Incentive Effects of Promotions on Employee Participation: The Case of Korean Auto Workers
In the tournament games only the winner can advance to the next roundsof competition. The important feature of tournament is that the reward isbased on the rank order among competitors rather than absolute level oftheir performances. This type of reward system can be widely found incompetition for promotion in business organizations. For example, manyhourly workers in manufacturing plants compete for a limited number ofsupervisory positions; a number of vice presidents in a firm strive for onecoveted position of president.The employee participation in improvement activities have been thoughtof as one of the best practices taken in many auto plants around the world.So we can find auto firms often evaluating their workers on the basis ofhow good performances they show in off-line activities such as suggestionsand QC circles. Or at least it is one of many evaluating items. Since theopportunity of promotions is limited but often known to productionworkers in advance, it may be regarded as prizes open to candidates.Tournament theory shows that compensation based on relative order cangive participants an incentive to provide an optimal level of efforts undercertain a set of assumptions. It is often argued that the optimal level ofefforts depend positively on the price differential for winning the game.There has been many studies to analyze the benefits and costs thatemployee participation activities can give individual workers [Cooke(1990)]. However, few attempts have been made to test if promotiontournaments can induce workers to involve more actively in employeeparticipation. In this study I seek to test the incentive effects ofpromotion using data from a survey of Korean auto plants.
Year of publication: |
1995-06
|
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Authors: | Lee, Daechang |
Subject: | Korea | auto plants | manufacturing | incentive | promotion | employee participation |
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