It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic activities, and (ii) something can be done about this by introducing nonfinancial performance measures as for instance with a balanced scorecard. We give an explanation for both...

It is often claimed that (i) managers work too hard on operational issues and spend not enough effort on strategic activities and (ii) something can be done about this by introducing nonfinancial performance measures as for instance with a balanced scorecard. We give an explanation for both...

We study bonus assignments by managers who have discretion over bonus timing, analyzing extensive personnel records and linked survey data from a multinational firm. We find that – even though the bonus system is intended to provide timely rewards – managers award most bonuses at the end of...

We study bonus assignments by managers who have discretion over bonus timing, analyzing extensive personnel records and linked survey data from a multinational firm. We find that – even though the bonus system is intended to provide timely rewards – managers award most bonuses at the end of...

Most firms rely on subjective evaluations by supervisors to assess their employees' performance. This article discusses the implementation of such appraisal processes, exploring the use of multiple research methods such as the analysis of personnel records, survey data, and lab and field...

We examine the benefits of objective performance measurement in a field experiment conducted in a retail bank. At the outset objective performance measures of pro fits in each branch were only available on the branch level and managers allocated bonuses to their employees based on subjective...

A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature about the first trade-off. Due to lack of...

We study the incentive effects of grating supervisors access to objective performance information when agents work on multiple tasks. We first analyze a formal model showing that incentives are lower powered when supervisors have no access to objective measures but assess performance...

Milton Friedman has famously claimed that the responsibility of a manager who is not the owner of a firm is "to conduct the business in accordance with their [the shareholders'] desires, which generally will be to make as much money as possible." In this paper we argue that when contracts are...

We run two field experiments within a large retail chain showing that the effectiveness of performance pay crucially hinges on prior job experience. Introducing sales-based performance pay for district- and later for store-managers, we find negligible average treatment effects. Based on surveys...