Background Note | HBS Case Collection | January 2004 (Revised July 2006)

Incentives within Organizations

by Brian J. Hall

Abstract

Serves as a brief introduction to incentive design and implementation. The analysis first locates incentive strategy within the larger structure of organizations and markets and then helps to define the central components and difficulties of incentive design. Focuses on the principal difficulties in implementing incentive systems, including the tradeoff between objective and subjective performance metrics, how to design incentive systems in team environments, and the inherent problems with designing incentive systems in environments where workers are involved in multiple activities. A rewritten version of an earlier note.

Keywords: Organizations; Motivation and Incentives;

Citation:

Hall, Brian J. "Incentives within Organizations." Harvard Business School Background Note 904-043, January 2004. (Revised July 2006.)