Performance Measurement and Incentive Plans

Authors

  • ANTTI KAUHANEN,

  • SAMI NAPARI

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    • The authors’ affiliation is Research Institute of the Finnish Economy, Lönnrotinkatu 4 B 00120 Helsinki, Finland. E-mail: antti.kauhanen@etla.fi, snapari1@gmail.com. Funding by TT-säätiö is gratefully acknowledged. The data are proprietary; the authors are thus unable to release the data. Comments by Petri Böckerman, Panu Kalmi, and Terhi Maczulskij are appreciated.


Abstract

This paper explores performance measurement in incentive plans. On the basis of theory, we argue that differences in the nature of jobs between blue- and white-collar employees lead to differences in incentive systems. We find that performance measurement for white-collar workers is broader in terms of the performance measures, the organizational level of performance measurement, and the time horizon. The intensity of incentives is also stronger for white-collar employees. All of these findings are consistent with theory.

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