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The Determinants of Incentive Intensity in Group-based Rewards

Todd Zenger

University of Utah

C.R. Marshall

Upper Iowa University

January 17, 2000

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

Contact Information

Todd R. Zenger (Contact Author)
University of Utah ( email )
David Eccles School of Business
1655 East Campus Center Drive
Salt Lake City, UT 84112
United States
801 585-3981 (Phone)
801 581-7939 (Fax)
C.R. Marshall
Upper Iowa University
PO Box 1857
Fayette, IA 52142
United States
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