Group versus Individual Performance Pay in Relational Employment Contracts when Workers are Envious

I compare group to individual performance pay when workers are envious and performance is nonverifiable. Avoiding payoff inequity, the group reward scheme is optimal as long as the firm faces no credibility problem. The individual reward scheme may, however, become superior albeit introducing the prospect of unequal pay. This is due to two reasons: Group incentives are relatively low‐powered compared to individual incentives, requiring higher incentive pay and impeding credibility of the firm. Moreover, with individual rewards, the firm benefits from the incentive‐strengthening effect of envy, allowing for yet smaller overall incentive pay and further softening the credibility constraint. I also show that contracts combining both individual and group rewards are often optimal, depending on the firm's credibility problem. These contracts include joint and relative performance pay schemes.     

Are long‐term incentive plans an effective and efficient way of motivating senior executives?

Research on senior executive reward has typically explored the connection between pay, performance and the alignment of interests of executives and shareholders. This article examines the relationship between reward and motivation, drawing on the psychological, behavioural economics and decision‐making literatures. Based on an empirical study of FTSE 350 senior executives, the research examines whether long‐term incentive plans are an effective and efficient way of motivating executives, taking into account risk, time discounting, uncertainty and fairness. The article concludes that the way executives frame choices, perceive value, assess probability, evaluate temporal effects and respond to uncertainty means that long‐term incentive plans (LTIPs) are generally not efficient and are often not effective in meeting their objectives. It proposes that, in its current form, agency theory does not provide a sound basis for modelling senior executive reward, and suggests five areas for development.     

On the Effectiveness of Incentive Pay: Exploring Complementarities and Substitution between Management Control System Elements in a Manufacturing Firm

Abstract

Extant research already emphasises that complementarities and substitution involving incentive pay and other elements of an organisation's management control system play an important role in terms of explaining the effectiveness of incentive systems. Despite this awareness calls continue for more research addressing the need to better understand how interdependencies arise among management control system elements and how they affect organisational effectiveness. Based on an in-depth case study on the implementation of a new incentive system in a manufacturing firm, we seek to provide more research and insight into how incentive pay features in complementary and substitutional relationships in an individual organisational setting. Greater insight can help illustrate how complementary and substitutional relationships unfold in even more complex ways than current research indicates, as well as how the effectiveness of the incentive system in the individual organisational setting is determined by these relationships.     

Should managerial delegation contracts be made before or after union wage setting? A game‐theoretic analysis

This paper analyzes a multiple‐stage game in which, at the final stage, two (managerial) firms compete over quantities in the product market. Prior to this stage, firm‐specific unions set the workers' wages, while the owners of both firms hire managers and provide them with incentive contracts. Owners can freely decide to arrange the managerial contract before or after the (non‐managerial) wage determination stage. Hence, the endogenous choice of the incentive contract stage is derived. The possibility of multiple equilibria arises, where both owners choose managerial contracts before or after unions' wage setting, crucially depending on unions' preferences. Such results also prove to be true for a remarkable degree of asymmetry in preferences over wages vis‐à‐vis employment across unions.     

THE ESTIMATION OF HUMAN CAPITAL BY ADMINISTRATIVE ARCHIVES IN A STATIC AND LONGITUDINAL PERSPECTIVE: THE CASE OF MILAN

Abstract This paper focuses on the estimation of the latent variable human capital (HC) at disaggregated level (worker) by available routinely institutional data flows. In particular we utilize the Lombardy region administrative archive ‘Employment Centers of the Province of Milan’, collecting information about careers of workers in the private sector of the Milan area, and administrative flows collecting mandatory workers' individual income tax returns, filed with the National Internal Revenue Service. First, we propose and empirically estimate HC scores in a static (referred to 2004) framework, by means of a realistic measurement model within causal relationships among endogenous and exogenous (investment) HC indicators. Furthermore, the model also specifies a set of (concomitant) indicators that, not belonging to HC investment indicators, have causal impact on endogenous variables and on HC scores, too. Second, we propose a longitudinal analysis (period 2000–2004) aimed to investigate how workers' earned income growth rates vary over workers' educational levels and other personal characteristics. The empirical results of both analyses confirm the characteristics of the Italian job market, denoted by marked inequalities, and knowledge regarding the process of school to work transition, characterized by a weak incidence of education on longitudinal trajectories of earned income.     

