Why does performance pay de-motivate: financial incentives versus performance appraisal

Stephen French, Katsuyuki Kubo and David Marsden

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The sheer scale and speed of the shift of payment system from time-based salaries to performance-related pay, PRP, in the British public services provides a unique opportunity to test the effects of incentive pay schemes. This study is based on the first large scale survey designed to measure the effects of performance related pay on employee motivation and work behaviour across the British public services. While there is evidence of a clear incentive effect for those gaining above average PRP, it is likely that it is offset by a more widespread demotivating effect arising from difficulties of measuring performance fairly. Organisational commitment appears to offset some of the negative effects of PRP.

JEL-codes: J01 J1 R14 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2000-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://eprints.lse.ac.uk/3639/ Open access version. (application/pdf)

Related works:
Working Paper: Why Does Performance Pay De-Motivate: Financial Incentives versus Perfrormance Appraisal (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:3639

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