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Introduction

Smarter task assignment or greater effort: what makes a difference in team performance? Burgess, Propper, Ratto, Scholder, Tominey. Introduction. Two main motivations: Are financial incentives useful in the public sector? Do they have a role to play in public service reform?

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Introduction

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  1. Smarter task assignment or greater effort: what makes a difference in team performance?Burgess, Propper, Ratto, Scholder, Tominey Policy Studies Institute seminar, 26 June 2007

  2. Introduction • Two main motivations: • Are financial incentives useful in the public sector? Do they have a role to play in public service reform? • Compared to theoretical work, relatively little empirical evidence on incentives in organisations, and how they work. Policy Studies Institute seminar, 26 June 2007

  3. What we do: • Study a pilot scheme of team-based financial incentives in HM Customs & Excise (as was) • Use rich and disaggregate dataset based on their personnel records and MIS • Research design allows diff-in-diff-in-diff, and allows us to understand in detail how the scheme worked. Policy Studies Institute seminar, 26 June 2007

  4. What we find: • At team level the incentive scheme did increase performance • The incentive structure did raise individual productivity. • Managers reallocated efficient workers to the incentivised tasks; this happened disproportionately in one of the treatment teams. • This reallocation was the more important contributor to the overall outcome. • Why? Maybe career concerns … Policy Studies Institute seminar, 26 June 2007

  5. Plan • (Brief) details of the scheme • Data • Results: • Team level • Worker productivity • Reallocation • Decomposition • Conclusions – career concerns? Policy Studies Institute seminar, 26 June 2007

  6. UK experience on PRP in the public sector • November 1998 Public Services Productivity Panel. Advise the government of ways of improving the productivity and efficiency of government departments. • Programme to improve efficiency and productivity in the public sector. Makinson report (2000). Some directions and particular emphasis on teamwork. • Team-based pilot schemes in DWP and HM Customs and Excise. Policy Studies Institute seminar, 26 June 2007

  7. (Brief) details of the scheme 1 • Pilot ran 1 April – 31 Dec 2002, with 12 trials • Team-based: team = division, a few offices. Bonus for team as a whole. • Pairs of trial teams, plus blind control, with different bonus schemes. • We use pair of VAT Assurance divisions, team 1 (154 workers); team 2 (158); and control team (281) • Mean potential bonus about 4% salary. Policy Studies Institute seminar, 26 June 2007

  8. Bonus amount Policy Studies Institute seminar, 26 June 2007

  9. (Brief) details of the scheme 2 • Each incentive target was baseline + 5% • Aware of multi-task issues, and controlled. • Some tasks incentivised, some not. • Output split into different activities, different client groups and different outputs • 5 targets: 2 on visits (time), 3 on yield (££) • Note different production function effects of time and yield. Policy Studies Institute seminar, 26 June 2007

  10. Policy Studies Institute seminar, 26 June 2007

  11. Data 1 Apr 2001 1 Apr 2002 • 9 months of the scheme, same 9 months before • We have records for each worker, in each week, and in each trader group. • Outcomes: time allocated by each worker to each trader group (no direct measure of visits), total yield per worker per trader group, positive and negative yield per worker per trader group, and productivity. • Focus on continuously employed, front-line staff 31 Dec 2001 31 Dec 2002 Policy Studies Institute seminar, 26 June 2007

  12. Data 2 • Time: • Trader audit is more than half of time • Mean time per worker/week/group is 8 hrs • Mean groups worked on per w/w is 3 • Each incentivised group is about 30% of time • Yield: • Mean +ve yield per w/w/g is £302k; but median is just £5k  outliers! One obs w/w/g of £280m. • Largest share of +ve yield from exceptional risk TG • Av. –ve yield much smaller, follows same distribution Policy Studies Institute seminar, 26 June 2007

  13. Results • Team level • Worker productivity • Strategic task allocation • Decomposition Policy Studies Institute seminar, 26 June 2007

  14. Results - Team level • Exploit variation in incentivisation across: • Time • Treatment status • Trader group • Diff-in-diff-in-diff, controlling for time effects, team effects and TG effects. • Use median for anything involving ££ • Short answer: scheme worked in T2 more than T1. Policy Studies Institute seminar, 26 June 2007

  15. Difference: Diff in diff: Diff in diff in diff: Policy Studies Institute seminar, 26 June 2007

  16. Analysis – Worker level (unit: worker-trader group) • Same five outcomes available at w/g level, adding up over 9 months, and differencing • Regress: • Specifications: • With & w/out non-VAT; with & w/out trimming • Treated teams combined (intercept dummies), and each treated team + control separately Policy Studies Institute seminar, 26 June 2007

  17. Policy Studies Institute seminar, 26 June 2007

  18. Worker Effort and yield These are the coefficients on incentivisation OLS on difference in outcome (so implicitly FE). Unit is worker/group per 9-month spell, in £ This specification is trimmed of outliers (top & bottom 5%), and excludes non-VAT outcomes. Other controls: TG effects, team effects, years in grade, age, mean age squared, gender, part-time/full-time worker, job band. Policy Studies Institute seminar, 26 June 2007

