MG477      Half Unit
The Power of Incentives in Organisations

This information is for the 2025/26 session.

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Incentives are a powerful driver of human behaviour within organisations. This interdisciplinary course delves into the realm of behavioural economics, a fusion of economics and psychology, to unveil the intricate dynamics behind individual decision-making. By understanding incentives, monetary and non-monetary, students gain insights into why and how individuals behave within organisational contexts. Through a rich exploration of theoretical frameworks and practical activities, students learn to design and manage incentive systems that tap into employees' underlying motivations, fostering value creation and organisational goals. This course offers valuable insights for students with diverse career aspirations. Moreover, for aspiring leaders, entrepreneurs and managers seeking to optimise and drive organisational success, the principles covered in this course are universally applicable across industries.  

Course Objectives:

1. Introduce students to the interdisciplinary field of behavioural economics and its relevance in understanding organisational behaviour.

2. Explore theoretical frameworks and tools for designing and managing effective incentive systems.

3. Analyse the impact of incentive systems on employee motivation, attraction, promotion, and retention within organisations.

4. Provide students with the analytical skills to align reward strategy with business objectives.

15 hours of seminars and 15 hours of lectures in the Winter Term.

This course has a reading week in Week 6 of Winter Term.

Students are expected to prepare for, and contribute to, the seminars. Seminars will include group work, preparing and giving presentations, case analyses, small group discussions, and self-assessment exercises.

In its Ethics Code, LSE upholds a commitment to intellectual freedom. This means we will protect the freedom of expression of our students and staff and the right to engage in healthy debate in the classroom.

Group presentation. All groups will have the opportunity to meet with their class teacher in week 7 to discuss their presentations and to be given verbal feedback.

Students are expected to read widely in the appropriate journals; a detailed reading list will be provided at the start of the course.

Course textbooks:

Jones, E., and Perkins, S. (2020) Reward Management, Alternatives, Consequences and Contexts. CIPD, London (earlier editions are acceptable); 

Pepper, A. (2015) The Economic Psychology of Incentives. Palgrave Macmillan;

Pepper, S. (2006) Senior Executive Reward – Key Models and Practices. Gower Publishing;

White, G and Druker, J (2008) Reward Management – a Critical Text. Second edition. Routledge.

Presentation (50%)

Course participation (10%)

Report (40%)

The individual report (40%) will be based on the presentation.

For detailed assessment information, including all deadlines and timings, please see the relevant course Moodle page. Assessment timings will be available at the start of each term.