Monthly versus yearly targets - a field experiment

Last registered on December 21, 2020
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Pre-Trial

Trial Information

General Information

Title
Monthly versus yearly targets - a field experiment
RCT ID
AEARCTR-0005346
Initial registration date
February 05, 2020

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
February 07, 2020, 1:57 PM EST

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

Last updated
December 21, 2020, 3:37 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
United Kingdom of Great Britain and Northern Ireland
Region

Primary Investigator

Name
Oliver Gürtler
Affiliation
University of Cologne
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Other Primary Investigator(s)

PI Name
Max Thon
PI Affiliation
University of Cologne
Contact Investigator
PI Name
Dirk Sliwka
PI Affiliation
University of Cologne
Contact Investigator
PI Name
Matthias Heinz
PI Affiliation
University of Cologne
Contact Investigator

Additional Trial Information

Status
In development
Start date
2020-02-03
End date
2020-12-31
Keywords
Firms & Productivity, Labor
Additional Keywords
Performance-dependent pay
JEL code(s)
Secondary IDs
Abstract
We collaborate with a retail company and investigate changes in the salesworkers' compensation system. In an RCT, we study the effect of yearly target setting on performance. To that end, we introduce two new compensation systems. The first system is reset every month, whereas the second is reset only at the end of the year, leading to increased levels of commissions over time. We study how the different compensation systems affect revenues, turnover, conversion rates (i.e., the rate at which customers being served by salesworkers buy the firm's products), and granted discounts.
External Link(s)

Registration Citation

Citation
Gürtler, Oliver et al. 2020. "Monthly versus yearly targets - a field experiment." AEA RCT Registry. December 21. https://doi.org/10.1257/rct.5346-1.1
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2020-02-03
Intervention End Date
2020-05-31

Primary Outcomes

Primary Outcomes (end points)
Revenue, turnover
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Conversion rate, discounts
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We collaborate with a retailer operating 52 stores in the UK. The retailer employs salesworkers whose main task is to sell the firm's products in the stores. In an RCT, we implement two new compensation systems in half of the firm's stores, respectively, and the company has agreed to keep the treatments in the field for at least four months (i.e., until the end of May). The first system is reset every month, whereas the second is reset only at the end of the year, leading to increased levels of commissions over time:

Treatment A: Salesworkers' monthly compensation depends only on their own revenue in that month. The corresponding compensation scheme is piecewise linear; it has kinks at two pre-specified monthly targets and it becomes steeper once a target is reached.

Treatment B: Salesworkers' monthly compensation depends on their accumulated revenue up to (and including) that month. The corresponding compensation scheme is piecewise linear; it has kinks at two pre-specified yearly targets and it becomes steeper once a target is reached.

We study how the different compensation systems affect revenues, turnover, conversion rates (i.e., the rate at which customers being served by salesworkers buy the firm's products), and granted discounts. The discontinuity in the commission rate between the end of one month and the start of the next in the monthly scheme (which is absent in the yearly scheme) will also allow us to study gaming effects. We further study heterogeneous treatment effects with respect to workers’ pre-treatment performance (high- vs. low-performers) and tenure. Finally, we conduct employee surveys to measure employee attitudes. In particular, we explore heterogeneous treatment effects with respect to time preferences (as elicited by a survey).

Due to the Covid-19 pandemic the travel agency unfortunately had to close their stores in spring 2020 and the RCT had to be stopped.
Experimental Design Details
Randomization Method
Pairwise matching by revenues in 2019
Randomization Unit
The randomization was implemented on the store level.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
52 stores
Sample size: planned number of observations
Actual headcount on the 3rd of February (we do not yet have the precise data)
Sample size (or number of clusters) by treatment arms
Half of the stores (26) in each of the two treatments, respectively
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
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