Keywords
incentives, outcomes management, team-based incentives, game theory
Document Type
Proceedings Paper
Included in
Advertising and Promotion Management Commons, Business Administration, Management, and Operations Commons, Business and Corporate Communications Commons, Entrepreneurial and Small Business Operations Commons, Management Sciences and Quantitative Methods Commons, Marketing Commons, Organizational Behavior and Theory Commons, Other Business Commons, Performance Management Commons, Sales and Merchandising Commons
A Game Theory Analysis of Team Based Incentivization in Retailing
The connection between incentives and outcomes has long found consistent support in management literature generally (Bartol and Hagmann 1992; Miller & Schuster 1993; Swinehart 1986) and retailing in particular (Banker et al. 1996; Team Pay Case Studies 1997). Later meta-studies strongly support this view. (Condly, Noe and Jackson 2002; Garbers and Konradt 2014). Yet, providing performance-based incentives, at least for rank and file retail employees, still is not common in U.S. retailing and team-based incentives are even rarer.
The next section of this manuscript describes some of the issues with individualized commissions, which though not prevalent in a many product domains, are still dominant in some (cars, furniture and real estate for example). Then, we use game theory to illustrate how employees of retailers using team-based incentives might outperform employees who received no performance incentives and or individualized incentives.