The Effect of Promotion Tournament on Organizational Labor Productivity Enhancement: The Case of Kale Company

Abstract

The theory of tournament which seeks a way of enhancing labour motivation and promote their performance through structuring remunerations might be one of the most common strategies to promote employees’ effort and eliminate employers’ asymmetric learning. The structure of the reward is designed in such a way that upon observing the production level, the amount of reward is proportionate to varying amount of effort different laborers invest. The purpose of this research was to consider the extent to which the tournament theory might be employed to promote Iranian employees’ motivation and increase their performance, and thereby, that of national organizations. The research data were collected from a sample of employees at Kalleh Company in 2016. The research questions were answered using Multiperson Tournament with N employees and N reward. The findings indicated that keeping the reward constant, the tournament size could not significantly impact the effort level nor could the amount of reward. Hence, neither of these might be considered as motivation promoting devices to optimize performance. On the other hand, firms prefer larger tournaments with regard to the constant cost required for executing them.

Keywords

• economic firms
• labour productivity
• promotion tournament
• reward