Effort or Timing: The Effect of Lump-Sum Bonuses

22 Pages Posted: 17 Feb 2005 Last revised: 9 Nov 2008

See all articles by Thomas J. Steenburgh

Thomas J. Steenburgh

University of Virginia - Darden Graduate School of Business

Date Written: September 1, 2008

Abstract

This article addresses the question of whether lump-sum bonuses motivate salespeople to work harder to attain incremental orders or whether they induce salespeople to play timing games (behaviors that increase incentive payments without providing incremental benefits to the firm) with their order submissions. We find that lump-sum bonuses primarily motivate salespeople to work harder - a result that is consistent with the widespread use of bonuses in practice, but that contradicts earlier empirical work in academics.

Keywords: compensation methods, salesforce

JEL Classification: G30, J31, J33, L23, M31, M41, M52

Suggested Citation

Steenburgh, Thomas J., Effort or Timing: The Effect of Lump-Sum Bonuses (September 1, 2008). Quantitative Marketing and Economics, Vol. 6, No. 3, pp. 235-256, September 2008; Harvard Business School Marketing Unit Research Paper No. 05-03. Available at SSRN: https://ssrn.com/abstract=668504

Thomas J. Steenburgh (Contact Author)

University of Virginia - Darden Graduate School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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