The Power of Incentives in Decision Making (original) (raw)

Trade-offs in Organizational Architecture: Information Systems, Incentives and Work Design

1999

The first step towards successfully designing a organization is determining what parameters influence its performance. The next step is to recognize which of those parameters are variable, and which of those cannot be changed by the firm. For instance, both the level of customization demanded by a customer, and the level of skill-enhancing technology available to an empowered worker influence the performance of the organization. However, only the latter can be explicitly chosen by a manager. For those familiar with solving optimization problems, these steps correspond to identifying the parameters of the problem, and determining which of these parameters are variables. The parameters that can be chosen are termed internal design variables. The factors that are not controlled by the firm are classified into job-speczjk factors and external factors. The internal design variables fall into three broad categories: variables that determine the information systems and architecture, variables that describe employee incentives, and variables that describe operational work design. The framework is illustrated in Figure 1. Information systems: Information systems that have the most significant impact on the performance of an organization cause at least one of three effects. They enable superior access to information, they expand worker skills and expertise, and they increase processing speed. Some information systems result in more than one of these effects. Others may have a positive effect on one dimension and a negative effect on others. The central point here is that managers and workers desire one or more of these effects when they acquire information systems. Therefore, we model these effects, rather than explicit hardware and software choices, since this Center for Digital Economy Research Stern School of Business Working Paper IS-99-08 U(x): Utility function of the agents in the process; the argument x is monetary compensation.

The Role of Management Incentives in Successful Information Systems Development and Implementation

2004

Because organizations are making large investments in Information systems (IS), efficient IS project management has been found critical to success. This study examines how the use of incentives can improve the project success. Agency theory is used to: identify motivational factors of project success, help the IS owners to understand to what extent management incentives can improve IS development and implementation (ISD/I). The outcomes will help practitioners and researchers to build on theoretical model of project management elements which lead to project success. Given the principal-agent nature of most significant scale of IS development, insights that will allow for greater alignment of the agent’s goals with those of the principal through incentive contracts, will serve to make ISD/I both more efficient and more effective, leading to more successful IS projects.

Bayreuther Arbeitspapiere zur Wirtschaftsinformatik Bayreuth Reports on Information Systems Management Student Session Organization Programme Chairs Local Organization Programme Committee

2010

The Student Session, organised by students, is designed to encourage student interaction and feedback from the tutors. By providing the students with a conference-like setup, both in the presentation and in the review process, students have the opportunity to prepare their own submission, go through the selection process and present their work to each other and their interests to their fellow students as well as internationally leading experts in the agent field, both from the theoretical and the practical sector. As the goal of the Student Session is to provide the speakers with constructive feedback and a means to be introduced to the community, the competitive elements often found in conferences (best paper award, best presentation award) are intentionally omitted. Preparing a good scientific paper is a difficult task, practising it is the benefit of this session. All submissions were peer-reviewed and accepted paper submissions are assigned a 30 minute slot for presentation and ...

GROUP & ORGANIZATION MANAGEMENTWijnberg et al. / DECISION MAKING AT DIFFERENT LEVELS Decision Making at Different Levels of the Organization and the Impact of New Information Technology TWO CASES FROM THE FINANCIAL SECTOR

2016

This article focuses on the impact of information technologies on the upstream and downstream flows of information. The authors distinguish between two types of decisions and two types of decision-making criteria and propose a four-part framework in which the essential messages of systematic management and scientific management are depicted. Two cases, concerning the introduction of a new information technology (punched-cardmachines) in twoDutch banks, are analyzed within the framework. It is demonstrated how the chances of success are increased by employing the new technology to enable employees at lower levels of the organization to be more, instead of less, concerned with and aware of the performance objectives of the firm as a whole. The success of the introduction of new information technology generally depends on the compatibility between, on one hand, the characteristics of the organization, including the characteristics of the decision-making process within the organization ...

Information Systems for The Management of Organizations (From Theory to Practice)

Information Systems for The Management of Organizations (From Theory to Practice), 2021

This chapter investigates the key concepts of information systems, as well as the role of information in information management activities, in terms of supporting decision-making by managers of different organisations in the literature of information sciences and business sciences. Information has become, in the global economy, a source of value for organizations, taking a key role in contributing to the development of its performance. The relationship of information management with business management helps in the decision-making process.

PROCEEDINGS OF THE 7th INTERNATIONAL MANAGEMENT CONFERENCE "New Management for the New Economy", November 7th-8th, 2013, BUCHAREST, ROMANIA 125 INFORMATION SYSTEMS IN NOWADAYS’ MANAGEMENT

2013

The dynamics of the economic life and the contemporary informational explosion have turned the different decision-making assisting systems into a must. Despite the limitations caused by the impossibility for a computer to perfectly reproduce human reasoning, today, in management, information systems are indispensable tools for the modern manager. Their continual improvement, doubled by the improvement of the calculation technology, provide increased possibilities of taking over ever more comprehensive segments of the reasoning activity carried out by the human decision-maker. We shall note that under the conditions created by the Internet, the information system has set itself free from the enterprise and has even gone beyond the scope of the enterprise, providing a direct connection with banks and providers, and offering the corporate leadership data on the leadership of the modern enterprise is no longer satisfied with operative information; it wants forecasts, it wants to foresee...

Organizational environment and information systems

Vikalpa, 2003

The convergence of information technologies has opened new vistas of opportunities as well as risks for organizations. Organization structure, controls, and management have all witnessed a sea change with their information systems (IS) becoming technology driven. IS is seen as a strategic tool that must be watched carefully in order to lead to corporate vision. .or the first users, IS may bring competitive advantage but, for most, it becomes a need for survival. To sustain in this dynamic environment, executives need to be on alltime-alert to make sure that they do not lag behind competition. A study of best-run organizations indicates that to keep business and IS aligned, they have highly collaborative behaviour as well as well-defined policy for evaluating IS.

Incentives and their Effects on Information Systems Projects

Ecis, 2005

Information systems (IS) projects are often delivered late, over budget, and not always to required specifications. This is an ongoing problem that has eluded researchers and practitioners for decades, but to overcome these problems better ways to manage the success of project development and implementation are needed. We investigate the use of incentives in IS projects during development and implementation and draw upon an agency-based compensation model and suggests that incentives positively impact IS development and implementation. Practitioners were surveyed about the use of incentives. Incentives seem to improve the rate of IS development and implementation and better control IS expenditure and resources. Incentive-based contracts improve alignment with management objectives by managing factors that influence the behaviour of IS personnel. Thus incentive-based contracts specifying productivity and performance criteria can reduce IS project duration and cost.

Creating Strategic Alignment Between Organizations and IT Professionals Through Compensation

As information systems become an important competitive advantage for firms in the information age, how to attract and retain IT professionals through compensation plans has been a critical issue in human resource management. This paper presents the rationale of designing compensation for IT professionals based on the perspectives of agency theory and contingency theory. With rapid change in IT professions and increasing complexity of IT work, firms face the challenges of ineffective monitoring and outcome uncertainty. Under these constraints, incentive-based and competency-based compensation are encouraged as they help create risk-sharing and reduce uncertainty for firms. In addition, they motivate IT professionals to achieve firms' strategic goals and encourage continuous learning.