Design of an incentive system for application in a creative organization

Abstract

The present paper investigates an incentive problem (the method of providing incentives to members) in creative organizations, such as research and development departments, using a cybernetic model called the agency model. In such organizations, members appear to have their own individual objectives which are different from those defined by the organization, and so significant conflicts can exist. Therefore, the proposed model considers the objective of the individual, which is given no consideration in conventional models, and conflict between the objective of the individual and that of the organization. The principles of incentive system design (the effectiveness of the performance‐based wage system) are entirely different depending on whether the conflict exists.