Team Structure and the Effectiveness of Collective Performance Pay

29 Pages Posted: 28 Jul 2012

See all articles by Marisa Ratto

Marisa Ratto

Université Paris-Dauphine, PSL Research University

Emma Tominey

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Thibaud Verge

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Abstract

The adoption of performance related pay schemes has become increasingly popular in the public sector of several countries. In the UK, the scheme designers favoured collective performance pay with the aim to foster cooperation across offices. The resulting team structure included several offices (subteams) within the same team, defined by the remuneration scheme. In this paper we analyse the strategic interactions across subteams created by a two-level team structure, in order to assess whether rewarding collective performance necessarily promotes cooperation. We show that such team structure creates conflicting incentives to free-ride across and within subteams. Moreover, the relative size of subteams can be a powerful means to deliver incentives when funds for performance rewards are limited. Using data for one of the incentive schemes piloted in the UK, we analyse the role of the target level and of the relative size of subteams on subteams' performance.

Keywords: incentives, teams performance, sub-teams, cooperation

JEL Classification: M52, M54, J33

Suggested Citation

Ratto, Marisa and Tominey, Emma and Verge, Thibaud, Team Structure and the Effectiveness of Collective Performance Pay. Available at SSRN: https://ssrn.com/abstract=2119054 or http://dx.doi.org/10.2139/ssrn.2119054

Marisa Ratto (Contact Author)

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Lattre de Tassigny
Paris, 75016
France

Emma Tominey

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom
+44 117 928 9019 (Phone)

Thibaud Verge

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom
+44 117 928 9844 (Phone)
+44 117 928 8577 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
71
Abstract Views
572
rank
409,112
PlumX Metrics