Pay For Performance Research Articles

Performance Pay and Multiple Tasks; Inner Motivations and Participation Constraints

In principal-agent relationships, agents are often engaged in several tasks. Contracts are studied under different participation constraints for an agent that receives non-pecuniary rewards. The optimal contracts vary according to the degree of dependency between the efforts, the strength and distribution of inner motivations, and, the type of constraint. If the inner motivation for the incentivized task is relatively high (low), the inner motivation for non-incentivized tasks is relatively low (high) and/or the degree of substitutability between the efforts is relatively low (high), the bonus where a utility constraint holds, is higher (lower) than when a net-income constraint holds.

Pay-for-performance, procedural justice, OCB and job performance: a sequential mediation model

PurposeBuilding on the arguments of expectancy theory and social exchange theory, the present study provides insights into the process by which pay-for-performance (PFP) impacts employee job performance.Design/methodology/approachBased on a sample size of 226 employees working in a technology company in India, the study examines the relationships between PFP, procedural justice, organizational citizenship behavior (OCB) and employee job performance. Data on perceptions of PFP and procedural justice were collected from the employees, data on OCB were collected from the supervisors and the data on employee job performance were collected from organizational appraisal records.FindingsThe study found support for the positive relationship between PFP and job performance and for the sequential mediation of the relationship between PFP and job performance via procedural justice and OCB. Further, procedural justice was found to mediate the relationship between PFP and OCB.Research limitations/implicationsThe study was cross-sectional, so inferences about causality are limited.Practical implicationsThe study tests the relationship between PFP and employee job performance in the Indian work context. The study shows that the existence of PFP is positively related to procedural justice which, in turn, is positively related to OCB. The study found support for the sequential mediation of PFP-job performance relationship via procedural justice and OCB.Originality/valueThe study provides an insight into the underlying process through which PFP is related to employee job performance. To the best of our knowledge, such a study is the first of its kind undertaken in an organizational context.

성과급제와 성별 임금 격차

본 연구는 성과급제가 성별 임금 격차에 어떠한 영향을 미쳤는지 살펴보기 위해 한국노동패널조사 1~23차 자료를 이용하여 성과급 일자리 종사 확률의 성별 격차 및 성과급 임금 프리미엄의 성별 격차를 추정하였다. 추정한 결과에 따르면 여성 근로자가 남성 근로자에 비해 성과급 일자리에 종사할 확률은 약 2.9~3.3%p 더 낮았고, 남성과 여성 모두 성과급 임금 프리미엄이 양(+)의 값으로 추정되었으나 남성의 성과급 임금 프리미엄이 여성의 프리미엄에 비해 약 2.3~4.2% 더 높았다. 이러한 결과는 성과급제가 성별 임금 격차의 상승과 관련되어 있음을 의미한다. 요인분해 결과에 따르면 성별 임금 격차에 대한 성과급제의 설명력은 약 0.94~1.56%인 것으로 추정되었는데 이러한 추정치는 비교 가능한 영국(4.6%)과 미국의 추정치(2.4~12.1%)에 비해 다소 작게 추정된 결과이다.

Empowerment, Task Commitment, and Performance Pay

Empowerment, Task Commitment, and Performance Pay

An Experiment of Incentive and Sorting Effects of Pay-for-Performance on Creative Performance

There is a longstanding debate about whether pay-for-performance (PFP) enhances or undermines creative performance. Traditional motivation and revised creativity theories suggest that PFP and intrinsic task interest can be combined additively to enhance creative performance, whereas cognitive evaluation theory (CET) and self-determination theory (SDT) posit the undermining effect of PFP. To resolve these conflicting predictions and provide a more comprehensive understanding of how and when PFP influences creative performance, the current study incorporated the incentive and sorting mechanisms of PFP, varying strengths of PFP, and task autonomy as a key moderator. A novel laboratory experiment was designed to better reflect real workplace contexts, using more work-like creative tasks, benchmarking the incentive rates many U.S. companies adopt, and allowing subjects to sort into different pay conditions. Results showed that, through both incentive and sorting mechanisms, high PFP intensity more strongly enhanced creative performance than low PFP intensity and fixed pay did. This positive effect of PFP was greater when task autonomy was higher. In addition, exploratory analyses revealed that risk aversion and creative self-efficacy did not moderate the relationship between PFP and creative performance, but significantly predicted the probability of sorting into PFP.

JACR Health Policy Expert Panel: Pay for Performance

Over the last decade, there have been multiple efforts to use pay-for-performance (P4P) incentives to promote quality rather than quantity of care in radiology and other fields of health care [1]. P4P programs are also increasingly prevalent at the practice level, with groups determining a proportion of a radiologist’s compensation based on various performance measures [2]. However, participation in federal P4P programs such as the Merit-Based Incentive Payment System (MIPS) by individual radiologists and radiology groups has been variable due to multiple potential trade-offs [3].

Relationships Among Pay-for-Performance, Work Stressors, and Depression in Sales Workers: A Structural Equation Model Analysis.

The aim of this study was to examine whether pay-for-performance (PFP) affects depression via work stressors. This study used data from self-administered questionnaires obtained from 1160 sales workers, and the data were analyzed using structural equation modeling (covariance structure analysis). Models included "long hour labor condition (LHLC)," which consisted of the number of working hours, hours worked per month, service overtime, and increase or decrease in working hours; seven work stressors; and the Center for Epidemiologic Studies Depression scale. According to the final model (CFI = 0.950, RMSEA = 0.035), PFP worsened LHLC (standardized total effect [STE] = 0.357) and improved job control (STE = 0.108), and although slightly, exacerbated depression via other work stressors (STE = 0.051). Our results suggest the need for measures to avoid prolonged overwork to prevent worsening of employee mental health when introducing or implementing PFP.

