Tuesday, February 11, 2014

Misalignment of Incentives In Human Resources - A study by Artur Victoria

Misalignment of incentives usually comes down to a problem of workers choosing to do the "wrong" thing. The variations on the basic model of agency illustrate many of these problems:

1 - When workers have several tasks to perform, incentive systems have a hard time getting the balance right. Attention and effort will be given to those activities on which the employee perceives that he or she can have the biggest impact in terms of compensation. The perception of a large impact, in turn, depends on two considerations: Does the reward system take significant account of this or that measure of performance? And how much control does the individual have over the performance measures - how noisy is the relationship between efforts and performance measures? leia todo o artigo