Managing Cost Salience and Procrastination in Projects: Compensation and Team Composition

The rising trend of projects with high-skilled and autonomous contributors increasingly exposes managers to the risk of idiosyncratic individual behaviors. In this paper, we examine the e ects of an important behavioral factor, an individual's cost salience. Cost salience leads individuals to perceive the cost of immediate e ort to be larger than the cost of future e ort. This leads to procrastination in early stages and back-loaded e ort over the course of the project. We model the problem confronting the manager of a project whose quality is adversely impacted by such distortion of individual e ort over time. Complementary to prior works focused on the planning and scheduling tasks of project management in the absence of human behavior, we nd that managers should reward contributions made in earlier stages of a project. Our analysis also yields interesting insights on the project team performance: teams with diverse levels of cost salience will perform better than homogeneous teams. We also address another important facet of team composition, namely the choice between stable and uid teams, and nd that the practice of creating uid teams might have previously unrecognized bene ts when behavioral aspects of projects are considered. We conclude with insights and organizational implications for project managers.