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

Milvi Tepp () and Monika Poomann ()
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Milvi Tepp: School of Economics and Business Administration, Tallinn University of Technology
Monika Poomann: Telemedia Eesti AS

No 144, Working Papers from School of Economics and Business Administration, Tallinn University of Technology

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 people’s 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

Keywords: Salary system; pay-for-performance; work motivation (search for similar items in EconPapers)
JEL-codes: M12 M52 (search for similar items in EconPapers)
Date: 2006
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Published in Working Papers in Economics, School of Economics and Business Administration,Tallinn University of Technology (TUTWPE), Volume 19, Pages 79-90

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