Organizations must solve two canonical problems to perform well: coordination (who performs which tasks?) and motivation (what must happen to ensure these tasks are performed well?). Besides performance, other considerations may drive the allocation of tasks, such as fairness concerns, seniority or individuals’ preferences. In this paper, we analyse how the introduction of a monetary reward for team performance affects the allocation of tasks within teams and team performance.
We conduct a field experiment among the 120 company-owned shops of a Dutch retail chain that sells lingerie and swimwear. In a randomly selected subset of stores we introduce a short-term team incentive. Specifically, all employees of a store earn a bonus when their sales performance exceeds that of two comparable stores. This contest between stores, which the company has named the ‘Sexy SuperCup’, lasts for six weeks, during which time the stores receive a weekly performance ranking. Before the start of this contest we conduct a survey among the employees of all stores, eliciting what drives the allocation of tasks among employees in the store. According to the employees, task allocation in the stores is mostly driven by employee ability and fairness concerns. They also indicated that they see room for improved performance through changes in task allocation. We conduct a similar survey after the contest ends. Comparing the results of these surveys allows us to analyse the effect of the team incentive on task allocation.
We find a precisely estimated zero effect of the team incentive on store sales. Furthermore, we find no significant effect on task allocation within the stores. Perhaps the monetary incentive failed to strike a chord among the employees — although several recent studies with a comparable design do find positive effects on performance (see e.g. Delfgaauw et al. 2013; Friebel et al. 2017). Anecdotally, the company’s management did report observing that employees engaged in the contest. If this indeed is the case, our results indicate that even when people want to coordinate towards better performance, they may not manage to do so.
Delfgaauw, J., Dur, R., Sol, J., and Verbeke, W. (2013), Tournament incentives in the field: Gender differences in the workplace, Journal of Labor Economics, 31(2), 305-326.
Friebel, G., Heinz, M., Krüger, M., and Zubanov, N. (2017), Team incentives and performance: Evidence from a retail chain, American Economic Review, 107(8), 2168-2203
Delfgaauw, J., Dur, R., and Souverijn, M. (2017). Team incentives, task assignment and performance: A field experiment. TI Discussion Paper 17-090/VII