After completing this chapter, you will be able to address the following questions: What are career-based incentives? How/When can a firm use promotions for maximum incentive benefit? When should a firm be concerned about professional sabotage? When and how can seniority-based incentives work? How to motivate tournament participants when ability varies or certain parties are not in contention? | Chapter 11: Career-Based Incentives 4/8/2013 Chapter 11: Career-Based Incentives Promotions and Incentives Should Promotions Be Used as an Incentive System? Dual Roles That Sometimes Conflict Intentional or Accidental Incentive System? Promotion Rule: Tournament or Standard? Controlling Structure or Quality Relative versus Absolute Evaluation Ease and objectivity of evaluation Uncontrollable Risk Distortion How Do Promotions Generate Incentives? Prize Structure and Incentives Level of Salary Prize from Promotion Promotion Probability and Incentives Uncontrollable Risk Summing Up Advanced Issues Heterogeneity of Employees Variation in Ability Variation in Personality Incentives for Losers Outside Hiring Turnover Evidence Career Concerns Seniority Pay and Incentives Practical Considerations Seniority-Based Pay as an Implicit Contract The Worker as Lender Mandatory Retirement Summary 4/8/2013 Promotion-Based Incentives 4/8/2013 Chapter 11 – Promotions & Incentives After completing this | Chapter 11: Career-Based Incentives 4/8/2013 Chapter 11: Career-Based Incentives Promotions and Incentives Should Promotions Be Used as an Incentive System? Dual Roles That Sometimes Conflict Intentional or Accidental Incentive System? Promotion Rule: Tournament or Standard? Controlling Structure or Quality Relative versus Absolute Evaluation Ease and objectivity of evaluation Uncontrollable Risk Distortion How Do Promotions Generate Incentives? Prize Structure and Incentives Level of Salary Prize from Promotion Promotion Probability and Incentives Uncontrollable Risk Summing Up Advanced Issues Heterogeneity of Employees Variation in Ability Variation in Personality Incentives for Losers Outside Hiring Turnover Evidence Career Concerns Seniority Pay and Incentives Practical Considerations Seniority-Based Pay as an Implicit Contract The Worker as Lender Mandatory Retirement Summary 4/8/2013 Promotion-Based Incentives 4/8/2013 Chapter 11 – Promotions & Incentives After completing this chapter, you will be able to address the following questions: What are career-based incentives? How/When can a firm use promotions for maximum incentive benefit? When should a firm be concerned about professional sabotage? When and how can seniority-based incentives work? How to motivate tournament participants when ability varies or certain parties are not in contention? 4/8/2013 4 Salary by Hierarchical Level 4/8/2013 Raise in Salary by Type of Job Change 4/8/2013 Promotions & Incentives These data are evidence of what is often the most important source of incentives: promotions Why are promotions so important to incentives? work well with specialization & functional org. structures problem: what if the best candidate to promote is not the best performer? ., an engineering job ladder In many cases, they are an “Accidental Incentive System” remember the importance of promotions as credentials on your resume 4/8/2013 What Promotion Rule Should be Used? One extreme: promote all or .
