Recent advances in incentive theory stress the multidimensional nature of agent effort and specifically cases where workers affect one anothers' performance through “helping” efforts. This article models helping efforts as determined by the compensation package and task allocation. The model is tested with Australian evidence on reported helping efforts within work groups. The evidence consistently supports the hypothesis that helping efforts are reduced, while individual efforts are increased, when promotion incentives are strong. Piece rates and profit‐sharing appear to have little effect on helping efforts, while task variety and helping efforts are positively correlated.

Worker incentive schemes are invariably assumed to be administered by an owner-entrepreneur who has an incentive to understate worker performance after the event. While tournaments can overcome this problem, they discourage cooperation between workers. We show that a professional manager concerned with equality between workers and with avoiding bankruptcy rather than maximizing shareholder wealth will conduct a tournament that preserves individual effort incentives while promoting cooperation between workers. The theory predicts lower debt levels and more compressed pay scales as cooperation becomes more important. In the limit this becomes a group bonus scheme, supported by "blue-chip" debt.