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Confronting Objections To Performance Pay: The Impact Of Individual And Gain‐Sharing Incentives On Job Satisfaction

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  • K. Pouliakas
  • I. Theodossiou

Abstract

The increasing use of incentive pay schemes in recent years has raised concerns about their potential detrimental effect on intrinsic job satisfaction (JS), job security and employee morale. This study explores the impact of pay incentives on the overall JS of workers in the United Kingdom and their satisfaction with various facets of jobs. Using data from eight waves (1998–2005) of the British Household Panel Survey (BHPS) and a uniquely designed well‐being dataset (EPICURUS), a significant positive impact on JS is only found for those receiving fixed‐period bonuses. These conclusions are robust to unobserved heterogeneity, and are shown to depend on a number of job‐quality characteristics that have not been controlled for in previous studies.

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  • K. Pouliakas & I. Theodossiou, 2009. "Confronting Objections To Performance Pay: The Impact Of Individual And Gain‐Sharing Incentives On Job Satisfaction," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(5), pages 662-684, November.
    • Handle: RePEc:bla:scotjp:v:56:y:2009:i:5:p:662-684
    DOI: 10.1111/j.1467-9485.2009.00502.x
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    3. Keith A. Bender & Alex Bryson, 2013. "Performance Pay: Trends and Consequences Introduction," National Institute Economic Review, National Institute of Economic and Social Research, vol. 226(1), pages 1-3, November.
    4. Konstantinos POULIAKAS & Ioannis THEODOSSIOU, 2010. "Differences in the job satisfaction of high-paid and low-paid workers across Europe," International Labour Review, International Labour Organization, vol. 149(1), pages 1-29, March.
    5. Jones, Derek C. & Kalmi, Panu & Kato, Takao & Mäkinen, Mikko, 2017. "Worker separation under performance pay: Empirical evidence from Finland," Bank of Finland Research Discussion Papers 33/2017, Bank of Finland.
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    7. Konstantinos, Pouliakas & Ioannis, Theodossiou, 2010. "An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work," MPRA Paper 20336, University Library of Munich, Germany.
    8. Konstantinos Pouliakas, 2010. "Pay Enough, Don't Pay Too Much or Don't Pay at All? The Impact of Bonus Intensity on Job Satisfaction," Kyklos, Wiley Blackwell, vol. 63(4), pages 597-626, November.
    9. Jones, Derek C. & Kalmi, Panu & Kato, Takao & Mäkinen, Mikko, 2017. "Worker separation under performance pay : Empirical evidence from Finland," Research Discussion Papers 33/2017, Bank of Finland.
    10. Benjamin Artz, 2010. "Fringe benefits and job satisfaction," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(6), pages 626-644, September.
    11. Cornelissen, Thomas & Heywood, John S. & Jirjahn, Uwe, 2011. "Performance pay, risk attitudes and job satisfaction," Labour Economics, Elsevier, vol. 18(2), pages 229-239, April.
    12. Patrice Laroche, 2016. "A Meta-Analysis of the Union–Job Satisfaction Relationship," British Journal of Industrial Relations, London School of Economics, vol. 54(4), pages 709-741, December.
    13. Yingchao Zhang & Oliver Fabel & Christian Thomann, 2015. "Pay inequity effects on back-office employees’ job performances: the case of a large insurance firm," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 421-439, June.
    14. Nikolaos Georgantzis & Efi Vasileiou & Iordanis Kotzaivazoglou, 2017. "Peer norm guesses and self-reported attitudes towards performance-related pay," PLOS ONE, Public Library of Science, vol. 12(4), pages 1-15, April.
    15. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Socio-Economic Differences in the Satisfaction of High-Pay and Low-Pay Jobs in Europe," MPRA Paper 16733, University Library of Munich, Germany, revised 10 Aug 2009.
    16. Konstantinos Pouliakas & Nikolaos Theodoropoulos, 2012. "The Effect of Variable Pay Schemes on Workplace Absenteeism," Research in Labor Economics, in: Research in Labor Economics, pages 109-157, Emerald Group Publishing Limited.
    17. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2012. "Rewarding carrots and crippling sticks: Eliciting employee preferences for the optimal incentive design," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1247-1265.
    18. Yuliya Frolova, 2014. "What Job will Bring Satisfaction? An Analysis based on Responses of Students Studying Business in Kazakhstan," Eurasian Journal of Business and Management, Eurasian Publications, vol. 2(2), pages 25-49.
    19. Yannis Georgellis & Vurain Tabvuma, 2010. "Does Public Service Motivation Adapt?," Kyklos, Wiley Blackwell, vol. 63(2), pages 176-191, May.
    20. Aleksandr Yu. Kokovikhin, 2020. "Skills management in regional economic policy of the OECD and the EU member countries," Upravlenets, Ural State University of Economics, vol. 11(5), pages 81-96, November.
    21. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Performance Pay as an Incentive for Lower Absence Rates in Britain," MPRA Paper 18238, University Library of Munich, Germany.

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