Group Incentives Research Articles

Patients and community together. A family medicine community-oriented primary care project in an urban private practice.

There has been considerable discussion in the literature regarding the value and feasibility of community-oriented primary care (COPC), but relatively few published real-world examples. To examine the effect of a practice-based COPC project on rates of preventive health interventions within an inner-city family medicine practice. A newly created community advisory board called Patients and Community Together (PACT) and the medical director of the practice in Rochester, NY, collaborated on all phases of the COPC project. Papanicolaou smear and mammography screening, childhood immunizations, diabetes control, and smoking cessation were targeted for intervention. A practice/community awareness campaign was instituted and individual and group incentives were developed. Progress was monitored through a computerized medical record that included all active patients in the practice. Rates of annual Papanicolaou smears increased from 46% to 71%; annual mammography for women older than age 50 years, from 56% to 86%; completed childhood immunizations when younger than 6 years, from 78% to 97%; and performance of semiannual glycosylated hemoglobin, from 85% to 92%. Rates of patients with glycosylated hemoglobin values under 10% improved from 56% to 77%. There were 5 smokers who successfully quit. This project illustrates how practice-based COPC can be successfully implemented within a private practice setting. It also shows how COPC principles can be used to achieve the goals for Healthy People 2000 within inner-city practices.

Using a Quality Scorecard to Measure and Improve Medical Groups’ Performance

Blue Cross of California (BCC) uses an annual Quality Scorecard to measure performance of participating medical groups (PMGs) and independent practice associations (IPAs). The scorecard provides information to the PMGs/IPAs on their performance in several domains relative to the average network score. BCC pays annual bonuses to PMGs/IPAs with superior quality performance. A structured intervention was designed to improve the performance of PMGs/IPAs that performed poorly on the scorecard. A cohort study was conducted in a large health maintenance organization in California in 1997. All PMGs/IPAs received a detailed summary of the components of the annual quality scorecard. Scorecard components include an annual audit of quality, utilization management, credentialing, and members' rights and responsibilities, grievance rates, member transfer for quality reasons, a satisfaction survey, and a preventive health review. Twenty-two of 124 PMGs/IPAs with more than 1,000 BCC members during 1996 that had scored lower than 1 standard deviation below the mean were targeted. These 22 outlier PMGs/IPAs received additional information indicating that their performance was below average. A BCC quality team subsequently visited the outlier PMGs/IPAs to provide supplementary information on the deficient areas and provide assistance in making improvements. The outlier groups showed significant improvements in the annual audit of quality score, member satisfaction with access, member satisfaction with last visit, overall member satisfaction with PMGs/IPAs, mammography screening, and the total score. A structured quality improvement intervention in poorly performing PMGs/IPAs was followed by improvements in specific performance measures.

Systematic Early Warning of Humanitarian Emergencies

More than 60 communal minorities were victimized as a result of internal wars and state failures between 1980 and 1996. Two theoretical models provide the basis for systematic early warning of future victimization of communal and political groups. The potential for communal rebellion is said to be a joint function of group incentives, group capacity, and opportunities for collective action. Indicators of these concepts from the Minorities at Risk project are used to identify 73 groups at high risk of communal rebellion in the late 1990s. Genocide and politicide are attributed to background conditions (e.g. political upheaval), intervening conditions (e.g. elite fragmentation), and a short-term increase in theoretically pre-specified accelerators. Monitoring of accelerators and de-accelerators in potential crisis situations provides a link between risk assessments based on structural models and early warnings of use to national and international policy-makers. The approach is illustrated by an analysis of accelerators prior to the occurrence of the 1994 genocide in Rwanda.

Can We Create a Conflict‐Free Commission Payment System?