  19. Summary of results • At team level, treated teams spend more time on all trader groups and recover more yield than the control team. • At individual level, the increase in productivity in incentivised trader groups is larger in Team 1 than in Team 2, and statistically significant only for Team 1. • Mismatch between individual-level and team-level outcomes: • individual productivity increases more in T1 than in T2. • at team level T2 performs better than T1 Different strategy at team level between the treatedteams Policy Studies Institute seminar, 26 June 2007

  20. Results – Task Allocation • Identify efficient workers in pre-scheme period as those in top quartile of productivity • Consider reallocation across a four way split: incentivised vs non-incentivised tasks, efficient vs non-efficient workers. • Is there a significant difference in the reallocation of time on the incentivised and the non-incentivised trader groups by efficient workers and other workers in each team? Policy Studies Institute seminar, 26 June 2007

  21. Non-inc Horizontal axis = time on incentivised trader groups Vertical axis = time on non-incentivised trader groups Teams can increase total time on audit, and/or reallocate time between the two types of groups Increasing total time Inc Reallocating fixed time Time allocation Policy Studies Institute seminar, 26 June 2007

  22. Non-inc • Any point (x, y) derives from: • an overall increase in time of (x – y)/2, and • a net reallocation of (x + y)/2. • The latter is half of the vertical distance between (x, y) and the positively sloped 45o line. • The gross reallocation is twice that, namely the full vertical distance between (x, y) and the positively sloped 45o line x, y Inc Time allocation Policy Studies Institute seminar, 26 June 2007

  23. Strategic task allocation: efficient workers Policy Studies Institute seminar, 26 June 2007

  24. Individual level difference in time spent per month Incentivised trader groups Non-incentivised trader groups Reallocation between incentivised and non-incentivised trader groups Efficient workers Reallocation of efficient workers Reallocation of other workers Policy Studies Institute seminar, 26 June 2007

  25. Time change per trader group Policy Studies Institute seminar, 26 June 2007

  26. Results - Decomposition • How much of the change in a team’s yield is due to increased worker effort, and how much to better deployment of workers? • Tijt is time spent by i on group j period t, and yijt is the corresponding productivity • Decomposition of total team yield: Policy Studies Institute seminar, 26 June 2007

  27. Decomposition of the change in total yield We have taken out the highest single yield datapoint in T2 of £280m Policy Studies Institute seminar, 26 June 2007

  28. Conclusions • The incentive scheme: • raised individual yield and productivity • led to the reallocation of efficient workers towards the incentivised tasks. • Reallocation was the more important contributor. • Comparing the teams: • The increase in individual yield collected was essentially the same in the two teams. • But T2 engaged in reallocation to a significantly greater degree than T1 • T2 hit its targets and collected the bonus. • Why? Policy Studies Institute seminar, 26 June 2007

  29. Conclusions 2 • Why: • Staff composition: more experience in T2? No. Different managerial strategy prior the scheme? No. • Nature of bonus scheme? No. • Intrinsic incentives – career concerns? • Office managers in T2 were younger, and had been in that job band for fewer years. • Division manager in T2 was much younger than in either the control or T1, and had less experience. • Managers in T2 may have been more driven to perform well for longer term career concerns Policy Studies Institute seminar, 26 June 2007

  30. Policy Studies Institute seminar, 26 June 2007

  31. Managers Profile Policy Studies Institute seminar, 26 June 2007

  32. The Teams There are 12 teams, consisting of trial sites in RBS and LBG. These are: -         VAT Assurance Division, Solent, RBS South -         VAT Assurance Division, North East, RBS Central -         Excise Assurance, RBS Scotland -         Excise Assurance, RBS North -         International Trade Assurance, RBS North -         International Trade SME Assurance, RBS Scotland -         Risk Team (Operational Analysis Division), RBS North -         Risk Team, RBS Northern Ireland -         National Function – Registration Unit -         National Function – Debt Management Unit -         National Function - Nation Advice Service -         LBG Scotland and Northern Ireland Policy Studies Institute seminar, 26 June 2007

  33. Bonus award process Are the obligations/targets in all other areas of the team activity which are not subject of the incentives targets met? No Yes Does the team meet the baseline target and at least 50% of the stretch on all incentive targets? No The team qualifies for admission to bonus scheme Yes Payment of bonus: - 100% bonus if all the incentive targets are met in full - 50% bonus if incentive targets are not met in full but baseline target and at least 50% of the stretch is met on all incentive targets Policy Studies Institute seminar, 26 June 2007

  34. Team staff mean characteristics. Policy Studies Institute seminar, 26 June 2007

  35. Time series variation in time. Policy Studies Institute seminar, 26 June 2007

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