Performance-Based Pay Research Articles

How Do Executives Benefit From Investment Efficiency? Investigating The Use of Accounting Performance-Based Pay: Evidence From Indonesia

How Do Executives Benefit From Investment Efficiency? Investigating The Use of Accounting Performance-Based Pay: Evidence From Indonesia

Performance-Based Pay and Limited Information Access. An Agent-Based Model of the Hidden Action Problem

Abstract Models involving human decision-makers often include idealized assumptions, such as rationality, perfect foresight, and access to relevant information. These assumptions usually assure the models’ internal validity but, at the same time, might limit the models’ power to explain empirical phenomena. This paper addresses the well-known model of the hidden action problem, which proposes an optimal performance-based sharing rule for situations in which a principal assigns a task to an agent and the task outcome is shared between the two parties. The principal cannot observe the action taken by the agent to carry out this task. We introduce an agent-based version of this problem in which we relax some of the idealized assumptions. In the proposed model, the principal and the agent only have limited information access and are endowed with the ability to gain, store and retrieve information from their (finite) memory. We follow an evolutionary approach and analyze how the principal’s and the agent’s decisions affect their respective utilities, the sharing rule, and task performance over time. The results suggest that the optimal (or a close-to-optimal) sharing rule does not necessarily emerge in all cases. The results indicate that the principal’s utility is relatively robust to variations in memory. On the contrary, the agent’s utility is significantly affected by limitations in the principal’s memory, whereas the agent’s memory appears to only have a minor effect.

Performance-Based Pay System and Job Stress Related to Depression/Anxiety in Korea: Analysis of Korea Working Condition Survey

The adoption rate of performance-based pay systems has increased in recent years, and the adverse effects of systems have been emphasized. However, no study has analyzed the increase in the risk of depression/anxiety symptoms caused by the pay system in Korea. This study aimed to reveal the association between performance-based pay systems and symptoms of depression/anxiety, using data from the fifth Korean Working Conditions Survey. Depressive/anxiety symptoms were assessed using "yes" or "no" questions regarding medical problems related to depression/anxiety. The performance-based pay system and job stress were estimated using self-response answers. Logistic regression analyses were conducted to determine the association between performance-based pay systems, job stress, and symptoms of depression/anxiety using data from 27,793 participants. The performance-based pay system significantly increased the risk of the symptoms. Additionally, risk increments were calculated after grouping by pay system and job stress. Workers with two risk factors had the highest risk of symptoms of depression/anxiety for both sexes (male: OR 3.05; 95% CI 1.70-5.45; female: OR 2.15; 95% CI 1.32-3.50), implying synergistic effect of performance-based pay system and job stress on depression/anxiety symptoms. Based on these findings, policies should be established for early detection and protection against the risk of depression/anxiety.

A Study on Performance-Based Pay - A Motivator to Work Rather a Stress Inducer, Remarkably in Chennai City

In this study, I, the author predominantly concentrated on the impact of performancebased wage system on the workers, both in a beneficial aspect and an adverse aspect. The study idea was mooted by the ambient situations of financial difficulties influenced by the wage system in the employer organisations. The study has been conducted in such a diversified manner under which the two crucial financial sides have been covered namely, the job productivity and the home life. Interestingly, the study also focuses on the opinion of students, self-employed and unemployed individuals, in this regard. This study is pioneering in focusing on the problem of study in Chennai, Tamil Nadu

Do Performance-Based Pay and Pay Competitiveness Moderate the Relation Between Lower-Level Employees Total Compensation and Job Satisfaction? Evidence from South Korea

Decades of international multidisciplinary studies have examined how compensation affects employees and organizations, but they neither specify the boundary conditions for employee job satisfaction nor differentiate the effects of pay on job satisfaction of employees at differing tiers within an organization. We explore whether performance-based pay and pay competitiveness moderate the relation between total compensation and job satisfaction among lower-level employees in South Korea. To investigate boundary conditions for that relation, we use performance-based pay and pay competitiveness as variables that tie compensation structure to job satisfaction. Drawing from data for 2,281 employees at 470 South Korean firms, we consider how two variables—incentive compensation and pay competitiveness—influence job satisfaction of lower-level employees. First, we confirmed a positive relationship between compensation and job satisfaction, and second, we found that the relationship is stronger among employees of firms where average compensation is below what is paid elsewhere.