全年一次性奖金的个人所得税税收筹划

全年一次性奖金的个税扣缴,存在"所得不如所缴"的六个区间,个人税后所得将比少于此区间上限所得要少。且越靠近区间上限,差异越大;期间起始金额越大,差异越大。建议放弃一部分所得,使单位和个人收益最大化。     

Top executive pay and performance

Using data on 241 of Britain's largest industrial companies, the pay received by top executives in 1985 is studied as a function of corporate performance. An attempt is made to estimate the extent to which executive pay and shareholder wealth are linked. Rival explanations, relating pay to the assets, employment level and turnover of the company, are also examined. No support is found for the managerialist view that remuneration tends to be correlated with size attributes. The results do, however, suggest that, while much of the variation in executive pay remains unexplained, there is evidence of executive remuneration policy serving to effect incentive alignment between the executive's and shareholders' interests.     

Why should firms manufacture retailer brands?

For firms manufacturing convenience goods there are three branding policies available, a proprietory brand policy, a retailer brand policy and a mixed brand policy. A firm's choice depends on differences in demand and promotion costs between the proprietory and retailer brand markets. This can be analysed using a simple elaboration of the standard 3rd degree price discrimination model. But if the two markets are not independent over the long-term there may be other consequences of following the optimization rules of the model. If retailers develop consumers' preference for their own shops and their own brands, the demand advantage enjoyed by manufacturers' brands may be reduced further. The more willing are manufacturers to supply retailer brands, the more retailers win undermine the demand for manufacturers' proprietory brands.     

Team Rewards: How Far Have We Come?

Although many organizations find teams to be important to their success, few have implemented reward systems that encourage team effort. This study examines the practices of 35 firms using team‐based reward programs and identifies some features of these programs that improve their effectiveness. The results indicate that the most valued programs were those associated with (1) high levels of communication to employees about the specifics of the plan, (2) strong worker involvement in the plan's design and implementation, and (3) team members' perceptions that the pay system was fair. HR managers considered more complex plans more beneficial than simple plans. © 2001 John Wiley & Sons, Inc.     

Incentive Pay and Firm Performance: Moderating Roles of Procedural Justice Climate and Environmental Turbulence

In connection with the literature on strategic reward and agency theory, this study investigates the effects of incentive pay on employee outcomes and firm performance. We identify employee outcomes, such as commitment and competence, as mediating processes that explain the effects of incentive pay on firm performance. We further propose procedural justice climate and environmental turbulence as boundary conditions that determine the strength of the effects of incentive pay on employee outcomes. The research model is tested using multisource data collected at three time points over a five‐year period from 227 Korean companies. Our analysis confirmed that incentive pay enhanced employee commitment and competence, which, in turn, improved the operational and financial performances of firms. The effect of incentive pay on employee commitment was negative for firms with a low procedural justice climate, but positive for firms operated under a highly turbulent environment. By contrast, the effect of incentive pay on employee competence was positive only for firms operated under a stable environment. This study enriches the literature by presenting and validating plausible underlying mechanisms and boundary conditions under which strategic performance–contingent incentive pay affects firm performance. © 2015 Wiley Periodicals, Inc.     

The wildcat strike and industrial relations*

Institutionalised collective bargaining can be seen as a limited vehicle for the promotion of workers' demands. This detailed participantobserver case study in a plant in northern New Jersey describes the process of a wildcat strike and evaluates its efficacy as a means of advancing important aspects of workers' interests outside the conventional, institutional channels.     

Operationalising workers' participation: a comparison of US and Yugoslav models

Richard Rosenberg and Eliezer Rosenstein compare Yugoslavian workers' councils with consultative participation in US plants. They conclude that shopfloor participation offers the most potential for active worker involvement in management and even for the effective downward transfer of decision-making authority.     

Business Strategies of Incumbents in the Market for Electric Vehicles: Opportunities and Incentives for Sustainable Innovation

This paper focuses on the relation between large car manufacturers’ incentive and opportunity to innovate and their electric vehicle (EV) business strategies. We analyze how environmental regulation and the firm's incentive (measured by net income) and opportunity to innovate (measured by EV asset position, determined from a combination of patent, partnership and prototype data) affected EV sales over the period 1990–2011. During the EV's R&D period in the 1990s, large car manufacturers that were regulated by the full zero emission vehicle mandate developed a significantly stronger EV asset position, but did not sell significantly more EVs than their rivals. During the EV's commercialization period (2007–2011), large car manufacturers with both a strong incentive and a strong opportunity to innovate sold significantly more EVs. Based on these results, the paper offers a typology of business strategies, several managerial implications, and recommendations for policy makers to stimulate sustainable development. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

Russia's official trade unions: renewal or redundancy?

