Performance Pay or Fixed Pay - A Field Experiment with a Large Retail-Chain

Last registered on September 21, 2017

View Trial History

Pre-Trial

Trial Information

General Information

Title

Performance Pay or Fixed Pay - A Field Experiment with a Large Retail-Chain

RCT ID

AEARCTR-0002450

Initial registration date

September 21, 2017

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

September 21, 2017, 12:56 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

Germany

Region

Primary Investigator

Name

Timo Vogelsang

Affiliation

Frankfurt School of Finance and Management

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Kathrin Manthei

PI Affiliation

University of Applied Science Neuss

Contact Investigator

PI Name

Dirk Sliwa

PI Affiliation

University of Cologne

Contact Investigator

Additional Trial Information

Status

On going

Start date

2017-08-01

End date

2018-06-30

Keywords

Labor

Additional Keywords

Incentives, Performance Pay, Fixed Pay

JEL code(s)

Secondary IDs

Abstract

Within a large retail chain, we randomly assign store managers to either a performance-contingent bonus or a fixed bonus payment. The performance-contingent bonus is based on the store’s profit contribution margin (= sales - costs of goods sold - inventory shrinkage - personnel costs).

External Link(s)

Registration Citation

Citation

Manthei, Kathrin, Dirk Sliwa and Timo Vogelsang. 2017. "Performance Pay or Fixed Pay - A Field Experiment with a Large Retail-Chain." AEA RCT Registry. September 21. https://doi.org/10.1257/rct.2450-1.0

Former Citation

Manthei, Kathrin, Dirk Sliwa and Timo Vogelsang. 2017. "Performance Pay or Fixed Pay - A Field Experiment with a Large Retail-Chain." AEA RCT Registry. September 21. https://www.socialscienceregistry.org/trials/2450/history/21663

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

Intervention Start Date

2017-09-01

Intervention End Date

2017-11-30

Primary Outcomes

Primary Outcomes (end points)

The contribution margin on the store level (as well as all its components), further retail key figures

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The intervention takes place in one of two regions in the North of Germany. This experiment follows an earlier experiment (registered under AEARCTR- 0002128). In the preceding experiment we had randomly assigned districts within each region to either TreatMONIT (1), TreatBON (2), TreatMONITBON (3), or the Control group (4).
Two months after the first round experiments, groups are switched so that every store manager is eligible for a bonus in exactly one three month period this year. We now use this switch to study a different question, namely to compare the effect of a performance based bonus with the effect of a fixed payment of similar magnitude.
We now randomly assign districts that previously belonged to the control group and the treatment group TreatMONIT to the two new treatments TreatFIX or TreatBON:

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 their performance (the respective bonus values).

TreatFIX: Store managers receive a fixed pay of 280€ each month for a three month period. Store managers receive monthly feedback on their performance (values of the gross margin).

Control: The stores in districts belonging previously to TreatBON or TreatMONITBON do not receive any further sort of information.

We briefed the district managers how to react to different sorts of questions concerning the experimental design.

Experimental Design Details

Randomization Method

Stratification method

Randomization Unit

District

Was the treatment clustered?

Yes

Experiment Characteristics

Sample size: planned number of clusters

28 district

Sample size: planned number of observations

198 stores

Sample size (or number of clusters) by treatment arms

TreatBON: 52 stores
TreatFIX: 48 stores
Control: 95 stores

Note: There can be slight changes in the number of treated stores as previous 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)

Supporting Documents and Materials

IRB