Conclusions

The Annual Fund changed its compensation scheme from a piece-rate scheme to an hourly wage scheme. The rationale was that high ability workers would be attracted to a job with a high base wage. The subsequent influx of high ability workers would increase production, measured in pledge dollars per attempt. However, this was not the case. The data suggests that production decreased by nearly 25%, which means that low ability workers were attracted to the high base wage with no piece-rates, and thus productivity went down. No linear tenure effects were found, which means workers were not consistently more productive or less productive after being assimilated with the pay scheme.

The changes in output suggest that the Annual Fund workers respond best to a piece-rate compensation scheme. According to the research done by Clemens (2012), this implies that the factors of productivity are endogenous. Call donation centers or other nonprofit organizations that rely heavily on call donations could increase their profit from switching to a piece-rate. This research provides additional support that switching compensation schemes from a piece-rate to an hourly wage scheme decreases production and it paves the way for more research on incentivizing cold callers.