Key to any successful organization are compensation systems and the degree to which they motivate employees to be increasingly more productive. Research has shown that performance-based compensation such as piece-rate pay plans, commissions, profit-sharing, gainsharing, and small group incentives can all increase performance. What research hasn’t shown, however, is how performance-based compensation affects employees’ ethical decision-making. Those who create incentives that are designed to encourage employees to generate revenues for the firm, while simultaneously making money for themselves, fail to consider that these same incentives may encourage employees to ignore their customers’ needs. As a matter of fact, the 1997 Ethics Officers Association’s survey of its 350 members, corporate ethics officers from some of the largest corporations in America, found that among the major principal obstacles these members faced in performing their duties, was a “compensation system inconsistent with corporate values.” Consider the following: In 1992, auto repair advisors at Sears were accused of overcharging auto repair customers in order to earn higher commissions. When news of these practices became public, Sears’ CEO denied any intent to deceive customers, but acknowledged management’s responsibility for putting in place compensation and goal-setting systems that “created an environment in which mistakes did occur.” Sears’ total cost to settle pending lawsuits was estimated at $60 million. In October 1993, as a result of the first of several governmental sales practice investigations of the insurance industry, Metropolitan Life Insurance Company was “investigated in several states for using questionable tactics to sell thousands of life-insurance policies across the country.” In the mid-1990s, Prudential Securities and Paine Webber, to a lesser degree, were both ordered to set aside significant funds to repay customers who suffered losses due to factual misstatements in the sale of investment products. It has been widely thought that some of the root causes for these and other similar abuses were lax ethical management and poorly structured incentives that invited abuse. Interestingly, compensation “malpractice” doesn’t limit itself just to the corporate world. In September 1997, the director of the United States Internal Revenue Service publicly apologized to taxpayers for the Service’s abuses—abuses caused by IRS compensation system incentives that rewarded high taxpayer collections and penalties and, in so doing, often resulted in significant misconduct of agents—at the expense of honest taxpayers. These examples illustrate a growing concern that performance-based compensation, such as commission, may provide incentives for employees to act unethically. Daily we read in the newspaper of ethics abuses involving commissions. In the financial services industry we hear of scandals involving trading on insider information, penny-stock fraud, inappropriate use of highly leveraged investments, all linked in some way to individual incentives and raising serious questions about Wall Street’s integrity. And potentially more troubling, we look at the

Employee Perceptions of the Fairness of Work Group Incentive Pay Plans

A field study investigated 368 employees’ perceptions of the fair-ness of work group incentive pay plans. In particular, we studied therelationships between six antecedent variables (understanding of thepay plan, satisfaction with base pay, organizational commitment, beliefsin the pay plan eflectiveness, plan payout amount, and group identijication) and outcome variables, including fairness judgments of both theprocesses associated with the pay plan as well as the earned payoutamounts. The setting for this study was a major nonunion production facility of a Fortune 500 company that is involved in chemical produc-tion. The findings indicate that understanding of the pay plan, belief inthe pay plan effectiveness, and organizational commitment were relatedto perceptions of procedural justice. Moreover, pay satisfaction, under-standing, belief in the pay plan effectiveness, and organizational commitment were associated with perceptions of distributive justice.Further, we found significant effects of two control variables— job classification on perceptions of procedural justice, and organization altenure on both perceptions of procedural and distributive justice.

Seven Dimensions of Success Reward Plans

Companies that achieve lasting competitive advantage will be those that succeed in aligning the goals, behaviors, and skills of their employees with their business strategy. The strategic use of pay and incentives accomplishes this goal by reinforcing corporate culture, setting the tone and focus of a change process, and supporting and improving upon company objectives. Seven methods in particular help facilitate the alignment of people and strategy: pay for performance, linkage to other organizational change levers, measurable competencies, incentives matched to corporate culture, clear and simple group incentives, widespread communication, and recognition for the work itself. Using these methods, companies can increase the return on their investment in human capital, foster employee loyalty, and reap substantial benefits for shareholders.

Employee perceptions of the fairness of work group incentive pay plans

A field study investigated 368 employees' perceptions of the fairness of work group incentive pay plans. In particular, we studied the relationships between six antecedent variables (understanding of the pay plan, satisfaction with base pay, organizational commitment, beliefs in the pay plan effectiveness, plan payout amount, and group identification) and outcome variables, including fairness judgments of both the processes associated with the pay plan as well as the earned payout amounts. The setting for this study was a major nonunion production facility of a Fortune 500 company that is involved in chemical production. The findings indicate that understanding of the pay plan, belief in the pay plan effectiveness, and organizational commitment were related to perceptions of procedural justice. Moreover, pay satisfaction, understanding, belief in the pay plan effectiveness, and organizational commitment were associated with perceptions of distributive justice. Further, we found significant effects of two control variables—job classification—on perceptions of procedural justice, and organizational tenure—on both perceptions of procedural and distributive justice.

Determinants of the Incidence of Group Incentives: Evidence from Canada

We use Canadian data on four group incentive schemes to examine the deter- minants of the probability that a firm offers each scheme to its non-managerial workers and to production workers alone. We find that unionization lowers the incidence of group incentives, except for productivity gainsharing. Larger firms are more likely to offer share purchase plans to all non-managerial employees and profit sharing to production workers; cash bonuses are less common in larger firms. We find little indication that group incentives are either discouraged by machine-paced production or more common in firms with good industrial relations.

Worker Performance and Group Incentives: A Case Study

The author uses monthly, individual-level data collected from two units within a large U.S. financial corporation to estimate employees' response to the introduction of a group incentive plan. The findings indicate that the incentive plan caused performance to converge to a standard: the initially least productive workers improved greatly, whereas the performance of the initially most productive workers did not change. However, the evidence suggests that the incentive plan was successful in increasing the average level of productivity across the work group.

