An Empirical Examination of the Impacts from Termination of a Performance-Based Incentive Plan

This paper reports on the financial impacts from the termination of a pay for performance plan for the salesforce at a retail establishment. Using monthly panel data spanning more than eight years for 15 outlets of a major retailer, this study documents that store-level sales and operating profits decrease after the incentive plan is terminated. Individual performance data are then investigated to help identify the role of effort and selection effects in explaining the documented decrease. The analysis of the individual employee sales data reveals that virtually all of the declining store level sales can be explained by selection effects.

Challenges and Opportunities in Healthcare Volunteer Management: Insights from Volunteer Administrators

Volunteer administrators from 105 hospitals in five states in the northeast and southern United States provided open-ended survey responses about what they perceived to be the most pressing challenges and opportunities facing healthcare volunteer management. Taken together, these 105 hospitals used a total of 39,008 volunteers and 5.3 million volunteer hours during a 12-month period between 2010 and 2011. A qualitative content analysis of administrator responses suggests that primary challenges include volunteer recruitment and retention, administrative issues, and operational difficulties brought about by the current economic crisis. Key opportunities include more explicitly linking the volunteer function to hospital outcomes and community impact, expanding volunteer recruitment pools and roles and jobs, and developing organizational support for volunteers and making the volunteer management function more efficient and effective.

An Empirical Analysis of Performance Impacts Resulting From Conversion to Franchise Operations

Franchising is an important form of organizational control. Possible benefits of franchising include its ability to reduce agency costs that increase with costly monitoring, and provide incentives for the use of local information by onsite managers. However, these benefits may come at a cost, as franchisees may reduce quality by choosing to free ride. While many studies have investigated the reasons for franchising, few studies have documented the impacts of franchising on unit level operating performance. Using time-series data from a number of lodging properties that were converted to franchisee control from company control, this study documents the performance impacts of franchising. The analysis reveals that conversion results in a modest decline in financial performance and an immediate sharp decline in quality.

An Empirical Analysis of Continuing Improvements Following the Implementation of a Performance-Based Compensation Plan

Performance improvements subsequent to the implementation of a pay-for-performance plan can result because more productive employees self-select into the firm (selection effect) and/or because employees allocate effort to become more effective (effort effect). We analyze individual performance data for 3,776 sales employees of a retail firm to evaluate these alternative sources of continuing performance improvement. The incentive plan helps the firm attract and retain more productive sales employees, and motivates these employees to further improve their productivity. In contrast, the less productive sales employees’ performance declines before they leave the firm.

A Field Study of the Impact of a Performance-Based Incentive Plan

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 15 retail outlets over 66 months indicates a sales increase when the plan is implemented, an effect that persists and increases over time. Sales gains are significantly lower in the peak selling season when more temporary workers are employed.

Evaluating Form and Functionality of Pay-For-Performance Plans: The Relative Incentive and Sorting Effects of Merit Pay, Bonuses, and Long-Term Incentives

Using two-year longitudinal data from a large sample of US employees from a service-related organization, the present study investigates the relative effects of three forms of pay-for-performance plans on employees’ job performance (incentive effects) and voluntary turnover (sorting effects). The study differentiates between three forms of pay: merit pay, individual-based bonuses, and long-term incentives. By definition, these PFP plans have different structural elements that distinguish them from each other (i.e., pay plan form) and different characteristics (functionality), such as the degree to which pay and performance are linked and the size of the rewards, which can vary both within and across plan types. Our results provide evidence that merit raises have larger incentive and sorting effects than bonuses and long-term incentives in multi-PFP plan environments where the three PFP plans are operating simultaneously. Only merit pay has both incentive and sorting effects among the three PFP plans. The implications for the PFP-related theory, as well as for the design and implementation of PFP plans, are discussed.

The Changing Relationship between Supervisors and Subordinates: How Managing This Relationship Evolves over Time

Understanding how the relationship between a subordinate and manager develops over time has been a critical matter both for academics and for business. In both academic journals and industry publications, some writers have argued that the relationship is driven by perceptions of fairness and treatment, and that developing the relationship can lead to better performance. Others have argued that higher performers get better treatment and resources, which results in superior relationships with their managers. There is really no clear answer of what comes first—perceptions of fairness, satisfaction with the supervisor, or job performance—and which leads to which.

The Impact of Supervisory Monitoring On High-End Retail Sales Productivity

Based on a two-stage analysis of a panel of data on 12 outlets of a high-end retailer for 24 months, we investigate how the level of supervisory monitoring affects retail sales productivity. In the first stage, we use Data Envelopment Analysis (DEA) to compute the relative productivity of retail outlets in using their labor and capital resources to generate store sales. In the second stage, we regress the logarithm of DEA scores on contextual variables to obtain consistent estimators of the impact of contextual variables on productivity (Banker and Natarajan in Operation Research 56:48-58, 2008). Contrary to agency theoretic prediction that supervisory monitoring leads to an increase in retail sales productivity, our empirical results indicate that the higher the level of supervisory monitoring, the lower is the retail sales productivity for high-end retail outlets.