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Knowledge and Performance Pay - A Field Experiment with a Large Retail-Chain
Last registered on March 24, 2017

Pre-Trial

Trial Information
General Information
Title
Knowledge and Performance Pay - A Field Experiment with a Large Retail-Chain
RCT ID
AEARCTR-0002127
Initial registration date
March 24, 2017
Last updated
March 24, 2017 4:22 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
University of Cologne
Other Primary Investigator(s)
PI Affiliation
University of Applied Science Neuss
PI Affiliation
University of Cologne
Additional Trial Information
Status
In development
Start date
2017-03-24
End date
2017-12-31
Secondary IDs
Abstract
Within a large retail chain we introduce a bonus payment for store managers and provide knowledge about the production function, implementing a 2x2 experimental design. The bonus is based on the store’s profit contribution margin (= sales - costs of goods sold - inventory shrinkage - personnel costs).
Store managers in one region in South-West Germany are randomly assigned to one of four treatments. 25% of store managers serve as the control group. 25% of store managers receive a bonus based on the contribution margin. Another 25% of store managers get access to an online training on the contribution margin as well as novel information about the profit margins of all products in the store. The remaining 25% receive both, the bonus and the information about the production function.
Based on a theoretical model we hypothesize that both, giving only the bonus as well as only the further knowledge about the production function will increase performance. But we also hypothesize that there is a complementarity between both, i.e. the combination of both should lead the biggest increase.
External Link(s)
Registration Citation
Citation
Manthei, Kathrin, Dirk Sliwka and Timo Vogelsang. 2017. "Knowledge and Performance Pay - A Field Experiment with a Large Retail-Chain." AEA RCT Registry. March 24. https://doi.org/10.1257/rct.2127-1.0.
Former Citation
Manthei, Kathrin et al. 2017. "Knowledge and Performance Pay - A Field Experiment with a Large Retail-Chain." AEA RCT Registry. March 24. http://www.socialscienceregistry.org/trials/2127/history/15417.
Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2017-03-24
Intervention End Date
2017-06-30
Primary Outcomes
Primary Outcomes (end points)
The contribution margin on the store level (as well as all its components), further retail key figures, questionnaire data (pre and post)
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The intervention takes place in one region in the South-West of Germany. We randomly assign districts within each region to either TreatKNOW (1), TreatBON (2), TreatKNOWBON (3), or the Control group (4) using stratifications depending on the predicted contribution margin in the first treatment month. Randomization at the district level, although the unit of observation is the store level, gives us the possibility to separate treatment and control groups and only inform them concerning their specific treatment interventions.

TreatBON: Store managers receive a three-month bonus for an increase of their contribution margin above 80% of its planned value (following from the accounting plan for each store). In each month, store managers receive a bonus value of 0.05 * (contribution margin in € - 80% of the plan value). Cumulative bonus values are paid out after three month (capped at zero). Store managers receive monthly feedback on the respective bonus values.

TreatKNOW: Store managers get access to an online video and quiz which explains their possibilities to influence the contribution margin. We developed the training and shot the video especially for the cause of the field experiment. Additionally, they receive information about the relative profit margin of each product (this is novel information to them).
After the video store managers have to answer 14 related questions. There is, however, no direct request to increase the contribution margin. Store managers further receive a monthly overview about the development of the contribution margin (and all parts of it) apart from the possible monthly bonus notifications.

TreatKNOWBON: Is the combination of TreatBON and TreatKNOW.

Control: The control group does not receive any sort of information. They do not know about the other treatment groups.


We briefed the district managers how to react to different sorts of questions concerning the experimental design.
The company’s worker council agreed to this intervention. This serves as an IRB substitute.
Experimental Design Details
Randomization Method
Stratification method
Randomization Unit
District
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
54 districts
Sample size: planned number of observations
395 stores
Sample size (or number of clusters) by treatment arms
Control: 98 stores
TreatKNOW: 95 stores
TreatBON: 100 stores
TreatKNOWBON: 102 stores

Note: There can be slight changes in the number of treated stores as pay experience has shown that the firm may reconfigure district compositions for administrative reasons at short notice. However, this should concern only very few stores and we document reasons and procedures.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports, Papers & Other Materials
Relevant Paper(s)
REPORTS & OTHER MATERIALS