Worker Performance and Group Incentives: A Case Study

Worker Performance and Group Incentives: A Case Study

Conference Report:

A new, in-depth research study into what makes group incentive reward programs successful found that site variables have more than twice as much impact on how well employees respond to a group incentive reward program as do plan variables themselves, although both are important. Site variables include such factors as top management's attitude toward the group incentive reward plan at each site, the enthusiasm for the plan at each site, and methods of plan implementation at each site. This is one of the key preliminary research findings on group incentive reward programs from the most recent CARS research project. These findings were presented by Susan Murphy (SRM, Inc.), Elizabeth Hawk (Sibson and Company), and Jerry Mc Adams (Watson Wyatt) at the American Compensation Association's annual conference in Orlando, Florida, on May 7. "CARS" is an acronym for an ongoing ACA research project into reward strategies sponsored by the Consortium for Alternative Reward Strategies research. "CARS IV, Group Plan Effectiveness: Case Study Research," consisted of an in-depth study of group incentive plans in 11 manufacturing groups in four companies. The study sought to determine the effect of the plans on all levels of employees, on business performance, and on organizational culture. The methodology included more than 70 management interviews, 1,200 employee surveys, and 22 employee focus groups, as well as quantitative data.

Individual performance as a function of individual and group pay contingencies

An alternating-treatment design was used to compare the productivity of college students engaged in a card-sorting task under an individual monetary incentive system and a 10-member group monetary incentive system. In both pay conditions, subjects received a base pay plus incentives contingent upon the number of cards sorted in 20-minute sessions. In the individual incentive condition, subjects earned $0.005 for each card sorted over 400 cards. In the group incentive condition, incentives were based on the group average, with all subjects earning $0.005 for each card by which the group average exceeded 400. Subjects received feedback on their performance and the performance of other group members in both conditions. The number of cards sorted did not differ significantly under the two pay systems. Subjects reported the systems to be equally enjoyable and demanding, however, when asked which pay system they would prefer to work under in the future, high performers chose the individual incentive system, and low performers chose the group incentive system.

Income Shifting in Italian Business Groups and some Governance Implications

This paper explores the relationship among group control, financial reporting strategies and governance implications in the pursuit of domestic tax planning. A very large number of papers deals with international tax planning in multidivisional enterprises, but very few are devoted to exploring significant incentives for national business groups to engage in tax planning strategies. In this paper we propose a one-period model relating to the tax incentives of income shifting in Italian business groups. We show that, given the total amount of expected earnings before taxes and the dividends received by the firms belonging to a business group, an optimal solution to the problem of minimizing the group tax burden exists. The optimal solution involves a gain in value for the group as a whole; nevertheless, since in business groups ownership is often differentiated among shareholders (often because of the separation between ownership and control), income shifting may determine wealth transfers, often in favor of the controlling shareholder. We therefore analyze the management and governance implications of such income shifting, for both shareholders and stakeholders (i.e. managers).

Structure of financial incentive systems for providers in managed care plans.

Managed care plans, health maintenance organizations (HMOs) in particular, rely on a variety of financial incentive systems to induce providers to control health care expenditures. Based on the theory of incentive contracts, this study examines the unique nature of effective incentive systems for health care providers; applies the conceptual framework to managed care plans, viewing the incentive and payment system as the contract between the insurer and the provider; and analyzes the determinants of the structure of incentive systems in HMOs. This study shows that the group incentive scheme provides an essential control over the perverse incentives associated with excessive referrals by primary care physicians. The relative market power of an HMO and providers also affects the aggressiveness of incentive systems for providers. An analysis of the structure of physician incentive systems in HMOs provides valuable policy implications for cost containment because within the HMO market, various innovative incentive and payment systems are applied to providers to reduce expenditures.

Compensation in the year 2000: pay for performance?

Notes the attempts by many companies today to identify innovative compensation strategies that are directly linked to improving organizational performance. Observes that there are many approaches to incentive compensation such as cash bonuses, stock purchase and profit sharing. Examines the individual and group incentive concepts that reward performance based on predetermined organizational goals and metrics, several behavioural theories that can be associated with reward and compensation, and convergent and divergent views and conclusions from the business community.

Trading Volume with Private Valuation: Evidence from The Ex-Dividend Day

We test a theory of the interaction between investors' heterogeneity, risk, transaction costs, and trading volume. We take advantage of the specific nature of trading motives around the distribution of cash dividends, namely the costly trading of tax shields. Consistent with the theory, we show that when trades occur because of differential valuation of cash flows, an increase in risk or transaction costs reduces volume. We also show that the nonsystematic risk plays a significant role in determining the volume of trade. Finally, we demonstrate that trading volume is positively related to the degree of heterogeneity and the incentives of the various groups to engage in trading. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.

