. Urologists penalized in 2017 had higher rates of consolidation by 2019 compared to those who were not (14% vs 5%, P <.05). Small urology practices and those caring for a higher proportion of dual eligible beneficiaries tended to perform worse in MIPS.

The Golden Mean: The Risk‐Mitigating Effect of Combining Tournament Rewards with High‐Powered Incentives

The rewards received by financial managers depend on both relative performance - e.g., fund infows based on league table rankings, executive promotions based on peer comparisons - and absolute performance - e.g., bonus payments for meeting accounting targets, hedge-fund incentive fees. It is well known that both relative and absolute performance rewards engender risk taking. In this paper, we show that these two sources of risk taking, relative and absolute performance rewards, mollify the risk-taking incentives produced by the other: absolute performance rewards mitigate rank-motivated risk taking. Rank rewards mitigate risk taking motivated by absolute performance rewards.

Non‐base compensation and the gender pay gap

AbstractThis paper investigates whether non‐base compensation contributes to the gender pay gap (GPG). Using administrative data from Germany, we find in wage decompositions that lower bonus payments to women explain about 10 per cent of the gap at the mean and at different quantiles of the unconditional wage distribution whereas the lower prevalence of shift premia and overtime pay among women is unimportant. Among managers, the contribution of bonuses to the mean gap more than doubles and is steadily rising as one moves up the wage distribution. Our findings suggest that gender differences in bonuses are an important contributor to the GPG, particularly in top jobs.

Correlates of Turnover: Salary and Bonuses

Purpose–This paper investigates how salaries and bonus payments are related to turnover. Design/methodology/approach–The wealth maximization hypothesis posits that turnover is negatively related to the worker’s expected future earnings at the current firm. Thus, salary and bonuses should be related to turnover to the extent they provide information about the worker’s future earnings at the firm. To evaluate this hypothesis, this paper uses data coming from the personnel records of a medium-sized US firm in the financial services industry. Results–The regression results show that pay variables are serially correlated and they signal future promotions in the firm. Thus, both salaries and bonuses provide information about the worker’s future earnings through these two channels. Further, as predicted by the wealth maximization hypothesis, both salaries and bonuses are related to turnover. In particular, the results show that the growth rate of salary and bonus size (as well as earning a bonus in the current year) are negatively related to turnover.Discussion–The findings of this study underscore the importance of pay variables on turnover behavior. While most existing studies focus on salaries, thereby ignoring bonuses, the current analysis shows that bonus payments are an important determinant of turnover. Hence, in addition to providing workers with effort incentives, the retention function of bonuses should be taken into account for designing optimal compensation schemes.

Power of Bonus in Pricing for Crowdsourcing

We consider a simple form of pricing for a crowdsourcing system, where pricing policy is published a priori, and workers then decide their task acceptance. Such a pricing form is widely adopted in practice for its simplicity, e.g., Amazon Mechanical Turk, although additional sophistication to pricing rule can enhance budget efficiency. With the goal of designing efficient and simple pricing rules, we study the impact of the following two design features in pricing policies: (i) personalization tailoring policy worker-by-worker and (ii) bonus payment to qualified task completion. In the Bayesian setting, where the only prior distribution of workers' profiles is available, we first study the Price of Agnosticism (PoA) that quantifies the utility gap between personalized and common pricing policies. We show that PoA is bounded within a constant factor under some mild conditions, and the impact of bonus is essential in common pricing. These analytic results imply that complex personalized pricing can be replaced by simple common pricing once it is equipped with a proper bonus payment. To provide insights on efficient common pricing, we then study the efficient mechanisms of bonus payment for several profile distribution regimes which may exist in practice. We provide primitive experiments on Amazon Mechanical Turk, which support our analytical findings[5].

Incentivizing Equity? The Effects of Performance-Based Funding on Race-Based Gaps in College Completion

ABSTRACT Performance-based funding models for higher education, which tie state support for institutions to performance on student outcomes, have proliferated in recent decades. Some states now tie most of their higher education appropriations to completion outcomes and include bonus payments for historically underrepresented groups to address equity gaps in postsecondary attainment. Using a Synthetic Control Method research design, we examine the heterogenous impact of these funding regimes in Tennessee and Ohio on completion outcomes for racially minoritized students and students from historically overrepresented racial groups. Across both states, we generally estimate null or negative effects on credentials conferred to racially minoritized students and null or positive effects on credentials conferred to students from historically overrepresented racial groups. As a result, we find that performance-based funding policies widened the racial gap in certificate completion in Tennessee and in baccalaureate degree completion in Ohio. Across both states, the estimated impacts on associate degree outcomes are also directionally consistent with performance-based funding exacerbating racial inequities in associate degree attainment.

