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Impact of Pay-for-Performance on Work Motivation of Sales Personnel: A Case of Information Media Firms

Author

Listed:
  • Milvi Tepp

    (School of Economics and Business Administration, Tallinn University of Technology)

  • Monika Poomann

    (Telemedia Eesti AS)

Abstract

The usage of pay-for-performance for the management of human resources is constantly growing. However, estimations about the efficiency of applying this are contradictory. The current paper describes the reasons for the contradictory results, suggests an expectations theory based model as an appropriate framework for analysing the pay-for-performance as motivator and presents results of an empirical research about the effects of pay-for-performance on motivation.A reason for the contradictions lies in the fact that the pay-for-performance problems are based on different areas of research and its effectiveness depends primarily on management practices. Pay-for-performance is basically a stimulus, the purpose of which is to direct peopleís behaviour and influence their work motivation. Therefore, a prerequisite for creating and implementing effective pay-for-performance systems is using psychology and the principles about the mechanisms of human behaviour. The authors are of the opinion that one of such possibilities is a model based on expectations theory. The empirical research seeks to analyse the motivating effect of pay-for-performance on sales personnel and to study the role of pay-for-performance rates on motivation

Suggested Citation

  • Milvi Tepp & Monika Poomann, 2006. "Impact of Pay-for-Performance on Work Motivation of Sales Personnel: A Case of Information Media Firms," Working Papers 144, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
    • Handle: RePEc:ttu:wpaper:144
    as

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    References listed on IDEAS

    as
    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Salary system; pay-for-performance; work motivation;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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