Management Accounting Section Midyear Meeting

Pay for Quantity or Time? Implications for Worker Speed and Quality

• In Event: Incentives and Compensation (Experimental)

Abstract

We examine how paying workers for a pre-specified quantity of work vis-à-vis paying workers for a pre-specified amount of time for a quality-focused task affects the time spent per unit of work and the quality achieved. We find that workers paid for a set quantity of work achieve higher quality than workers paid for a set amount of time, but contrary to our expectations our results suggest that this is the result of spending more time per unit of work rather than through increased intensity of effort. We also examine how different “incentives” – monitoring, a bonus, and a rehiring opportunity – affect time spent per unit of work and quality. For workers paid for a pre-specified quantity of work, we find that workers promised a rehiring opportunity for satisfactory performance spend the least amount of time per unit of work and achieve the lowest quality relative to workers with other incentives or no incentive. We conjecture that these workers infer that the opportunity will depend on both quality and speed and that they sacrifice quality to achieve greater speed rather than increasing effort intensity. Overall, our results add new insights to the literature on employee effort in multidimensional task settings.

Authors

• Carolyn Victoria Deller, The Wharton School, University of Pennsylvania

• Santiago Gallino, University of Pennsylvania