Bilateral (Hong Kong): Innovative Management Practices and Firm Performance: A Quasi-natural Experiment within a Private Manufacturing Firm in China
Lead Research Organisation:
University of Birmingham
Department Name: Marketing
Abstract
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People |
ORCID iD |
| Stan Siebert (Principal Investigator) | |
| John Heywood (Co-Investigator) |
Publications
Heywood JS (Author)
(2013)
Consequences of a Piece Rate on Quantity and Quality? Evidence from a Field Experiment
| Description | We have succeeded in staging two field experiments on incentive pay the Halai Kunde Technology company (Shenzhen, China). The first was in August 2012, and then we staged an improvement in June 2014. We have thus achieved our main research objective of using the field experimental methodology to overcome the "selection" problem that particular worker types with unobservable ability may select pay schemes where ability has an extra pay-off, leading to misleading conclusions. Our project is one of the few to use this robust methodology to study incentive pay. A fundamental finding is that piece rates do not simply raise quantity at the expense of quality, which is a common criticism of piece rates. Instead, our results imply that the careful selection of ("committed") workers interacts with monitoring practices and the piece rate's high-powered incentives to influence the workforce's quality-quantity performance. Different combinations of these three practices have different costs, and the firm selects among practices to deliver a chosen workforce quality-quantity outcome. In other words, the firm can refine its worker selection and monitoring options together with the payment system to deliver a chosen (optimum) quality-quantity. |
| Exploitation Route | Our two experiments have implications for the design of incentive pay systems which are central to worker motivation. The findings will contribute to the literature on what really happens, using robust experimental methodology, when piece rates are instituted under various monitoring and worker selection conditions. These results will also indluence practical management. An important next step is to show how the three payment system variables that we identify are used in practice. We are therefore aim to analyse how payment systems and worker selection are used by the firms in practice, and the Workplace Employment Relations Survey (WERS) offers questions on all three of our variables which could make it a suitable database. We are taking this approach forward. |
| Sectors | Education,Financial Services, and Management Consultancy,Manufacturing, including Industrial Biotechology,Retail |
| URL | http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7660 |
| Description | Our experimental methods have been noticed by the authorities in Shaoyang (the principal city in Southwest Hunan province) who initially assisted us in setting up trials for incentive payment schemes. At their suggestion, we set up trials within the local education authority, aiming to increase teacher efficiency via new student-teacher feedback methods. The results of these experiments are detailed in our working paper (IZA 11347 Feb 2018). In other words, our initial findings on incentive pay were based on experimental methods. The robust nature of these methods has led to the education authorities to apply them, with our help, within their schools. This education application was not one which we had considered at the outset, but it has shown economically important advantages for schools. |
| First Year Of Impact | 2014 |
| Sector | Education |
| Impact Types | Economic,Policy & public services |
| Title | Experimental data on incentive pay and worker characteristics |
| Description | Three datasets have been collected. The first, based on worker personnel records at the Dacheng noodle group (our first study company) was deposited with the UK data service in 2012. Two further datasets on the randomised control experiment at the Halai Kunde Technology company (Shenzhen, China) have also been collected. Both give worker output quantity (words typed) and quality (error rates) under time and piece rates, with two levels of monitoring (10% vs 50% of outputs checked for errors). The first of these datasets is described in our IZA Working Paper 7660 (Sept 2013) (see publications). The description of the second database is currently being finalised for publication later this year in a further IZA Working Paper. The technical documentation of these datasets is still under development. |
| Type Of Material | Database/Collection of data |
| Provided To Others? | No |
| Impact | The development of this research database has enabled us to develop two papers on "The consequences of a piece rate on quantity and quality", using randomised control trial methodology. The first paper was based on the experiment run in Jun 2012, which we have since improved, and are writing up the second paper. |
| URL | http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7660 |
| Title | Hong Kong-bilateral-Labour Management |
| Description | There are three linked datasets (payroll data, and two employee survey datasets, wave1 and wave2). The linking variable is staffcode as explained in the User Guide. The data are to be read in conjunction with the corresponding employee attitude questionnaires. |
