Research On Performance Evaluation And Incentive Design Under Multi-task Setting

Facing the increasingly complex business environment and the gradual improvement of interdependence among departments,employees need to have the ability to work in a multitask environment.How to motivate and evaluate their performance in the multi-task environment becomes a very important research question.Since Holmstrom and Milgrom put forward the multi-task principal-agent model in 1991,economists have mainly discussed the possible disparity effect of performance incentive in the multi-task setting,while the relevant research of accounting mainly focuses on whether the performance indicators in the multi-task environment can meet the consistency,that is,is to measure whether the agent’s performance information can maximize the expectation of the principal.If the enterprise cannot set up a reasonable incentive model and performance contract for the agent in the multi-task environment,it will cause serious effort distortion.For example,early studies have shown that agents will allocate more effort to rewarded tasks,which makes them reduce the effort allocation to the unrewarded tasks.Recent studies have also shown the complexity of performance evaluation in multi-task setting.For example,some studies found that providing relative performance feedback(RPI)in the context of multitasking will enable agents to allocate more efforts to performance indicators concerned by managers,while in subjective performance evaluation,multitasking will reduce the synergy and help between agents.Multitasking will have a more complex impact on the behavior of agents,so it is very necessary to expand the incentive mechanism to multitasking environment.However,the research on multi-task incentive needs to obtain the data related to the front-line performance and salary of enterprise employees.Due to the low availability of data,most of the early research is limited to analytical research.In recent years,the relevant empirical research on multi-task incentive is still mainly concentrated on the economic research,and the accounting research lacks empirical discussion on this issue.Based on the internal data of a fitness club,this paper discusses the performance evaluation and incentive mechanism under the multitasking setting through two performance reforms and expands the relevant research of performance evaluation and incentive mechanism to the multitasking environment.Performance contract has both incentive effect and selection effect.Performance contract makes employees’ behavior consistent with enterprise behavior by connecting employees’ salary with measurable performance(incentive effect).If the performance contract is constructed in a way that is attractive to individuals with certain characteristics and not attractive to individuals without these characteristics,it can be used to select the right talents for the enterprise(selection effect).Most of the discussions on performance incentive contracts in the existing literature focus on the incentive effect.In addition,there is no research to discuss how the performance incentive contract in the multi-task setting will affect the recruitment and selection of employees.Using the second performance reform as the research setting,this paper also analyzes the selection effect of incentive in multi-task environment and how it affects the development of firm’s human capital.Based on theory lens of the influence of incentive on task performance,the incentive mechanism and selection effect in multi-task setting,this paper uses the two performance reforms of a fitness club’s personal trainers’ incentive system to explore the incentive and selection effects of different incentive mechanisms in multi-task setting.At first,this paper directly tests the impact of task interaction on employee performance through the first performance reform.Results indicate that the task interaction in the multi-task environment makes the spillover effect.This spillover is not only reflected in the pull and improvement of one task’s increase on the performance of another task,but also reflected in the negative impact of one task’s decrease on the performance of another task.This paper defines this finding as the reverse spillover effect.Secondly,through the second performance reform,this paper examines the impact of incentive interrelation on employee performance in the multi-task situation.The results show that enterprises bind two complementary tasks,namely,the sales and teaching of personal trainers through the incentive contracts,and achieve positive interaction effects,which not only improves employees’ different task performance,but also improves their comprehensive contribution margin.The complexity of performance evaluation in multi-task setting is that the complementary and substitutable relationship between different tasks will be moderated by personal factors.Firstly,this paper finds that different agents have different responses to incentives,although sales tasks and teaching tasks are complementary on the whole,however,for meliorater who pays more attention to short-term performance,the two tasks show a stronger substitutable effect after the performance reform,which leads them to achieve higher sales goals by sacrificing teaching performance and quality.Further research found that employees’ work experience can moderate the relationship between motivation and employee performance.Experienced employees can obtain considerable sales commission after the performance reform,so they lack more motivation to improve teaching performance.Finally,this paper also uses the second performance reform to test the selection effect of performance incentive in multi-task setting.The result shows that when enterprises demand higher sales incentive targets for employees,the sales ability of new employees is stronger,but the teaching ability is weaker;The sales ability of the new coach increases rapidly with time and work experience,but there is still a significant difference between the teaching ability of the new coach and the old coach.With the implementation of the performance policy,the employee structure of the enterprise has changed,which is manifested in the gradual substitution of new employees with strong sales ability but weak teaching ability for old employees with general sales ability but strong teaching ability.Finally,the further research of this paper shows that younger employees have more career development and choices and are more inclined to leave under the new performance policy.The theoretical contributions of this paper are as follows:Firstly,it enriches the related research of task interaction in multi-task setting.Most of the existing studies focus on the disparity effect,and