The Impact of Promotion-Incentives on Team Performance

Bachelor Thesis from the year 2015 in the subject Leadership and Human Resource Management - Miscellaneous, grade: 1,3, University of Cologne (Seminar für ABWL und Personalwirtschaftslehre Prof. Dr. Dirk Sliwka), language: English, abstract: Examining the relationship between individuals and groups is, among others, one of the key issues in sociology that originates from the concept of reciprocity (Gouldner, 1960). Reciprocity, the tendency of people to return a favorable action after having received one (Gouldner, 1960), is a guiding principle that forms human actions. Surely, this principle is applicable to the employer-employee relationship in companies, as both wish to receive such favorable actions from one another. Companies require their employees to show high performance and excellent work behavior at all times and employees expect the company to compensate their effort and loyalty in return. Now, what does it take to deliver excellent work behavior nowadays?

According to company profiles, characteristics like responsibility, communicational and analytical skills, capacity of teamwork and leadership abilities are demanded in many cases. Evidently, individuals are naturally equipped with these skills and abilities to different extents, but it is also the company's concern to influence employees in such a way that they are willing to deliver optimal work behavior. In order to do so, companies must strive to create encouraging compensation plans, in economic contexts referred to as incentives, so that performance is heightened and specially desired work characteristics can even be evoked. This arrangement is built on the central idea of reciprocity (Rhoades and Eisenberger, 2002).

This thesis is divided into six sections. In section 2, an economic team model is presented that will constitute the reference team model for later observations. It demands certain prerequisites in order to be rightfully called a team in economics. In the course of section 3, the incentive problem of companies is presented extensively with regard to the main subject. In the fourth section, it is the main purpose to find the impact of promotion-incentives on team performance. All preceding considerations will then be applied to the economic team model from section 2 in order to finally determine whether or not the promotion-incentive fits a team in theory. Section 5 reveals limitations of this work and proposes interesting fields for future research. Finally, section 6 sums up the essence of this thesis.