A FIELD-STUDY OF THE IMPACT OF A PERFORMANCE-BASED INCENTIVE PLAN

Much management accounting research focuses on design of incentive com pensation contracts. A basic assumption in these contracts is that per formance-based incentives improve employee performance. This paper rep orts on a field test of the multi-period incentive effects of a perfor mance-based compensation plan on the sales of a retail establishment. Analysis of panel data for 15 retail outlets over 66 months indicates a sales increase when the plan is implemented, an effect that persists and increases over time. Sales gains are significantly lower in the p eak selling season when more temporary workers are employed.