Friday, 11 July 2014

Incentives matter: manager file

A new paper forthcoming in the Scottish Journal of Political Economy. "Base Salaries, Bonus Payments, and Work Absence among Managers in a German Company" by Christian Pfeifer. The abstract reads:
This paper provides scarce insider econometric evidence on the structure of management compensation and on the incentive effects of fixed base salaries and bonus payments. Six years of personnel data of 177 managers in a German company are analyzed with special emphasis on the highest achievable bonuses under a Management-by-Objectives (MBO) incentive scheme. The main finding of panel negative binomial regressions is that higher achievable bonus payments are correlated with fewer absent working days, which supports the incentive effect of performance pay for managers. The fixed base salary component is, however, not significantly correlated with managers’ work absence. (Emphasis added.)
So if you give people a reason to be a work, they are at work. Seems reasonable.

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