Rewarding safety performance: Improving safety or maintaining beliefs?

The enduring link between the annual cash bonus and safety metrics that is common practice across the oil and gas industry, and in some other domains, is in part due to job market pressures, and possibly supported by a self-reinforcing belief system. The current study aims to investigate the contemporary annual cash bonus practice in the oil and gas industry from the perspective of the employees and managers, regarding both the perceived value of bonus payments and the influence these have on safety. Forty-eight employees participated in semi-structured interviews in which they described their sense of the impact of the bonus scheme on safety and what could be improved. The results of the case study indicate that only a minority of the frontline properly appear to understand the link between safety performance and their annual bonus payment. Even for those with an understanding, positive safety behaviours are not directly encouraged by the bonus since the incentives are linked to the absence of incidents and are not relevant to the workers’ daily activities. There is strong evidence for a negative impact on incident reporting, both through under-reporting and reclassification of incidents. However, the current practice is considered valuable by the respondents as it signals the importance of safety alongside production and profit. Taken together, the results suggest that the contemporary annual cash bonus practice should be discontinued in the long term because of the limited influence on safety behaviour and potential adverse effect on safety outcomes, simultaneously ensuring that the commitment to safety is communicated through alternative means.

Psychiatrists Feel the Financial Pinch of MIPS

Psychiatrists Feel the Financial Pinch of MIPS

Financial incentives tied to Medicare star ratings: impact on influenza vaccination uptake in Medicare beneficiaries.

To evaluate the impact of the star rating bonus payment policy on annual influenza vaccination rates before and after the policy was adopted for Medicare Advantage (MA) plans in 2012. Observational study using data from the Medicare Current Beneficiary Survey from 2007 to 2015 to test whether the bonus payment policy led to higher flu vaccination rates in MA prescription drug (MAPD) plans vs fee-for-service prescription drug plans (PDPs), which were ineligible for bonus payments. Mean preperiod (2007-2011) and postperiod (2012-2015) influenza vaccination rates were compared for enrollees in both types of plans using descriptive and multivariate difference-in-difference (DID) equations. The experimental effect of the MA bonus payment policy was estimated as the interaction between plan type (MAPD plan vs PDP) and period (pre- vs post period) controlling for the main effects of plan type (MAPD vs PDP), timing of the observation (pre- vs post period), and other potential confounders. The study sample included 40,369 person-years of data in the preperiod and 27,703 person-years of data in the post period. Vaccination rates increased by 3.8% in MAPD plans compared with 2.7% in PDPs, leading to a relative MAPD-favored difference that was nonsignificant (P = .31). However, the effect was statistically significant (odds ratio [OR], 1.12; P = .03) in the main multivariate DID model. A larger relative difference was observed among beneficiaries 75 years and older (OR, 1.18; P = .03). The Medicare bonus payment policy led to a small increase in beneficiaries' flu vaccination rates, suggesting that expanding the star measure set could be an effective way to increase uptake for other recommended adult vaccines.

Applying data envelopment analysis to allocate incentive bonuses for container terminal operators

Incentive bonus payments for terminal operators are mostly based on the size of throughput growth rate. In most cases, this does not encourage terminal operators to effectively utilize the terminal facilities and equipment. Therefore, it is necessary to establish efficiency and scale of operation as the basis for incentive bonus allocations. The importance of this issue is that in some port governance models, concessions are static agreements where fees and other conditions generally do not change over time. This paper introduces the possibility and advantage of data envelopment analysis (DEA)-based incentive bonus allocations that can ensure that the incentive bonuses allocated to terminal operators are based on both the amount of throughput/throughput increment and production efficiency. To this end, three DEA-based incentive bonus allocation models are proposed for different output items. The results show that the incentive bonus allocation approach proposed in this study effectively takes into account the magnitude of the throughput/throughput increment and production efficiency of terminal operators.