Management Accounting Section Midyear Meeting

Bout of Sales: Impact of Alignment between Leadership Style and Incentive Systems

• In Event: Field Experiments and Field Studies

Abstract

In partnership with a US apparel retailer with over 10,000 employees and 1,000 stores, we engineered a field experiment to study the role of leadership style in mediating the effectiveness of different types of incentives. Specifically, we study whether incentives that leverage team- centric intrinsic motivation are more effective when the team manager invests in strengthening the team’s identity. We measure the extent to which the team manager invests in their team by measuring whether the manager utilizes the servant leadership style (Greenleaf 1970). In the field experiment we organized a series of one-on-one tournaments varying the prize that stores could win: either a group outing for the store associates or a cash prize of similar value. Consistent with our theoretical development, the empirical evidence suggests that servant leaders were able to better leverage non-monetary performance incentives that took special value when team identity is high as compared to non-servant leaders. We found that in contests with a cash prize, the leadership style of the manager does not change the odds of a store winning, but in contests with a non-monetary prize the stores with a servant leader are more likely to win.

Authors

• Joe Moran, University of Pennsylvania

• Asis Martinez-Jerez, University of Notre Dame

• Pablo Casas-Arce, Arizona State University