Managerial incentives and favoritism in promotion decisions: Theory and field evidence

Arbeitspapier

This paper investigates the effects of managerial incentives on favoritism in promotion decisions. First, we theoretically show that favoritism leads to a lower quality of promotion decisions and in turn lower efforts. But the effect can be mitigated by pay-for-performance incentives for managers who decide upon promotion. Second, we analyze matched employer-employee survey data with detailed firm level information on managerial incentive schemes and find that perceived promotion quality is indeed substantially higher when managers receive performance-related pay or participate in gain sharing plans.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5543

Classification and Topics

• Classification: Wirtschaft ; Compensation Packages; Payment Methods ; Personnel Economics: Firm Employment Decisions; Promotions ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Personnel Economics: Labor Management ; Labor Discrimination
• Subject: incentives ; favoritism ; nepotism ; tournaments ; Erwerbsverlauf ; Personalauswahl ; Führungskräfte ; Patronage ; Leistungsentgelt ; Extensives Spiel ; Theorie ; Feldforschung

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Berger, Johannes ; Herbertz, Claus ; Sliwka, Dirk
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/51773
• URN: urn:nbn:de:101:1-201104133606
• Last update: 10.03.2025, 11:44 AM CET