Incentive and productivity : evidence from courtier performance of a large courier company in China

Abstract

How do employees respond to motivation? This paper explores how employees are motivated and the impact of different incentives on their job performance in terms of both material and non-material incentives. Based on data on courier delivery performance from a large Chinese logistics company, we examine the relationship between employee incentives and job performance using the company's pay structure reform and the COVID-19 pandemic as exogenous shocks. The paper finds that couriers' delivery volumes increased significantly after the elimination of base pay. Delivery quality improved in the short term, but returned to the original level in the long term. Heterogeneity analysis reveals that younger, better educated, more capable, and married couriers are more significantly affected by the base pay elimination policy. Further research on the impact of the COVID-19 pandemic found that couriers' delivery volumes declined significantly after the COVID-19 outbreak. Couriers delivered on average 24% to 40% less at the time of city lockdown relative to that at normal times. On the other hand, local and non-local couriers exhibited heterogeneous labor supply behaviors in the face of the pandemic, with non-local couriers experiencing more limited negative impacts from the pandemic in terms of attendance, delivery rate, and delivery quality. This difference is significant only during lockdowns, while no significant difference in delivery patterns was found between local and non-local couriers before and after the city lockdowns. Further mechanism analyses suggest that this difference does not stem from observable demographic background and economic concerns, but is highly correlated with the couriers' level of altruism.