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Related Experiment Videos

Multiple effects of performance-contingent pay for wait-persons.

J T George1

  • 1Kansas State University.

Journal of Applied Behavior Analysis
|July 1, 1989
PubMed
Summary

Performance-contingent pay for restaurant waitstaff increased worker productivity and earnings. However, this pay structure did not significantly improve owner benefits, challenging common assumptions about performance-based compensation.

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Area of Science:

  • Behavioral Economics
  • Organizational Psychology
  • Labor Economics

Background:

  • Restaurant owners faced challenges with hourly wages for waitstaff.
  • Waitstaff requested pay raises, which owners cited financial inability to provide.

Purpose of the Study:

  • To investigate the impact of shifting waitstaff compensation from hourly wages to performance-contingent pay.
  • To assess the effects on waitstaff productivity, earnings, and owner labor costs.

Main Methods:

  • Implemented a performance-contingent pay system tied to dollars of food sold for waitstaff.
  • Monitored changes in waitstaff productivity, hourly earnings, take-home pay, and labor costs per dollar of food sold.

Main Results:

  • Waitstaff demonstrated increased productivity and higher earnings per hour after the pay change.
  • A majority of waitstaff experienced an increase in their take-home pay.
  • Minimal improvement was observed in labor costs per dollar of food sold for the owners.

Conclusions:

  • Performance-contingent pay can benefit employees (increased earnings and productivity) without necessarily benefiting owners (no significant reduction in labor costs).
  • Findings challenge conventional economic theories suggesting performance-contingent pay primarily benefits employers.

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