Effect of Performance-Based Pay on Employees' Outcomes

Based on past research that discussed the system of pay within an organization, participation and performance appraisal are two important elements in a performance-based pay. The ability of managers to implement these two important elements may influence job satisfaction and organizational commitment among employees. Hence, this study was carried out to test the connection between performance-based pay against job satisfaction and organizational commitment. Employees at the Department of Fire and Rescue in Selangor and Putrajaya were chosen as the sample in this study. The outcome of the SmartPLS model analysis demonstrates that participation and performance appraisal play an important role as a determinant of an employee's job satisfaction and organizational commitment. Discussion, implication, and conclusion have been provided in this study.

Cheating for the Cause: The Effects of Performance-Based Pay on Socially Oriented Misreporting

ABSTRACTWe examine the effect of performance-based pay on misreporting intended to benefit a social mission. We show that performance-based pay decreases people's propensity to misreport for a social mission in a not-for-profit setting (Experiment 1). We similarly show that in a for-profit setting, performance-based pay also decreases misreporting propensity for a social mission, although not for a non-social mission (Experiment 2). Finally, using a framed field experiment with participants attending a conference hosted by a real charity, we show that performance-based pay reduces actual misreporting when misreporting leads to more donations for the charity (Experiment 3). These results are consistent with our theory suggesting that, relative to fixed pay, performance-based pay imposes additional costs on misreporting employees' self-concepts of benevolence and honesty.JEL Classifications: C93; J33; L31; M4; M52.

“It’s [Not] All ‘Bout the Money”: How do Performance-based Pay and Support of Psychological Needs Variables Relate to Job Performance?

The use of performance-based pay is increasing rapidly, but empirical evidence on how and why it relates to job performance, as well as its relative strategical importance, remains unclear. The present study examined the relative importance of performance-based pay variables and support of psychological needs variables for task and contextual performance in a sample of 582 white-collar employees in Sweden. Multiple regression results, based on survey and register data, showed that the instrumentality of the pay system related to lower levels of task and contextual performance. However, supplementary relative weight analysis (RWA) showed that, in relative terms, instrumentality of the pay system was of minor importance for performance. Performance-based pay-raise amount was positively related to contextual performance but not predictive of task performance. Procedural pay-setting justice was unrelated to both outcomes. Among the support of psychological needs variables, feedback and job autonomy had positive associations with both outcomes while social support from colleagues was not predictive of performance. Considering the explained variance (16–17%), the performance-based pay variables combined accounted for up to a third (12.6–29.2%) while support of psychological needs variables accounted for more than half of the explained variance (56.1–68.1%) in task and contextual performance. The results indicate that organizations would benefit from putting support of psychological needs to the forefront of their motivational strategies as a complement to administrating complex compensation systems.

Performance-Based Pay: Investigating its International Prevalence in Light of National Contexts

Performance-based pay is a popular technique in public management, but its international prevalence remains poorly evidenced. This study asks to what extent countries are using performance-based pay and how local contexts matter to its adoption status. Focusing on the education sector, we report on the varying degrees to which teacher appraisals have been used and linked with monetary rewards across countries as of 2012. We found that performance-based pay tended to be used more in less liberal economies, in cultures with a lower degree of uncertainty avoidance and a higher degree of individualism, in those with more decentralized educational systems, and surprisingly, in places where teachers exert greater influence. Our results suggest that some country contexts matter to the prevalence pattern of performance-based pay, and they offer policy makers some insights into the debate on whether a managerial technique like this, used in other countries, is transferrable to their own national context.

