Communicated values as informal controls: Gaining accuracy while undermining productivity?

We find that the effectiveness of piece-rate compensation relative to fixed pay in a laboratory
letter-search task hinges on the presence or absence of a nonbinding statement to participants
that the experimenter values correct responses. In the absence of the value statement, participants with piece-rate rewards for correct responses generate more correct and incorrect
responses than do their counterparts with fixed pay, correcting errors as they go along to maximize compensation. Essentially, piece-rate compensation acts as an output control, incentivizing participants to maximize correct responses through a “produce-and-improve” strategy. The value statement suppresses this strategy because participants appear to perceive it as an input constraint, prompting greater initial care at the expense of lower overall productivity.
As a result, the value statement eliminates the gains in correct responses that piece-rate incentivized participants otherwise realize. Thus, in settings in which individuals can gain efficiency by working expeditiously and improving quality when necessary, our results suggest the possibility that organizations could be better off just letting incentive schemes operate, rather than emphasizing quality in ways that could overly constrain productivity.
Publication Information
Article Title: Communicated values as informal controls: Gaining accuracy while undermining productivity?
Journal: Contemporary Accounting Research (2016)
33 (4)
Author(s): Kachelmeier, Steve;  Thornock, Todd;  Williamson, Michael
Researcher Information
Thornock, Todd
Thornock, Todd
Assistant Professor
  • Personality and Individual Differences
  • Incentive Compensation
  • Performance Feedback
  • Management Control Systems
  • Cost Management
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