Pay for performance, partnership success, and the internal organization of venture capital firms

We show how the structure of partner incentives and decision processes within a venture capital firm contribute to fund performance and partnership success. Optimal capital allocation during staged financing requires that partner incentives encourage cooperation by linking a partner's compensation to the return on the entire fund rather than return on the investment sponsored by an individual partner. Incentives for individual performance are optimally provisioned by a higher profit share in a subsequent fund. Our paper provides an economic underpinning to empirical observations about partner pay and the internal organization of venture capital firms.

Statistical Analysis of Hot-Mix Asphalt Pay for Performance versus Quality Control for Performance

Statistical Analysis of Hot-Mix Asphalt Pay for Performance versus Quality Control for Performance

Field factors impacting incentives of quality control for performance (QCP) and pay for performance (PFP) specifications for hot-mix asphalt in Illinois

Illinois Department of Transportation (IDOT) developed two HMA pay specifications, quality control for performance (QCP) and pay for performance (PFP). These specifications assign pay incentives and/or disincentives based on air voids, voids in mineral aggregate, and in-place density. The paper investigated the pay disincentive sources in QCP and PFP projects. Eleven construction contracts were evaluated during the 2018 construction season. First, on-site field observations of contracts were conducted to HMA production, construction, sampling, coring, and testing procedures. Then quality acceptance data were analyzed. Results indicate mix production, and construction issues were the main cause of pay disincentives to the contractors. The production issues found were related to aggregate quality, handling, variability, and contamination as well uncontrolled mix switches. However, there were cases that which testing issues compromised the contractor’s pay. The issues observed included: sample reheating, lab-gyratory compaction bias, and inconsistent volumetric test weights.

Appraising and Reacting to Perceived Pay For Performance: Leader Competence and Warmth as Critical Contingencies

While pay for performance (PFP) is widely adopted in organizations to boost employee performance, the empirical evidence on its incentive effect has been mixed. Based on Park and Sturman’s (2021) PFP perception framework, we integrated two motivation theories—transactional theory of stress and role engagement theory—to delineate two countervailing mechanisms that explain how individuals appraise and react to perceived PFP. Our study considers employees’ perception of PFP-I (perceived PFP based on individual performance) and highlights leader competence and warmth as critical contingencies. We propose that perceived PFP-I is appraised by employees as a challenge when leader competence is high, which leads to employees’ work engagement and enhanced task performance, but is appraised as a threat when leader warmth is low, which leads to employees’ work withdrawal and decreased task performance. In two three-wave survey studies, we found support for our model. The present research advances our knowledge regarding the incentive effect of PFP-I by emphasizing the importance of perceived PFP-I and proposing a new way of seeing employee motivation and performance ensuing from perceived PFP-I through the lens of stress and role (dis)engagement. Our findings provide insights into how organizations and leaders can effectively utilize PFP to motivate employees.

Teacher Performance Pay and Student Learning: Evidence from a Nationwide Program in Peru

We study the impact of a nationwide teacher pay-for-performance program in Peru. Public secondary schools compete in a tournament based on eighth graders’ performance in a standardized test. The principal and teachers of winning schools receive a substantial bonus. We perform a difference-in-differences estimation comparing the internal grades of eighth and ninth graders of the same school, before and after the program. We find a precisely estimated zero effect on student achievement, which could be a consequence of teachers’ uncertainty about how to improve their students’ performance in the standardized test tied to the bonus.

Pay for Performance: Compensation Growth Dynamics in Private Equity

Pay for Performance: Compensation Growth Dynamics in Private Equity

Physicians’ Incentives, Patients’ Characteristics, and Quality of Care a Systematic Experimental Comparison of Fee-for-Service, Capitation, and Pay for Performance

Physicians’ Incentives, Patients’ Characteristics, and Quality of Care a Systematic Experimental Comparison of Fee-for-Service, Capitation, and Pay for Performance

The gender pay gap: Pay for performance and sorting across employers

The gender pay gap: Pay for performance and sorting across employers

Redistribution with Performance Pay

Half of the jobs in the U.S. feature pay-for-performance. We study nonlinear income taxation in a model where such labor contracts arise as a result of moral hazard frictions within firms. We derive novel formulas for the incidence of arbitrarily nonlinear reforms of a given tax code on both average earnings and their sensitivity to output risk. We show theoretically and quantitatively that, following an increase in tax progressivity, the higher sensitivity of earnings to performance caused by the crowding-out of private insurance is almost fully o�set by a countervailing performance-pay effect driven by labor supply responses. As a result, earnings risk is hardly affected by policy. We then turn to the normative analysis of a government that levies taxes and transfers to redistribute income across workers with different levels of uninsurable productivity. We�find that setting taxes without accounting for the endogeneity of private insurance is close to optimal. Thus, the common concern that standard models of taxation underestimate the cost of redistribution is, in the context of performance-based compensation, overblown.

Worker Stress and Performance Pay: German Survey Evidence

Worker Stress and Performance Pay: German Survey Evidence

Performance Pay and Work Hours: Us Survey Evidence

Performance Pay and Work Hours: Us Survey Evidence

Pay(out) for Performance

Pay(out) for Performance

Effort and Selection Effects of Performance Pay in Knowledge Creation

Effort and Selection Effects of Performance Pay in Knowledge Creation