How performance-based pay can motivate employees, but there are risks - EP177

<p>Can we get people to work harder and perform better if we make their pay performance-related - e.g. with performance bonuses or commissions? Does this work? Are individual or group incentives better? What does the evidence say? We know that people respond to incentives, but, as Gene Tunny and Tim Hughes discuss this episode, getting those incentives right can be tricky. </p><p>Please get in touch with any questions, comments and suggestions by emailing us at <a href="mailto:contact@economicsexplored.com">contact@economicsexplored.com</a> or sending a voice message via <a href="https://www.speakpipe.com/economicsexplored">https://www.speakpipe.com/economicsexplored</a>. </p><h3>What’s covered in EP177</h3><ul><li>What is performance-related pay? [0:41]</li><li>The types of jobs in which performance-based pay works and doesn’t - e.g. fast food vs real estate [8:09]</li><li>The importance of getting incentives right and having transparency [23:16]</li><li>Performance-related pay is a difficult thing to put into practice [28:24]</li><li>Group-based incentive schemes - evidence from a recent European study of the Hydrema manufacturing business [52:54]</li></ul><h3>Links relevant to the conversation</h3><p><a href="https://wol.iza.org/articles/performance-related-pay-and-labor-productivity/long">IZA World of Labor - Performance-related pay and productivity</a></p><p><a href="https://cepr.org/voxeu/columns/how-group-based-incentives-increase-worker-performance">How group-based incentives increase worker performance | CEPR</a></p><p><a href="https://repec.iza.org/dp14986.pdf">Does Group-Based Incentive Pay Lead To Higher Productivity? Evidence from a Complex and Interdependent Industrial Production Process</a></p><p><a href="https://toughnickel.com/business/The-Use-of-Reward-and-Incentive-System-A-Case-Study-of-McDonalds">The Use of Reward and Incentive Systems: A Case Study of McDonald's - ToughNickel</a></p><p><a href="https://employeebenefits.co.uk/issues/june-2015/mcdonalds-restaurants-puts-motivation-and-reward-a