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How To Avoid the Problems of Target-Setting
Abstract
The advocates and critics of target-setting in the workplace seem unable to reach beyond their well-entrenched battle lines. While advocates point to what they see as demonstrable advantages, critics point to what they see as demonstrable disadvantages. Academic literature on this topic is currently mired in controversy, with neither side seemingly capable of envisaging a better way forward. This paper outlines a more fruitful approach, based both on theory and experience.
Performance Pay and Managerial Experience in Multitask Teams: Evidence from within a Firm
This article exploits a quasi-experimental setting to estimate the impact that a commonly used performance-related pay scheme had on branch performance in a large distribution firm. The scheme, which is based on the Balanced Scorecard, was implemented in all branches in one division but not in another. Branches from the second division are used as a control group. Our results suggest that the Balanced Scorecard had some impact but that it varied with branch characteristics, and, in particular, branches with more experienced managers were better able to respond to the new incentives.
