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Variable Pay: A Case Study In Warehouse Logistics


  • Ilija Coric

    () (MCI d.o.o.)

  • Katija Vojvodic

    () (University of Dubrovnik, Department of Economics and Business Economics)


The use of variable pay schemes has been identified as a means of rewarding employees in order to increase their motivation and productivity. However, experiences from post-transition economies show prevalent use of variable pay model in the sales sector. The reason behind that is insufficient interest by top management into other sectors, such as supply chain management. In addition, supply chain management and different types of distribution channels have not yet been recognized as the sources of competitive advantage. Furthermore, when compared to the sales sector, performance is hard to measure within the supply chains suggesting the need for more complex performance indicators. The main aim of this paper is to present the introduction of variable pay schemes in warehouse logistics leading to productivity improvement. In that context, a case study method is used to compare warehouse employees’ fixed and variable pay and their impact on employees’ performance. The results reveal significant differences in warehouse employees’ performance outputs after introducing variable pay schemes. The research is limited by the levels of technology used in the warehouse operations. Consequently, the lack of a precise classification of warehouse employees’ activities can be noted indicating the need to include subjective indicators in the analysis. Finally, performance management in post-transition economies is still rather delicate field with top management still being sceptical about the use of performance pay schemes. In that sense, the efforts should be made to develop efficient solutions to improve employee motivation and performance.

Suggested Citation

  • Ilija Coric & Katija Vojvodic, 2015. "Variable Pay: A Case Study In Warehouse Logistics," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 15, pages 189-200.
  • Handle: RePEc:osi:bulimm:v:15:y:2015:p:189-200

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    References listed on IDEAS

    1. Eriksson, Tor & Villeval, Marie Claire, 2008. "Performance-pay, sorting and social motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 412-421, November.
    2. W.D. McCausland & K. Pouliakas & I. Theodossiou, 2005. "Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction," Labor and Demography 0505019, University Library of Munich, Germany.
    3. Yeh, Wan-Yu & Cheng, Yawen & Chen, Chiou-Jung, 2009. "Social patterns of pay systems and their associations with psychosocial job characteristics and burnout among paid employees in Taiwan," Social Science & Medicine, Elsevier, vol. 68(8), pages 1407-1415, April.
    4. repec:eme:ijmpps:v:34:y:2013:i:1:p:465-485 is not listed on IDEAS
    5. Julie Cloutier & Denis Morin & Stéphane Renaud, 2013. "How does variable pay relate to pay satisfaction among Canadian workers?," International Journal of Manpower, Emerald Group Publishing, vol. 34(5), pages 465-485, August.
    6. Fidan Ana Kurtulus & Douglas Kruse & Joseph Blasi, 2011. "Worker Attitudes Towards Employee Ownership, Profit Sharing and Variable Pay," UMASS Amherst Economics Working Papers 2011-15, University of Massachusetts Amherst, Department of Economics.
    7. Erling Barth & Bernt Bratsberg & Torbjørn Hægeland & Oddbjørn Raaum, 2008. "Who pays for performance?," International Journal of Manpower, Emerald Group Publishing, vol. 29(1), pages 8-29, March.
    8. Konstantinos Pouliakas & Nikolaos Theodoropoulos, 2012. "The Effect of Variable Pay Schemes on Workplace Absenteeism," Research in Labor Economics, in: Solomon W. Polachek & Konstantinos Tatsiramos (ed.), Research in Labor Economics, volume 36, pages 109-157, Emerald Publishing Ltd.
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