Women's access to appropriate providers within managed care: Implications for the quality of primary care

Summary Women receive care for common acute and chronic illnesses from family physicians/general practitioners and internists and preventive care and reproductive-related care from gynecologists. In addressing the issue of appropriate providers, then, current information about use and practice variation would suggest that many women require an arrangement that offers access to a family physician and/or internist as well as a gynecologist to receive a full complement of care. In fact, those women respondents in the Commonwealth Fund Survey of Women's Health who saw both a family physician/general practitioner or internist and an obstetrician/gynecologist for regular care were most likely to receive more preventive services. 4 However, although this arrangement increases a women's potential to receive comprehensive care, it reduces opportunities for continuous and coordinated care. A reliance upon more than one physician throughout a woman's life to deliver both preventive care and therapeutic care is not compatible with existing models of primary care and may be problematic in managed care arrangements that require women to use specific providers. In addition, requiring more than one physician to obtain the majority of one's health care services is likely to result in increased direct and opportunity costs. Women without adequate insurance or financial resources may be unable to seek care from one, let alone two, physicians and therefore may be at higher risk of not receiving needed or necessary care. Nonetheless, women are satisfied with a dual arrangement and articulate strong preferences for maintaining access to gynecologists and to family physicians and internists. Alternatively, women may realize that this arrangement is necessary to obtain needed services, particularly screening for cervical and breast cancer, gynecologic care, and contraception. If these practice patterns continue, any limitation on women's access to providers places them at increased risk of not receiving a full complement of care. If a dual or multiple provider arrangement of primary care persists, however, there will be little incentive for physician specialty groups to acquire or maintain a broad range of diagnostic, preventive, and therapeutic skills. Simple or arbitrary designation of primary care providers without assurances that training and practices undergo modifications may only increase the magnitude of the problem of fragmentation of care. 21 In addition, the identification of multiple primary care specialties as primary care providers will affect workforce and reimbursement policies. Much of the available data about practice patterns and use were gathered prior to the expansion of managed care systems. Future studies will help to delineate the influence of managed care on patient preferences and provider practices and determine which arrangements of primary care for women are efficient and result in resource-savings, quality care, and patient satisfaction. Ultimately, as integrated delivery systems expand, considerations of women's preferences and costs will need to be balanced. Future studies will be necessary to examine the effect that managed care has on the practice patterns of these three physician specialty groups, as well as the quality of primary care that women receive.

Group Incentives and Pay Satisfaction: Understanding the Relationship Through an Identity Theory Perspective

The goal of this paper is to develop a conceptual model based on identity theory to specify the relationship between group incentives and pay satisfaction. Pay satisfaction, as currently measured, does not include items that directly measure group-based rewards, therefore, any changes in pay satisfaction associated with group incentive implementation would be the result of some spillover effect. Identity theory is employed to model this effect by delineating how group incentives tap salient work-related roles; the theory also has implications for various behavioral consequences. The research described in this paper tests two hypotheses derived from the conceptual model. These hypotheses are tested in two quasi-experimental field studies conducted in a high technology firm and a consumer products company that both implemented gainsharing programs. The findings indicate that gainsharing plans can be viewed as either a benefit or as part of individual pay based on the ability of the incentive plan to activate salient work-related roles.

Effects of cooperative incentives and heterogeneous arrangement on achievement and interaction of cooperative learning groups in a college life science course

AbstractThe purpose of this study was to examine the importance of cooperative incentives and heterogeneous grouping as elements of cooperative learning in a college life science course. Cooperative learning may be defined as a classroom learning environment in which students work together in heterogeneous groups toward completion of some task. Cooperative incentive structures provide some type of group reward based on group products or individual learning. In heterogeneous grouping, students are arranged in order to maximize variety within groups. A 2 × 2 design was utilized in this study. The independent variables considered included (a) use of cooperative incentives in learning groups, and (b) use of heterogeneous grouping in cooperative learning groups. Dependent variables for all treatment groups were scores from a multiple‐choice instrument developed for an earlier, related study, along with direct observational data on frequency of cooperative interactions. Analysis of covariance (ANCOVA) was used as the data analysis procedure for the achievement portion of the study, and analysis of variance (ANOVA) was used for analysis of the cooperative interaction portion of the study. No significant differences were found between the treatment groups.

On the choice of incentives in firms

Simple models of individual and group incentives under uncertainty are compared, and comparative performance is shown to depend upon various exogenous parameters. The incentive effects of profit sharing will thus vary with organizational and other characteristics that may be difficult to observe, and attempts to quantify productivity effects that neglect selection bias are likely to be misspecified. Significant selection effects are found in previously used firm-level data, and productivity effects of existing profit sharing are found to be much larger than potential effects in firms without sharing arrangements. This throws doubt on policies to encourage sharing in isolation.