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7 - How should people be rewarded for their work?

Published online by Cambridge University Press:  05 June 2014

By
Bruno Frey
Edited by
Adam Oliver
Bruno Frey
Affiliation:
University of Zurich, University of Warwick, and Centre for Research in Economics, Management and the Arts, Switzerland
Adam Oliver
Affiliation:
London School of Economics and Political Science
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Summary

The orthodox view

Recently, I met a couple. Joan has a management education and is employed as a human resource manager by a large international insurance firm with about 30,000 staff. George studied economics and now manages a well-respected family-run car dealing firm with fifteen employees in three locations.

When I talked to them about their professional activities, both emphatically stated: ‘People should be paid according to their performance.’ Indeed, it was absolutely clear to both of them that performance pay induces people to work. Performance pay means that targets are fixed ex ante, and that those exceeding them get a bonus. Those not meeting the targets should be reprimanded or dismissed. In the case of George, each car sold should lead to a higher pay; in the case of Joan, those performing better than the target set should receive a higher salary. However, she did not tell me how ‘performance’ should or can be determined in the insurance business, except in relation to the direct selling of insurance contracts.

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Behavioural Public Policy , pp. 165 - 190
Publisher: Cambridge University Press
Print publication year: 2013

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  • How should people be rewarded for their work?
    • By Bruno Frey, University of Zurich, University of Warwick, and Centre for Research in Economics, Management and the Arts, Switzerland
  • Edited by Adam Oliver, London School of Economics and Political Science
  • Book: Behavioural Public Policy
  • Online publication: 05 June 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781107337190.008
Available formats
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  • How should people be rewarded for their work?
    • By Bruno Frey, University of Zurich, University of Warwick, and Centre for Research in Economics, Management and the Arts, Switzerland
  • Edited by Adam Oliver, London School of Economics and Political Science
  • Book: Behavioural Public Policy
  • Online publication: 05 June 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781107337190.008
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • How should people be rewarded for their work?
    • By Bruno Frey, University of Zurich, University of Warwick, and Centre for Research in Economics, Management and the Arts, Switzerland
  • Edited by Adam Oliver, London School of Economics and Political Science
  • Book: Behavioural Public Policy
  • Online publication: 05 June 2014
  • Chapter DOI: https://doi.org/10.1017/CBO9781107337190.008
Available formats
×