Team Incentives Research Articles

Management Team Incentive Heterogeneity and Stock Price Crash Risk

Research into group decision-making suggests that any optimal managerial compensation incentive design should incorporate synergistic interrelationships among top executives within a firm. This paper investigates whether the equity incentive structure of a management team affects firm-level stock price crash risk. Using a large sample of S&P 1500 firms over the period 1994--2015, we find that the average of top five executives' equity-based incentive ratios is positively related to future crash risk. However, the positive relation is moderated by management team incentive heterogeneity, measured by the Gini coefficient of top five executives' equity incentive ratios. The impact of management team incentive heterogeneity on crash risk is more pronounced when the firms have weaker internal corporate governance, less institutional investor monitoring, and higher financial leverage. Our main results are robust to the two-stage least squares identification method, alternative measures of crash risk, and alternative measures of management team incentive heterogeneity. Overall, our findings highlight the important role of management team incentive heterogeneity as an internal corporate governance mechanism.

Effects of team-based goals and non-monetary incentives on front-line health worker performance and maternal health behaviours: a cluster randomised controlled trial in Bihar, India

IntroductionWe evaluated the impact of a ‘Team-Based Goals and Incentives’ (TBGI) intervention in Bihar, India, designed to improve front-line (community health) worker (FLW) performance and health-promoting behaviours related to reproductive,...

Pay to Quit and Team Incentives

AbstractThis paper examines the optimal compensation scheme, job design, and severance policy for a team using a model of repeated moral hazard. In the optimal contract, the agent may be paid to quit after a poor performance. We show that a generous severance policy facilitates the adoption of team incentives and team-based production by making it cost-effective to implement peer monitoring and sanction among the agents.

Executive Equity and Pay Incentives and Firm Performance—Based on GEM Listed Companies in China

Based on the Agency Theory, this paper takes 366 listed companies on the GEM listed companies of China Between 2015 and 2017 as a sample, and uses the two methods of high-level management team incentives. Equity incentives and pay incentives are dependent variables, and the return on assets (ROA) is the independent variable, measuring corporate profitability. At the same time, considering the time difference between incentives and making appropriate operating decisions, this paper conducts a one-year and two-year lag effect test on executive incentives. The conclusion is that executive equity incentives and pay incentives have a positive impact on corporate performance. Executive equity incentives have a positive correlation with corporate performance in the lag period, while compensation incentives do not have significant correlation.

The role of executive cash bonuses in providing individual and team incentives

Given CEOs’ substantial equity portfolios, much recent literature on CEO incentives regards cash-based bonus plans as largely irrelevant, begging the question of why nearly all CEO compensation plans include such bonuses. We develop a new measure of bonus plan incentives and show that performance sensitivities are much greater than prior estimates. We also test hypotheses regarding the role of bonuses in providing executives with individualized and team incentives. We find little evidence supporting the individualized incentives hypotheses but find consistent evidence that bonus plans appear to be used to encourage mutual monitoring and to facilitate coordination across the top management team as a whole.

Team incentives with imperfect mutual inference

I study the optimal team incentive when the agents can coordinate private actions through repeated interaction with imperfect public monitoring. The agents are able to imperfectly infer each other’s private actions via the stochastically correlated measurements. Correlation of measurement noise, besides its risk sharing role in the conventional multiple-agent moral hazard problem, is crucial to the accuracy of each agent’s inference. The principal’s choice of performance pay to provide incentive via inducing competition or coordination among the agents thus exhibits the trade-off between risk sharing and mutual inference between the agents. I characterize the optimal form of performance pay with respect to the correlation of measurement noise. Whether the conventional theoretical prediction holds depends on how the agents form the mutual inference, based on an exogenous standard or formed endogenously.

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

We conduct a field experiment in a Dutch retail chain with 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 depends on a team's social cohesion. In particular, free-riding should be weaker when co-workers care more about each other. Conversely, 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 strongly increases in social cohesion as measured before the intervention. We find that social cohesion itself is not affected by the team incentives. Our study illustrates the potential of complementing a field experiment with ex ante and ex post questionnaire data collection for the study of management practices, workplace behavior, and performance.

Improving Patient Flow: Analysis of an Initiative to Improve Early Discharge.

