A Field Study of the Impact of a Performance-Based Incentive Plan
Posted: 15 May 1995
Much management accounting research focuses on design of incentive compensation contracts. A basic assumption in these contracts is that performance-based incentives improve employee performance. This paper reports on a field test of the multi-period incentive effects of a performance-based compensation plan on the sales of a retail establishment. Analysis of panel data for 34 retail outlets over 66 months indicates a sales increase when the plan is implemented an effect that persists over time. Sales gains however are significantly lower in the peak selling season when more temporary workers are employed.
JEL Classification: J33
Suggested Citation: Suggested Citation