Reinstating and Revising § 162(m)'s Performance-Based Pay Exception

Reinstating and Revising § 162(m)'s Performance-Based Pay Exception

Performance-Based Pay: An Empirical Study in Malaysian Federal Government Linked Companies, Kuching, Sarawak

Compensation management literature highlights that properly administering performance-based pay may directly affect employee attitudes and behaviours (i.e. job performance and job turnover). Furthermore, a thorough review of such relationships revealed that the effect of performance-based pay on such employee attitudes and behaviours is indirectly affected by perceptions of procedural justice. The nature of this relationship is less emphasised in past research studies. Therefore, a survey method was used to gather 124 usable questionnaires from employees who have worked in the Malaysian Federal Government linked companies in Kuching, Sarawak (GLCKUCHING). A stepwise regression analysis was performed to determine the mediating effect of procedural justice and the findings obtained indicated that procedural justice and performance-based pay were significantly correlated with job performance. However, no significant correlation was found between procedural justice and performance-based pay with job turnover. Results of this study serve as evidence confirming the assertion that procedural justice does act as a partial mediating variable in the performance-based pay models of the organizational sector investigated. This paper also addresses the implications of such findings on compensation theory and practice. In addition, conceptual and methodological limitations, and directions for future research are also discussed.

보수체계의 유인효과와 선택효과

보수체계의 유인효과와 선택효과

The Influence of Education and Training and Performance-based Pay System on Innovation

The Influence of Education and Training and Performance-based Pay System on Innovation

Implementing and Integrating Policies on Performance-Based Pay: Coordinating the “One-Employer Approach” in a Swedish Municipality

ABSTRACTIn Sweden, performance-based pay has gone furthest in the public sector. This development has placed demands on employers to have a transparent and salient salary review process with which to evaluate employees uniformly and fair – and to act in a unitary manner, as one employer. Pay policies aim to coordinate salary reviews in organizations. However, the transfer of policy to practice is not easy and research has shown a gap between intended and implemented policies. Drawing on a case study in a municipality, this article expands knowledge on policy transfer by exploring and describing how HR, unions, managers and employees perceive implementation and integration of the pay policies, and to what extent the municipality succeeds in a one-employer approach. The findings suggest that the municipality fails to act as one employer and that the units that are most successful in implementing the policy are those closer to top management.

The Subjective Study of the High School Teachers on the Performance-based Pay System for Teachers

The Subjective Study of the High School Teachers on the Performance-based Pay System for Teachers

The Impact of Performance-Based Pay and Competition on Rare Target Search Performance

The Impact of Performance-Based Pay and Competition on Rare Target Search Performance

Cheating for the Cause: The Effects of Performance-Based Pay on Socially-Oriented Misreporting

We examine the effect of performance-based pay on misreporting intended to benefit a social mission. We show that performance-based pay decreases people’s propensity to misreport for a social mission in a not-for-profit setting (Experiment 1). We similarly show that in a for-profit setting, performance-based pay also decreases misreporting propensity for a social mission; however, it does not decrease misreporting propensity for a non-social mission (Experiment 2). Finally, using a framed field experiment with participants attending a conference hosted by a real charity, we show that performance-based pay reduces actual misreporting when misreporting leads to more donations for the charity (Experiment 3). These results are consistent with our theory which suggests that, relative to fixed pay, performance-based pay imposes additional costs on misreporting employees’ self-concepts of benevolence and honesty.

The Equilibrium Relationships between Performance-Based Pay, Performance, and the Commission and Detection of Fraudulent Misreporting

ABSTRACTWe develop an agency model in which managerial information manipulation creates pooling and entails ex post costs internal and/or external to the firm. We examine the implications of the strategic interactions between shareholders (who set internal governance and managerial incentive compensation), the manager (who exerts effort and reports on its outcome), and an external regulatory authority or RA (who investigates for fraud and levies penalties ex post). When the RA cannot pre-commit to an ex post investigation strategy, a fraudulent equilibrium obtains if the firm's internal governance costs are sufficiently high. Consistent with (so far fairly scant) post-SOX empirical evidence, but the opposite of the implications of signal-jamming models and equilibria with pre-commitment, the model implies an increase in minimum internal governance standards or ex post fraud penalties (as with SOX) results in decreased equilibrium pay-for-performance sensitivity and firm performance.

Новая (смешанная) система оплаты труда российских госслужащих «по результатам»

Новая (смешанная) система оплаты труда российских госслужащих «по результатам»

The Relation of the Awareness of Teacher Librarians about the Performance-Based Pay System and Their Job Satisfaction

The Relation of the Awareness of Teacher Librarians about the Performance-Based Pay System and Their Job Satisfaction