there is less discussion on the spillover effect.Through field research,this paper finds that after the cancellation of differentiated pricing of courses,the decline of sales has formed a reverse spillover effect on teaching performance,resulting in the decrease of staff’s teaching performance.In addition,employees with a sense of overqualification will have an unfair psychological feeling.They will further reduce their efforts in teaching tasks after the performance reform.The purpose of canceling differentiated pricing is to encourage employees with lower original grade(star)to conduct more teaching.However,due to the neglect of the interaction effect between the different tasks,it eventually leads to the inconsistency between performance measures and the company’s objectives.Therefore,in the multi-task setting,the interaction between tasks should be fully considered when designing performance system.Secondly,it enriches the related research of incentive interaction in multi-task setting.The existing discussion on incentive interaction in multi task-setting mainly focuses on the design and weight of performance contract measures,and how the interaction between different measures affects employee performance.However,most of the relevant studies use analytical research or discuss through simple qualitative cases.This paper test the theoretical propossals from analytical research through the first-hand data obtained from a field site,results find that when enterprises set interactive performance measures for two complementary tasks,a positive incentive interaction effect will be formed.In addition,this paper also uses the "melioration theory" of psychology to analyze the behavioral response of individuals with different risk preferences to incentive interaction and expands the application situation of this theory.Thirdly,this paper extends the research on the selection effect of performance incentive to the multi-task setting and enriches the relevant literature on the selection effect of performance incentive on employees.Most of the existing literature focuses on the incentive effect of performance incentive,and few studies examine how performance incentive affects employee recruitment and selection,and ultimately how it affects the composition of enterprise human capital.This study found that due to the interaction of performance incentives,employees pay more attention to short-term sales performance.The new performance incentive policy attracts employees with stronger sales ability but weaker teaching ability.The change of human capital structure may not be beneficial to the long-term performance and development of enterprises.Therefore,enterprises need to be cautious about setting radical sales target,which may have a long-term adverse impact on enterprise performance.Fourthly,in addition to the above three main theoretical contributions,this paper expands the relevant research on the impact of personal factors(such as melioraters,work experience and employees’ high sense of qualification)on the relationship between "motivation and task performance" under the multi-task setting and promotes the application and integration of different theories in accounting research.Most of China’s management accounting research is only the description of practice or management accounting concept and has not risen to the height of theory.In addition,in terms of specific theories,economic theory,especially agency theory,is still the main theory,while management accounting research using sociology and psychology is less.This paper not only makes full use of the relevant theories of contracting economics,but also applies the melioration theory of psychology and the theory of employee overqualification in human resource management to the analysis of the full text,which enhances the application and integration of various theories in the research of management accounting.This paper has strong practical implications.Based on the two reforms of personal trainer’s incentive model in a fitness club,this paper studies the impact of the change of performance evaluation and incentive mechanism design on employee performance in multi-task setting.The research findings have important implications to practice and important reference value for all kinds of enterprises to establish reasonable incentive mechanism in multi-task environment.First of all,when designing performance contracts in multi-task environment,we should pay attention to the interaction between tasks.Before designing the performance system,enterprises should focus on analyzing the characteristics of employees’ work tasks and judge the complementarity and substitution between tasks.In addition,when adjusting the incentive policy for one task,the possible impact on the performance of other tasks should be fully considered.In the research context of this paper,the second performance reform correlates the teaching commission of employees with the completion of sales objectives.The higher the completion of sales objectives,the higher the bonus ratio of teaching incentive.For two complementary work tasks,incentive interaction makes the sales performance,teaching performance and final contribution margin rise simultaneously.However,most employees have become “meliorators” after the performance reform.By providing ultra-high sales discounts and stock sales,they have rapidly improved their short-term sales performance,but lost their teaching performance and high-quality members.From the perspective of the selection effect of performance incentive,although the more radical sales incentive policy selects new employees with stronger sales ability to join,it makes the company lose many old employees with good teaching performance.Although the sales ability of the new employees can be quickly strengthened,their teaching ability is always lower than the old ones who left the company with good teaching ability,finally,the new employees with stronger sales ability but weaker teaching ability gradually replace the old trainers with decent sales ability but stronger teaching ability.This result is not beneficial to the in-depth maintenance of members and may eventually damage the long-term value of the enterprise.Therefore,enterprises should avoid blindly paying too much attention to sales performance indicators when designing multi-task performance contracts.Although improving the shortterm sales incentive or taking the sales performance index as the premise of achieving higher performance bonus of other tasks in the interactive incentive contract can quickly improve the cash flow,the enterprise should still pay attention to the possible negative impact and the impact on the performance of other tasks,especially the future long-term performance of the enterprise.