TITLE

Incentive Effects of Assigned Goals and Compensation Schemes on Budgetary Performance

AUTHOR(S)
Fatseas, Victor A.; Hirst, Mark K.
PUB. DATE
September 1992
SOURCE
Accounting & Business Research (Wolters Kluwer UK);Autumn92, Vol. 22 Issue 88, p347
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This study examines the combined effects of two management interventions, assigned goals and monetary compensation, on performance in a routine task. It investigates the effects of assigned goals (four goal levels: low, medium, high, impossible) and three types of compensation scheme (fixed-pay, piece-rate and budget-based). A laboratory experiment involving 180 undergraduate accounting students showed that, in some circumstances, assigned goals dominated performance effects while, in other circumstances, monetary incentives played a major role. Over medium to high levels of difficulty, assigned goals had a positive and dominating effect on performance, regardless of type of compensation. When the assigned goal was low, however, performance-contingent pay schemes had an additive effect on performance, while at an impossible goal level, budget-based incentives had a negative effect on performance. Of the interventions tested, the highest performance resulted from using incentive-based compensation when the budget (assigned goal) was relatively low (80% achievable).
ACCESSION #
15182265

 

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