Performance Measurement and Incentive Plans

This paper explores performance measurement in incentive plans. On the basis of theory, we argue that differences in the nature of jobs between blue‐ and white‐collar employees lead to differences in incentive systems. We find that performance measurement for white‐collar workers is broader in terms of the performance measures, the organizational level of performance measurement, and the time horizon. The intensity of incentives is also stronger for white‐collar employees. All of these findings are consistent with theory.