Performance Pay and Applicant Screening

Uwe Jirjahn and Jens Mohrenweiser

No 10643, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using German establishment data, we show that the relationship between intensity of performance pay and intensity of applicant screening depends on the nature of production. In establishments with increased multitasking, performance pay is positively associated with applicant screening. By contrast, in establishments without increased multitasking, performance pay is negatively associated with applicant screening. The findings fit the hypothesis that performance pay induces a positive self-sorting of employees if jobs are less multifaceted. In this case, employers with a high intensity of performance pay do not need intensive applicant screening to ensure a high quality of matches between workers and jobs. However, if jobs are more multifaceted, performance pay can entail problems of adverse self-sorting. In order to mitigate or overcome these problems, employers making intensive use of performance pay also screen applicants more intensively.

Keywords: non-managerial employees; applicant screening; self-sorting; multitasking; performance pay; managerial employees (search for similar items in EconPapers)
JEL-codes: J33 J60 M51 M52 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2017-03
New Economics Papers: this item is included in nep-eur, nep-hrm and nep-lma
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Forthcoming - revised version published in: British Journal of Industrial Relations, 2019, 57(3), 540-575

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Related works:
Journal Article: Performance Pay and Applicant Screening (2019)
Working Paper: Performance Pay and Applicant Screening (2017)
Working Paper: Performance Pay and Applicant Screening (2015)
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