Discharge delays adversely affect hospital bed availability and thus patient flow. We aimed to increase the percentage of early discharges (EDCs; before 11 am). We hypothesized that obtaining at least 25% EDCs would decrease emergency department (ED) and postanesthesia care unit (PACU) hospital bed wait times. This study used a pre/postintervention retrospective analysis. All acute care units in a quaternary care academic children's hospital were included in this study. The patient sample included all discharges from the acute care units and all hospital admissions from the ED and PACU from January 1, 2014, to December 31, 2016. A multidisciplinary team identified EDC barriers, including poor identification of EDC candidates, accountability issues, and lack of team incentives. A total of three successive interventions were implemented using Plan-Do-Check-Act (PDCA) cycles over 10 months between 2015 and 2016 addressing these barriers. Interventions included EDC identification and communication, early rounding on EDCs, and modest incentives. Calendar month EDC percentage, ED (from time bed requested to the time patient left ED) and PACU (from time patient ready to leave to time patient left PACU) wait times were measured. EDCs increased from an average 8.8% before the start of interventions (May 2015) to 15.8% after interventions (February 2016). Using an interrupted time series, both the jump and the slope increase were significant (3.9%, P = .02 and 0.48%, P < .01, respectively). Wait times decreased from a median of 221 to 133 minutes (P < .001) for ED and from 56 to 36 minutes per patient (P = .002) for PACU. A multimodal intervention was associated with more EDCs and decreased PACU and ED bed wait times.

Evading labour market regulations to preserve team performance: evidence from the Victorian Football League, 1930–70

Sports teams that seek to maximise the number of wins, rather than profits, may not comply with league labour market regulations that compress payroll structures to promote even competition. This strategic behaviour depends on others, as teams choose a strategy to create team incentives, to which rivals will respond. A case study of four teams in a semi-professional Australian Rules football league tests the effectiveness of strategies to evade these regulations on winning percentages. Both compliance and non-compliance within this labour market regulation regime, based on different wage structures and talent distribution, were effective strategies to improve team performance.

Work Motivation and Teams

We provide a new measure of work motivation and show that motivation shapes the effects of team incentives and observation by peers on performance. In particular, we measure motivation to work hard as the deviation from the money-maximizing benchmark in a real-effort experiment. While we find that average output increases in response to team incentives and observation, we find that highly motivated workers do not respond. The reason is that highly motivated workers already work hard and increasing effort even further is very costly to them.

Team incentives, task assignment, and performance: A field experiment

The performance of a work team commonly depends on the effort exerted by the team members as well as on the division of tasks among them. However, when leaders assign tasks to team members, performance is usually not the only consideration. Favouritism, employees' seniority, employees' preferences over tasks, and fairness considerations often play a role as well. Team incentives have the potential to curtail the role of these factors in favor of performance — in particular when the incentive plan includes both the leader and the team members. This paper presents the results of a field experiment designed to study the effects of such team incentives on task assignment and performance. We introduce team incentives in a random subsets of 108 stores of a Dutch retail chain. We find no effect of the incentive, neither on task assignment nor on performance.

Team Incentives and Bonus Floors in Relational Contracts

A common means of incorporating non-verifiable performance measures in compensation contracts is via bonus pools. We study a principal-multi-agent relational contracting model in which the optimal contract resembles a bonus pool. It specifies a minimum joint bonus floor the principal is required to pay out to the agents and gives the principal discretion to use non-verifiable performance measures to both increase the size of the pool and to allocate the pool to the agents. The joint bonus floor is useful because of its role in motivating the agents to mutually monitor each other (team incentives). In an extension section, we introduce a verifiable team performance measure, in part to establish the robustness of our results. In this case, the optimal contract either ignores the team measure completely or uses it to create a conditional bonus floor (a floor only when the team measure is high). There is a minimum precision requirement on the team measure that has to be satisfied before the team measure is used to motivate mutual monitoring.

Pay for Performance with Motivated Employees

Abstract Heterogeneity in intrinsic motivation affects the optimal contract offered to employees in teams. Under individual incentives, the effort exerted by both motivated and selfish employees is distorted. This distortion is mitigated if employees receive a wage based on team performance. As a result, the principal prefers to use team incentives, while motivated employees are better off with individual incentives.

Team Incentives, Task Assignment, and Performance: A Field Experiment

The performance of a work team commonly depends on the effort exerted by the team members as well as on the division of tasks among them. However, when leaders assign tasks to team members, performance is usually not the only consideration. Favouritism, employees' seniority, employees' preferences over tasks, and fairness considerations often play a role as well. Team incentives have the potential to curtail the role of these factors in favor of performance -- in particular when the incentive plan includes both the leader and the team members. This paper presents the results of a field experiment designed to study the effects of such team incentives on task assignment and performance. We introduce team incentives in a random subsets of 108 stores of a Dutch retail chain. We find no effect of the incentive, neither on task assignment nor on performance.

Improving the Recording of Diagnoses in Primary Care with Team Incentives: A Controlled Longitudinal Follow-Up Study.