Russia's official trade unions claim to have reformed themselves into independent organisations representing workers' interests. This article takes one branch union, the official miners' union, and, on the basis of research in the South Kuzbass mines, considers how far enterprise level unions have changed, and the potential for reform.     

The transformation of industrial authority and paternalistic capitalism in the global economy: case studies of Taiwan's textiles industries

Abstract This paper is an attempt to theorize changing employment relations in capitalist development, drawing upon Taiwan's experience of industrialization within the context of global economic competition and undertaking case studies in the textiles industries. It aims to investigate changes in the nature of employment relations, with special reference to authority relations, by examining how they have been shaped by changes in Taiwan's textiles industries. It argues that a transformation of paternalistic capitalism is under way in Taiwan. The study also examines how changes in economic activities have profoundly affected people's lives and experiences. It is suggested that the underpinnings of traditional authority are being shaken. Loosened personal ties and claims for statutory working rights have led to the emergence of different sources of industrial authority. Here is a crucial 'ideological break' in terms of workers' consciousness. Moreover, the 'communal paternalism' or 'enterprise paternalism' of labour regimes in Taiwan propounded by Deyo (1989, 1998) is now called into question.     

Peer pressure and social comparisons with heterogeneous ability

When workers' efforts are not contractible, we investigate whether the display of workers' efforts to coworkers influences wage and effort decisions. We find that employers mainly increase the wages offered to the more valuable workers when they are observed that increases the difference in wages in such setting. We find evidence of peer pressure and strategic complementarity in efforts. Additionally, low‐ability workers are more sensitive to peer pressure than their more productive coworkers, and these workers exert less effort with increases in the reciprocity of their coworkers. Finally, the display of workers' efforts to coworkers is detrimental to the employer's payoff but enhances efficiency.     

Workplace values and beliefs: an empirical study of ideology,high commitment management and unionisation

This study is unique in that it examines both managers' and workers' values and beliefs about employment relationships. It found that managers consider the employment relationship in their own workplaces unitarist rather than pluralist, but have mixed ideologies when considering society as a whole. Workers are strongly pluralist when considering society as a whole, but their workplace ideology is somewhat unitarist. A modest union impact on workers' perspectives is found, but little evidence to suggest union's effect commitment to the employing organization. Workers' commitment is to personal careers first and the organization second, while managers put the organization ahead of personal careers. Correlations exist between unitary views of the employment relationship, increased High Commitment Management (HCM) practices, and high levels of commitment. The purpose and contribution of this study is that it reports an assessment of the relation between workplace attitudes and beliefs and the efficacy and influence of management and union initiatives designed to impact them.     

Breaking the vicious cycle of algorithmic management: A virtue ethics approach to people analytics

The increasing use of People Analytics to manage people in organizations ushers in an era of algorithmic management. People analytics are said to allow decision-makers to make evidence-based, bias-free, and objective decisions, and expand workers' opportunities for personal and professional growth. Drawing on a virtue ethics approach, we argue that the use of people analytics in organizations can create a vicious cycle of ethical challenges - algorithmic opacity, datafication, and nudging - which limit people's ability to cultivate their virtue and flourish. We propose that organizations can mitigate these challenges and help workers develop their virtue by reframing people analytics as a fallible companion technology, introducing new organizational roles and practices, and adopting alternative technology design principles. We discuss the implications of this approach for organizations and for the design of people analytics, and propose directions for future research.     

Worker reciprocity and the returns to training: Evidence from a field experiment

Do reciprocal workers have higher returns to employer-sponsored training? Using a field experiment with random assignment to training combined with survey information on workers' reciprocal inclinations, the results show that reciprocal workers reciprocate employers' training investments by higher posttraining performance. This result, which is robust to controlling for observed personality traits and worker fixed effects, suggests that individuals reciprocate the firm's human capital investment with higher effort, in line with theoretical models on gift exchange in the workplace. This finding provides an alternative rationale to explain firm training investments even with the risk of poaching.