The effect of mixed wage incentives on performance: an action research report

The purpose of this paper is to analyse whether a mixed incentives scheme can positively influence company performance. The research report documents the design and implementation of a mixed wage incentives scheme to an apparel manufacturer in Serbia. The scheme was designed as a combination of individual-and group-based incentives with the wage fund based on group performance and allocated based on individual performance. The effects on performance were measured continuously over a period of forty-four months through labour productivity when applying individual, group, and mixed incentives, respectively. The results show that mixed incentives resulted in significant labour productivity increase, and outperformed both the individual-and group-based wage incentives schemes. The scheme promotes cooperation, team effort, information, and knowledge sharing, while maintaining individual accountability. Apart from the effect on performance, mixed incentives implemen-tation positively affected employees' attitude towards work, their motivation to improve, and learn new skills.