Performance-Based Incentives in Multi-Layered Organizations
Performance-Based Incentives in Multi-Layered Organizations: Evidence from Sierra Leonean Community Health Workers
Access to adequate healthcare remains a key challenge in many developing countries. This is particularly true in rural villages of Sierra Leone, where access to health facilities is extremely limited and where both adult and under-five mortality rates are very high. In 2008, 393 of every one thousand 15 year olds were not reaching 60 years of age, and 192 of every one thousand born children were not reaching 5 years of age (WHO 2010). Improving the delivery of basic health services is first and foremost intrinsically important to enhance public welfare, but also instrumentally important to enable individuals to contribute to local institutions and economic development. Although low productivity of workers in public sector jobs like healthcare is a widespread problem in the developing world, it has been difficult to understand how better-designed financial incentives can influence the behavior of workers and supervisors in a multi-layered national public organization in a manner that ultimately improves service delivery outcomes.
- Given resource limitations, how should incentive schemes be structured between different layers of an organization, in this case community health workers and their supervisors, to improve service delivery outcomes?
- For example, is it optimal to adopt incentive structures that reward different layers of the organization equally? Or instead should organizations adopt incentive structures that reward one of the two layers more than the other?
This randomized evaluation will test the relative effectiveness of pay-for-performance schemes with the same overall budget but targeting different personnel layers, in this case frontline community health workers and their supervisors from the Community Health Worker (CHW) Program in Sierra Leone. Pay-for-performance has shown to be effective in improving job performance in both private and public organizations, but the existing literature has studied effects within a single tier of the organizational hierarchy, mostly focusing on frontline workers and rarely paying attention to their supervisors and managers. However, incentivizing one layer of the organization (either the lower- or upper-tier) might impact effort across both layers of the hierarchy, either through effort complementarities or fairness concerns. Three budget-neutral treatment arms will offer a performance bonus either only to the frontline worker, only to the supervisor, or to both, and measure the results on observable indicators of service delivery, including, for example pre- and post-natal visits, in comparison to a control group without incentives. This randomized evaluation aims to provide the first rigorously identified evidence on introducing financial incentives across different layers of an organization.