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Incentivizing Drivers at Grab - Short Version

Published 09 Feb 2021
Reference 6639
Topic Strategy
Region Asia
Summary

This case describes a field experiment to test the principles of incentive design conducted at Grab, one of Southeast Asia’s largest mobile technology companies that connects millions of consumers to millions of drivers. Ride-hailing platforms are a context where individual performance-based incentives for drivers should work well, because both the quantity and quality of service provided are measured, drivers do not depend on other employees for their productivity, and shocks such as bad weather or unpredictable events are automatically priced into the algorithm through surge pricing. However, in 2019, having observed distinct patterns of social interaction among drivers, Grab embarked on a project to add team-based incentives to its existing individual incentives.The Grab Economics team designed an experiment to test the hypothesis that social interaction and knowledge sharing shaped driver responses to incentives. The case can be used to discuss the theory of individual and team incentives in a class on incentive and organization design, in a methods class to discuss the theory of experimental design, and to study digitization and the changing nature of work and worker well-being in the gig economy.

Teaching objectives

1. Introduce students to the theory of individual and team incentives. 2. Introduce students to the role of social capital, social embeddedness and organizational culture in supporting the functioning of formal organization designs. 3. Discuss the challenges of work and worker well-being in the gig economy. 4. Introduce students to the methods of experimental design and randomized control trials.

Keywords
  • Incentive design
  • Organization design
  • Pay-for-performance incentives
  • Individual incentives
  • Team incentives
  • Platforms
  • Gig economy
  • Field experiments
  • Employee well-being
  • Social capital
  • Knowledge sharing
  • Ride-hailing
  • Digitization
  • Digital economy
  • Platforms
  • Q12021