Graduation Year


Document Type




Degree Granting Department

Business Administration

Major Professor

Uday S. Murthy


effort allocation, financial incentives, performance, relative performance information, task complexity, top and bottom performer


In this study, employees are given autonomy in effort allocation across two tasks - complex and simple tasks, where the return to the organization is significantly higher for the complex task requiring high skill than for the simple task requiring low skill. An unavoidable feature of multi-task settings is that effort expended on one task detracts from effort that can be expended on another task. This effort trade-off among tasks becomes problematic when the returns from different tasks are unequal, with important consequences for a firm's overall performance. The design of management accounting control systems in such multi-task setting is difficult because organizations have to achieve multiple objectives: to improve productivity on both simple and complex tasks (i.e., performance) and to direct employee effort to more complex tasks given that the complex tasks are more valuable to firms (i.e., effort allocation). In a laboratory experiment, I examine the effects of two motivational mechanisms, financial compensation and relative performance information (RPI), on employee performance and effort allocation between simple and complex tasks. I find that the effects of RPI and financial compensation are independent such that each motivational mechanism affects performance and effort allocation separately. In addition, I find that the effects of RPI or financial compensation depend on whether a worker is a top performer or a bottom performer. Also, findings demonstrate that the effects of these motivational mechanisms on employee effort allocation and performance depend on the complexity of the task. Future research studies and managers who design incentive systems should consider the implementation of different types of incentives for different performer levels. Organizations should consider the degree of complexity of the tasks that workers must perform in multi-task settings.