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| Performance Improvement: The Impact of Compensation Systems and Goal Setting |
| Sunday, May 27, 2007 |
| 3:00 PM–4:20 PM |
| Emma AB |
| Area: OBM; Domain: Basic Research |
| Chair: Kristen A. Maglieri (University of Nevada, Reno) |
| Discussant: Alyce M. Dickinson (Western Michigan University) |
| Abstract: Performance improvement has been the foremost objective of most organizational interventions since the time of the first traders. In recent years, a range of strategies have been used by managers and organizational consultants to achieve this goal. Incongruously, there remains a dearth of laboratory research on such interventions. The current symposium reports three experimental studies on two of the most popular and effective performance improvement interventions: pay for performance systems and goal setting interventions. The first study analyses the effect of a piece rate pay system in which pay was provided on the basis of group rather than on individual performance. The second study examines the effect of hourly, incentive and profit share pay systems on performance on a data entry task. The final paper reports a study in which goal statements were provided to employees to examine the effects of goals on performance. |
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| The Effect of a Grouped Piece-Rate Arrangement on the Individual Performance of High Performers. |
| HORACIO RICARDO ROMAN (University of Nevada, Reno), Ramona Houmanfar (University of Nevada, Reno), Jared A. Chase (University of Nevada, Reno), Sandy Kennedy (University of Nevada, Reno) |
| Abstract: The purpose of the study was to examine the effect of grouped piece-rate compensation on individual performance. Under a grouped piece-rate compensation arrangement, the average number of work units performed by a group was multiplied by a per-piece amount. Under such arrangements, it was predicted that high level of performance would deteriorate over time since high performers were undercompensated with regards to their individual performance. Previous research on grouped compensation with small groups (less than 15 members) has not shown this deterioration. A counterbalanced reversal design was used to examined the effects of group pay contingencies on high performance using virtual groups of 6 members and of 36 members. Undergraduate students performed a data entry task under a group compensation conditions in the context of a small (n=6) and a large (n=36) group. Preliminary findings indicated that similar level performance was maintained in small and large groups. This presentation will include an overview of the methodology, an analysis of the results, and discussion of findings. |
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| The Effect of Hourly, Incentive, and Profit Share Compensation Systems on Performance on a Data Entry Task. |
| KRISTEN A. MAGLIERI (University of Nevada, Reno), Ramona Houmanfar (University of Nevada, Reno), Denis P. O'Hora (National University of Ireland, Galway), Horacio Ricardo Roman (University of Nevada, Reno) |
| Abstract: The current study compares performance on a data entry task in two PFP systems, Incentive Pay and Profit Share, to performance in an Hourly pay system. The task simulated a medical data entry task wherein participants were required to categorize patients based on specific features of the patient’s history. Participants were provided with a Company Profit and Loss Statement and a pay slip after three two-minute work periods and pay conditions were presented in an alternative treatments design. Company profit was calculated based on number of patients correctly categorized by the participant and the fictional employees less the number of errors. During work periods, participants could either categorize patients themselves or correct their fellow employees’ previous errors. Incentive pay was only provided for correct categorizations. As expected, participants demonstrated higher levels of overall performance in both PFP systems than in the Hourly pay condition and participants were more likely to help fellow employees in the Profit Share condition than in the Incentive Pay condition. |
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| The Effect of Goal Statements on Performance on a Data Entry Task. |
| DENIS P. O'HORA (National University of Ireland, Galway), Catriona McGeady (University of Ulster), Kristen A. Maglieri (University of Nevada, Reno), Horacio Ricardo Roman (University of Nevada, Reno) |
| Abstract: Goal setting is one of the simplest and most effective organizational interventions that can be used to increase employee performance. From a behavioral perspective, goal statements have been understood to function as either discriminative stimuli, establishing operations or by establishing derived relations for the employee. The current study examines the effect of goal setting on performance on a data entry task. In a counterbalanced ABAC design, participants were exposed to baseline and then to two goal setting conditions, one (B; Easy) in which the goal was slightly higher than mean baseline performance, and one (C; Difficult) in which the goal was considerably greater than mean baseline performance. Each goal was presented by a fictional manager who was assigned randomly to either the Easy or the Difficult goal. In a final stage, participants were then asked to choose which manager they would like to work for. For the majority of participants, Difficult goals increased performance more than Easy goals and participants were less likely to choose the Difficult goals in the final choice stage. These findings raise questions for current theoretical accounts of goal setting in organizations. |
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