The Pros and Cons of Workplace Tournaments

The Pros and Cons of Workplace Tournaments

Authors

Published

IZA World of Labor, vol. 302, pp. 1-10, 2016

Website

http:// ideas.repec.org/p/chu/wpaper/16-27.html

Abstract

Tournaments are commonly used in the workplace to determine promotion, assign bonuses, and motivate personal development. Tournament-based contracts can be very effective in eliciting high effort, often outperforming other compensation contracts, but they can also have negative consequences for both managers and workers. The benefits and disadvantages of workplace tournaments have been identified in theoretical, empirical, and experimental research over the past several decades. Based on these findings, I provide suggestions and guidelines for when it might be beneficial to use tournaments in the workplace.