Tournament is a kind of reward system where fixed rewards are used for a fixed group of people and the “distribution of rewards is based on the order of the participants’ performance” (Lazear & Oyer, 2009, p. 9).
In this particular situation, four agents in one of Mitch & Murray’s offices are given a strong incentive to succeed in a sales tournament. Mitch & Murray uses a set of prizes that diminish in value as a person’s relative performance gets lower. The top seller will win himself a Cadillac, the second will win himself a set of steak knives, and the others will be out of job (Glengarry Glen Ross, n.d.).
In response to the given prizes, four agents react in different ways. For Ricky Roma, the only salesman making good sales recently, his response to the sales tournament is to secure his current position as the top seller by getting a great deal done. The fancy first prize does provide an incentive for him to work harder and more efficiently, but it does not stimulate him to exert much more effort because there are only 4 people involved in the competition and Ricky is already the current top seller whose sales performance far exceeds the others. His big chance to win the tournament motivates him to get Mr. Lingk’s deal done efficiently.
When he comes back to the office the next morning, he is so excited because this deal is big enough to win him the first prize. Tournament theory also explains why he is so eager to fix the problem when Mr. Lingk’s deal goes wrong, because otherwise, he has to exert extra effort on other deals that can guarantee him the position as the top performer. Shelley Levene is the employee struggling on the edge of unemployment. He has a huge financial burden since her daughter is severely sick. It is not the first prize, the fancy Cadillac, that motivates him to work hard, but the threat of being fired with no income. He starts to work right after the office meeting which proves that the prize of keeping this job does gave him incentive to exert effort. However, Shelly is only given the old leads that likely will not help him succeed at all. The good leads are locked in the office manager’s room and they will not be distributed until the end of the contest. (Glengarry Glen Ross, n.d.).
The Essay on Nobel Prize Nomination
Nobel Prize Nomination Abstract In this paper I will discuss the Nobel Prize as a most popular and considerable nomination today. Also I will analyze Nobel Prize not as an abstract nomination but as an experience of people. So I want to find out about some particular winners while doing this paper. Because Nobel Prize has been created for people who just work persistently and have success doing ...
After he realizes that no matter how hard he work, his sales performance will barely improve, he becomes desperate.
At that point, the cost of effort for him is too high which makes the prize unachievable, and thus provides no incentive for him to exert effort anymore. With those old leads, luck becomes relatively more important to the final success and effort relatively less important. In such case, workers will try less hard to win because effort has a smaller effect on whether or not they win (Lazear & Oyer, 2009, p. 10).
This is why he soon gives up working on the old leads but to flatter, threaten, and bribe the office manager to get good leads which can reduce the cost of his effort and diminish the importance of luck. However, the result is quite unexpected – His attempt to get good leads does not work out so he finally helps Dave to steal and sell the good leads to another company. This result may not be explained by tournament theory but can be explained by economic theories – Homo economicus all want to maximize their own profit or utility at the lowest cost (Homo economicus, n.d.).
Stealing and selling the leads may be a risky move but the profit it brings to Shelly exceeds the risk plus the profit he may gain from working on the old leads, and that explains why he committs the robbery in the end.
For Dave Moss and George Aaronow, the situation is quite the same as for Shelley Levene. The first prize is unachievable while the second prize is not big enough to provide incentive for them to exert effort. Thus, Dave comes up with the idea to steal and sell the good leads to another company. His responses to the sales tournament can also be explained by economic theories – As homo economicus, Dave persuades Shelly to commit the crime together with him because in this way, both of them can maximize their profit with lowest costs, even though they have to take the risk. However, for George Aaronow, a risk-adverse person, the risk entailed in the crime exceeds the profit he may gain, which in the end discourages him from partnering with Dave to commit the crime.
The Review on Employee Engagement Sheme
Chapter 1.INTRODUCTION 1.1 Concept of employee engagement 1.1.1 Defining Engagement One of the challenges of defining engagement is the lack of a universal definition of employee engagement, as a research focus on employees’ work engagement is relatively new. More often than not, definitions of engagement include cognitive, emotional, and behavioral components. The cognitive aspect of engagement ...
All four employees are afraid of getting the third prize, being fired, but with their own unique utility curve and risk preference, they choose to respond in the way that leads to the consequence with no surprise. Sometimes a large prize can provide enough incentive for the employee to exert more effort to work, but sometimes it cannot. The size of the prize is not the key factor that affects a worker’s working attitude, on the other hand, the cost of the employee’s effort and the role of luck are what may affect the incentive. Furthermore, to motivate the employee to work harder, we have to take into consideration of the employee’s needs from the psychological perspective, for example, in this case, the fancy Cadillac is the motivation only for Ricky, not for the other three agents. They already know that their chance to win the first prize is so small that they will not make it their goal of working. For these employees, their goal is not to lose the tournament, not winning the tournament. If they do not face the threat of being fired, the consequence may not be the same.
References
Lazear, E. P. and Oyer, P. (2009, July).
Personnel Economics. Retrieved from http://faculty-gsb.stanford.edu/oyer/wp/handbook.pdf [accessed November 25, 2012]
Glengarry Glen Ross. (n.d.).
Retrieved from http://www.imdb.com/title/tt0104348/ [accessed November 25, 2012]
Homo economicus. (n.d.).
Retrieved November 25th, 2012, from http://en.wikipedia.org/wiki/Homo_economicus [accessed November 25, 2012]
