Handicapping Bonus Pay for Managers
How can we motivate middle managers to take prudent risks and drive for performance for the organization?
Store managers at national brick-and-mortar retail chains offered Professor Shannon Anderson and her co-authors an opportunity to examine how specific subjective ratings can reward such store managers, even if they are employed on a one-size-fits-all contract.
“Subjectivity can be their friend,” Anderson says. “If we can do a good job handicapping you, we can make sure good work is rewarded.”
The study, “When one size does not fit all: Using ex post subjective ratings to provide parity in risk-adjusted compensation,” published online in June 2020 in Management Accounting Research, is available here.