What Makes Performance-related Pay Schemes Work? Finnish Evidence
AbstractWe analyze how features of performance-related pay (PRP) schemes affect their perceived motivational effects using a Finnish survey for upper white-collar employees from 1999. The results show that the following features are important for a successful PRP scheme: (i) the employees have to feel they are able to affect the outcomes; (ii) the organizational level of the performance measurement should be close to the employee: individual and team level performance measurement increase the probability that the scheme is perceived to be motivating; (iii) employees should be familiar with the performance measures; (iv) the level of payments should be high enough and rewards frequent enough. Levels below the median do not generate positive effects; (v) employees should participate in the design of the PRP scheme. Copyright Springer 2006
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Bibliographic InfoPaper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 929.
Length: 22 pages
Date of creation: 2004
Date of revision:
Other versions of this item:
- Antti Kauhanen & Hannu Piekkola, 2006. "What Makes Performance-Related Pay Schemes Work? Finnish Evidence," Journal of Management and Governance, Springer, vol. 10(2), pages 149-177, 05.
- NEP-ALL-2006-01-29 (All new papers)
- NEP-FMK-2006-01-29 (Financial Markets)
- NEP-LAB-2006-01-29 (Labour Economics)
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