Mission and the Bottom Line
The impact of performance pay in institutions with multiple goals depends on complementarities in the disutility cost of effort and how different tasks interact to achieve each goal. Workers of a mission-oriented nonprofit were randomly assigned to one of two bonus schemes, each incentivizing one of its two main operational goals: the performance of its microcredit program and the strengthening of community institutions of the poor. This study finds that the credit bonus improved credit-related outcomes but it undermined the social outcome. In contrast, the social bonus advanced the social mission as well as the microcredit program, but only for employees working alone, undermining the performance of employees working in teams. These results cannot be explained by a standard multitask principal-agent model featuring only complementarities in the disutility cost of effort. Instead, they suggest that production complementarities are also relevant.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2017-12
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| Subjects: | COMPLEMENTARITIES, INCENTIVES, INTRINSIC MOTIVATION, TEAMWORK, PERFORMANCE PAY, MICROCREDIT, COMMUNITY INSTITUTIONS, |
| Online Access: | http://documents.worldbank.org/curated/en/757341513086147069/Mission-and-the-bottom-line-performance-incentives-in-a-multi-goal-organization https://hdl.handle.net/10986/29006 |
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| Summary: | The impact of performance pay in
institutions with multiple goals depends on
complementarities in the disutility cost of effort and how
different tasks interact to achieve each goal. Workers of a
mission-oriented nonprofit were randomly assigned to one of
two bonus schemes, each incentivizing one of its two main
operational goals: the performance of its microcredit
program and the strengthening of community institutions of
the poor. This study finds that the credit bonus improved
credit-related outcomes but it undermined the social
outcome. In contrast, the social bonus advanced the social
mission as well as the microcredit program, but only for
employees working alone, undermining the performance of
employees working in teams. These results cannot be
explained by a standard multitask principal-agent model
featuring only complementarities in the disutility cost of
effort. Instead, they suggest that production
complementarities are also relevant. |
|---|