| Type Of Material | Database/Collection of data |
| Year Produced | 2013 |
| Provided To Others? | Yes |
| Impact | This database contains monthly personnel data for the Dacheng company's main plant (approximately 300 workers) for 30 months, June 2009 - December 2011. The company implemented a performance-and-fine pay scheme in January 2011, so our data cover over one year before and after. The novel aspect of the scheme is fines levied on employees proportional to their responsibility for costs of product recall. In addition, we conducted before and after surveys of worker background and opinions. It was deposited with the UK data service in 2012. This intitial research underlay our later 2 experiments with the Halai Kunde Technology company where we were able to institute the Dacheng company's fine system in a proper randomized control way. We also adopted the Dacheng technique of worker surveys, and were thereby able to measure worker "commitment" which has proved to be a powerful variable. |
| URL | http://discover.ukdataservice.ac.uk/catalogue/?sn=850809&type=Data%20catalogue |
| Description | Student feedback - experimental evidence from rural China |
| Organisation | Lingnan University |
| Country | Hong Kong |
| Sector | Academic/University |
| PI Contribution | Knowledge of economics of education, and of experiments in economics |
| Collaborator Contribution | Knowledge of economics of education, and of experiments in economics, plus connections with Education Authorities in rural areas of China (Hunan province) . These authorities encouraged our trials of education improvements in primary schools. The connections with these authorities were made in 2012, as a result of our Hong Kong Bilateral Innovative Management Practices project (RES-000-22-3854) when we were researching businesses with innovative practices. |
| Impact | Output is Working Paper 11347, February 2018, Institute of Labor Economics (IZA- University of Bonn) |
| Start Year | 2012 |
| Description | Asian Econometric society, Hong Kong, 3-5 June 2017 |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Professional Practitioners |
| Results and Impact | Two papers based on the randomised control treatments (RCT) in rural China were given. The first was a paper examining worker effort under different piece rate and supervision treatments. The second was a new paper examining student effort under different teacher feedback and parent involvement regimes |
| Year(s) Of Engagement Activity | 2017 |
| URL | http://www.econ.cuhk.edu.hk/2017AMES/site/assets/files/1188/paper_in_session_9.pdf |
| Description | Industry and Parliament Trust (10/5/16) |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Paper presented on the UK skills gap - 25 businesspeople and MPs attended for discussion |
| Year(s) Of Engagement Activity | 2016 |
| URL | http://www.ipt.org.uk/BlogDetail/tabid/248/ArticleID/492/Mind-the-Skills-Gap-the-UK%E2%80%99s-Skills... |
| Description | Lingnan University, Hong Kong, 7-8Oct 2016, Conference on Protecting the Weak |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Professional Practitioners |
| Results and Impact | International conference on policies to protect the weak - papers presented in particular on labour markets and social policy, including discussion of trails of enhanced parent-teacher communication to assist schooling of left-behind children in rural China (with Prof XD Wei) |
| Year(s) Of Engagement Activity | 2016 |
| URL | http://www.ln.edu.hk/psec/activities_conferenceoct2016.php. |
| Description | Seminar at Goethe Business School, University of Frankfurt, 7 May 2014 on "Consequences of a Piece Rate on Quantity and Quality" |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Participants in your research and patient groups |
| Results and Impact | Results of the project's research on experiments with workers rewarded via piece and time rates with and without fines were presented. The audience were faculty members from a wide range of disciplines within the Goether Business School including HRM, labour economics, industrial relations and finance. There was good discussion and comments afterwards to take the project forwards There was good discussion and comments afterwards to take the project forwards - as a result of which we have gained Hong Kong additional funding to perform a further field experiment. |
| Year(s) Of Engagement Activity | 2014 |
| Description | The Consequences of a Piece Rate on Quantity and Quality: Explorations from Two Field Experiments |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Participants in your research and patient groups |
| Results and Impact | The talk resulted in good questions and discussion As a result of the questions we updated our analysis of the experimental results |
| Year(s) Of Engagement Activity | 2014 |
| URL | http://www.sheffield.ac.uk/polopoly_fs/1.380517!/file/wpeg_2014programme-1.pdf |
| Description | Unintended Consequences of a Piece Rate? Evidence from a Field Experiment |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Professional Practitioners |
| Results and Impact | The talk resulted in good questions and discussion The research analysis and direction was improved |
| Year(s) Of Engagement Activity | 2013 |
| URL | http://www.cbs-events.nl/e-frame/workshops |