Performance, Promotion, and the Peter Principle.

Working paper

This paper considers why organizations use promotions, rather than just monetary bonuses, to motivate employees even though this may conflict with efficient assignment of employees to jobs. When performance is unverifiable, use of promotion reduces the incentive for managers to be affected by influence activities that would blunt the effectiveness of monetary bonuses. When employees are risk neutral, use of promotion for incentives need not distort assignments. When they are risk averse, it m...

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Authors: Malcomson, J; Fairburn, J

• Publisher: Department of Economics (University of Oxford)
• Series: Discussion paper series
• Publication date: 2000-01-01
• Language: English