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Transforming Incentives : Analysis of Personnel and Employee Output Data in a Large Japanese Auto Sales Firm

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  • Tsuru, Tsuyoshi
  • 都留, 康

Abstract

This paper analyzes the economic consequences of performance-oriented human resource (HR) system reform at Auto Japan (pseudonym), one of the largest Japanese auto sales firms, using personnel and employee output data. The author overviews the three major components of the HR reform: base wages, performance-based pay, and performance rating systems. Then the author examines the productivity effect of the reform. The performance-based pay system was changed from combining a base wage with a simple performance pay system to a scheme kinked around a draw line (representing aggregate base pay) to strengthen incentives. The introduction of the draw formula performance-based pay system raised the productivity of the new car sales staff, but generally failed to raise the productivity of the used car sales staff. The evidence suggests that while Auto Japan's performance-oriented HR system reform, which was typical of reforms instituted among major Japanese firms in the late 1990s, changed the wage structure and grading pattern of employees, it brought only slight improvement in individual productivity.

Suggested Citation

  • Tsuru, Tsuyoshi & 都留, 康, 2008. "Transforming Incentives : Analysis of Personnel and Employee Output Data in a Large Japanese Auto Sales Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 49(2), pages 109-132, December.
  • Handle: RePEc:hit:hitjec:v:49:y:2008:i:2:p:109-132
    DOI: 10.15057/16517
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    References listed on IDEAS

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    Cited by:

    1. Owan, Hideo & Takahashi, Shingo & Tsuru, Tsuyoshi & Uehara, Katsuhito, 2014. "Finding Good Managers: An Econometric Case Study of a Large Japanese Auto Dealership," Discussion Paper Series 609, Institute of Economic Research, Hitotsubashi University.
    2. Tsuru, Tsuyoshi & 都留, 康 & ツル, ツヨシ, 2008. "Incentives, Gaming, and the Nonlinear Pay Scheme: Evidence from Personnel Data in a Large Japanese Auto Sales Firm," Discussion Paper Series a510_v2, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    human resource management; personnel economics; automobile dealership; incentive; performance-based pay; performance rating;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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