Team Incentives and Performance: Evidence from a Retail Chain

47 Pages Posted: 25 Aug 2015 Last revised: 21 Feb 2017

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Matthias Heinz

University of Cologne - Department of Personnel Economics; Centre for Economic Policy Research (CEPR)

Miriam Krüger

Goethe University Frankfurt

Nick Zubanov

Goethe University Frankfurt

Multiple version iconThere are 3 versions of this paper

Date Written: February 15, 2017

Abstract

In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3%. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2% while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus, treatment and control shops’ performance converge, suggesting long-term stability of the treatment effect.

Keywords: management practices, randomized controlled trial (RCT), natural field experiment, insider econometrics

JEL Classification: J3, L2, M5

Suggested Citation

Friebel, Guido and Heinz, Matthias and Krüger, Miriam and Zubanov, Nick, Team Incentives and Performance: Evidence from a Retail Chain (February 15, 2017). Available at SSRN: https://ssrn.com/abstract=2649884 or http://dx.doi.org/10.2139/ssrn.2649884

Guido Friebel

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Matthias Heinz (Contact Author)

University of Cologne - Department of Personnel Economics ( email )

Cologne, 50923
Germany

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Miriam Krüger

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Nick Zubanov

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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