Introduction We studied whether primary care teams respond to financial group bonuses by improving the recording of diagnoses, whether this intervention leads to diagnoses reflecting the anticipated distribution of diseases, and how the recording of a significant chronic disease, diabetes, alters after the application of these bonuses. Methods We performed an observational register-based retrospective quasi-experimental follow-up study with before-and-after setting and two control groups in primary healthcare of a Finnish town. We studied the rate of recorded diagnoses in visits to general practitioners with interrupted time series analysis. The distribution of these diagnoses was also recorded. Results After group bonuses, the rate of recording diagnoses increased by 17.9% (95% CI: 13.6–22.3) but not in either of the controls (−2.0 to −0.3%). The increase in the rate of recorded diagnoses in the care teams varied between 14.9% (4.7–25.2) and 33.7% (26.6–41.3). The distribution of recorded diagnoses resembled the respective distribution of diagnoses in the former studies of diagnoses made in primary care. The rate of recorded diagnoses of diabetes did not increase just after the intervention. Conclusions In primary care, the completeness of diagnosis recording can be, to varying degrees, influenced by group bonuses without guarantee that recording of clinically significant chronic diseases is improved.

The Operation Mechanism of Amoeba’s Organizational Model

In recent years, there has been an upsurge of researching and learning the Amoeba management model in China. Amoeba management model is a business model created by INAMORI KAZUO in KYOCERA, and then many enterprises have achieved unprecedented success. At present, a large number of scholars have studied the amoeba management model, but the exploration of the operation mechanism of the amoeba management model has not yet appeared. As for an organization management model, it is very important to explore the mechanism for its normal operation, which provides the research question for this article, namely, the operation mechanism of amoeba organization model. Therefore, based on the characteristics of Amoeba organization, this paper explores the operation mechanism of Amoeba’s organizational model, which provides reference for other enterprises that want to implement the Amoeba organization model. The research found that the operation mechanism of Amoeba’s organizational model mainly includes Amoeba’s team relationship, team incentive mechanism, team accounting mechanism and team evaluation mechanism. The Amoeba team broke the traditional relationship between the corporate sector and the traditional relationship resulting in low efficiency of the enterprise, while the amoeba organization leads the trading relationship into the enterprise Amoeba teams, the trading between teams, and self-financing of each team resulting in the active communication between teams and the actively cooperate. The Incentive mechanism is mainly for the amoeba team decentralization, the establishment of a strict responsibility and profit mechanism for each team, the division of power and responsibility, so that each team has its own power. The accounting mechanism and the accounting of Amoeba organization model mainly introduce the independent accounting mechanism; each team is responsible for its own profit and loss, independent accounting, and uses the unit time accounting system to calculate the team. The Evaluation mechanism rigorously assesses the amoeba team. In the light of the strategy at this stage of the company, we need to build a guiding evaluation system so that the team goals and corporate goals become same, and commonly achieve the enterprise strategies.

Competition or cooperation? Using team and tournament incentives for learning among female farmers in rural Uganda

This study explores the behavioral learning characteristics of smallholder female farmers in Uganda by quantifying the amount of information learned under different incentive schemes. The paper shows how competitive versus team incentives compare in motivating Ugandan farmers to learn and share information relevant to adopting a new agricultural technology. We find that tournament-based incentives provide greater outcomes in terms of total information learned than threshold-based team incentives. Furthermore the order of the incentive – whether the tournament precedes or follows the team incentive scheme – does not affect the volume of information learned. New information introduced between rounds was learned by more individuals under team incentives than under tournament incentives. The study provides direct practical policy recommendations for improving learning in the context of agriculture in Uganda.

Team Incentives, Task Assignment, and Performance: A Field Experiment

The performance of a work team commonly depends on the effort exerted by the team members as well as on the division of tasks among them. However, when leaders assign tasks to team members, performance is usually not the only consideration. Favouritism, employees' seniority, employees' preferences over tasks, and fairness considerations often play a role as well. Team incentives have the potential to curtail the role of these factors in favor of performance -- in particular when the incentive plan includes both the leader and the team members. This paper presents the results of a field experiment designed to study the effects of such team incentives on task assignment and performance. We introduce team incentives in a random subsets of 108 stores of a Dutch retail chain. We find no effect of the incentive, neither on task assignment nor on performance.

Team Incentives under Moral and Altruistic Preferences: Which Team to Choose?

This paper studies incentives provision when agents are characterized either by homo moralis preferences, i.e., their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in a team setting with two agents whose efforts affect output stochastically, I demonstrate that the power of extrinsic incentives decreases with the degrees of morality and altruism displayed by the agents, thus leading to increased profits for the principal. I also show that a team of moral agents will only be preferred if the production technology exhibits decreasing returns to efforts; the probability of a high realization of output conditional on both agents exerting effort is sufficiently high; and either the outside option for the agents is zero or the degree of morality is sufficiently low.

Pay to Quit and Team Incentives

This paper examines the optimal compensation scheme, job design, and severance policy for a team using a model of repeated moral hazard. In the optimal contract, the agent may be paid to quit after a poor performance. We show that a generous severance policy facilitates the adoption of team incentives and team-based production by making it cost-effective to implement peer monitoring and sanction among the agents.