incentives

What happens when seasoned travelers sign up for, but don’t receive, customer loyalty rewards? New research from Cynthia Cryder, PhD, assistant professor of marketing at Olin Business School, shows the fiercest road warriors might be the most likely to turn on their favorite firms when they don’t achieve those all-important incentive goals.

Human guinea pigs do their homework before volunteering for high-paying clinical trials. New research shows that people equate large payments for participation in medical research with increased levels of risk. And when they perceive studies to be risky, potential participants spend more time learning about the risks and nature of the study. Findings published this month in Social Science and Medicine, suggest there is a “mismatch” between current research guidelines for setting compensation levels and the assumptions participants make about the levels of pay and risk.

Major League Baseball implemented revenue sharing to create incentives for ball clubs to build their teams and build their fan base. It’s ended up having the opposite effect, according to a business professor at Washington University in St. Louis. The amount a small-market team receives from the league may be more profitable than the revenue it gets from winning a game. Michael Lewis proposes an alternative way of distributing MLB revenues that creates incentives for ballclubs to create good teams and fill stadiums. (video available)

Managers can find way to increase their compensation.Now that the U.S. Senate Finance Committee has returned from its summer holiday, members have put the recent spate of backdating stock options at the top of the agenda. Over the summer, several companies have been caught up in the practice, which skims the top off a firm’s profits. According to professors at the Olin School of Business, the backdating of options is just one of the ways to time executive compensation in a way that enable executives to maximize their own pay. More…