Of awards in companies - an econometric assessment of honor and recognition as incentives

Awards are increasingly popular in the corporate sector to motivate employees. Managers consider innovative human resource practices, such as awards, to be essential to enhance firm competitiveness. The prevalence and popularity of awards in the corporate sector suggest that awards fulfill important functions in principal‐agent relationships. This is contrasted with the paucity of academic research targeted at recognition programs. This thesis provides an extensive discussion of awards and demonstrates their effect on employee performance. Chapters 2 and 3 lay the theoretical foundation for why awards may motivate and discuss their relationship with other incentive instruments. Additionally, some insights into practitioners' perceptions of the topic are presented. Chapters 4 to 6 provide the empirical evidence. The field experiment presented in chapter 4 shows that productivity in a data entry job is significantly higher in workgroups where the two best employees can get an award in addition to the fixed wage that is identical for all workgroups. Chapter 5 reports the results of an econometric study using data on awards and employee performance from the call center of a large international bank. It can be shown that the performance of award winners is significantly higher than that of nonrecipients one month after the award is handed out. Chapter 6 sheds some light into what award features drive this effect by reporting the results of a vignette study with researchers at a research laboratory. The findings suggest that the publicity associated with winning an award is a major motivation force that drives people to aspire an award. Finally, Chapter 7 concludes