• a familiarity with the core concepts of incentives and decision rights—the allocation decision-power within organizations’ structures—as the building blocks of strategy implementation
• the ability to apply core concepts in order to analyze how people will act in response to any given (change in) incentives, decision rights, and organizational structures to real-world cases, and an awareness of common pitfalls
• an awareness of the interdependences between different elements of organization design—e.g., incentives and pay structures (wages/bonuses/stock), the design of teams, and recruitment—to better understand how employees act in organizations and to elicit desired behaviors (such as initiative, coordination, cooperation, and trust)
• an understanding of the role of big data and artificial intelligence in incentives and organization design
• a basic understanding of how to analyse employee data—in order to understand which employees are at risk of departing (and possible things to do about it), and to forecast future employee behaviour

Incentives and decision rights are core elements of strategy implementation. Firms need to encourage value-creating behavior and discourage value-destroying behavior to advance organizational strategic goals. To do so, it is important that firms select the right people, provide the right incentives, and organize their structure accordingly. However, these choices are often challenging: If we change the design of an organization, its incentive systems, or its decision rights, we will change how people in the organization act.

In this class, students will learn that changes of incentives and decision rights often have surprising and unintended consequences. The course will cover core theoretical concepts in organizational economics, human resource management, and strategy. We will use case studies to discuss possible pitfalls of incentives and organization design choices and potential ways to avoid them. Students will learn to better understand employee responses to common forms of incentives and organization designs. The class thereby prepares students to make better predictions of intended and unintended consequences of incentives. A main goal of this class is for the students to be aware of the interdependences of incentives and organization design choices and be better equipped to continuously manage these interdependences in their future workplace.

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