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http://ssrn.com/abstract=200869
 
 

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The Determinants of Incentive Intensity in Group-based Rewards


Todd R. Zenger


Washington University in Saint Louis - John M. Olin Business School

C.R. Marshall


Upper Iowa University

January 17, 2000


Abstract:     
Higher-powered incentives have spread to a broader subset of employees within hierarchies, largely through group-based pay plans such as profit sharing, gainsharing, and team-based rewards. Yet, in most organizations, the incentive intensity of group rewards, like the incentive intensity of individual rewards, remains low. This paper explores the determinants of incentive intensity in group-based rewards. We draw upon agency theory for hypotheses and test these with a sample of 663 group-based pay plans. We find that incentive intensity is higher when groups are small, when plans need not measure quality, and when management participation is high. We also find that plans embedded in small firms and plans with longevity have higher incentive intensity.

Number of Pages in PDF File: 38

JEL Classification: J31

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Date posted: February 2, 2000  

Suggested Citation

Zenger, Todd R. and Marshall, C.R., The Determinants of Incentive Intensity in Group-based Rewards (January 17, 2000). Available at SSRN: http://ssrn.com/abstract=200869 or http://dx.doi.org/10.2139/ssrn.200869

Contact Information

Todd R. Zenger (Contact Author)
Washington University in Saint Louis - John M. Olin Business School ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
C.R. Marshall
Upper Iowa University
PO Box 1857
Fayette, IA 52142
United States
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References:  53
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