 Pay for performance versus non-financial incentives in small and medium-sized enterprisesRainer Baule and Christian Soost International Journal of Entrepreneurial Venturing, 2016, vol. 8, issue 1, 24-45 Abstract: The use of pay for performance (PFP) in organisations has come to be a standard tool in human resource management within the past three decades. However, economic-psychological literature questions the effectiveness of PFP plans, as they might crowd out intrinsic motivation, leading to reduced labour efforts of employees. This paper discusses the situation of PFP in relation to non-financial incentives in German small and medium-sized enterprises (SMEs). We find that variable pay is well-established in German SME and discuss the effects of financial and non-financial incentives on intrinsic motivation. We identify three key factors for the success of SME: social environment, non-financial incentives, and intrinsic motivation. These factors are strongly connected and can be used to offer employees a different kind of workplace in contrast to big companies. We point out that PFP in SME can be hazardous and the use of this kind of compensation must be implemented implemented. Keywords: pay for performance; PFP; small and medium-sized enterprises; SMEs; non-financial incentives; intrinsic motivation; crowding-out; social environment; performance-related pay; human resource management; HRM; Germany. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijeven:v:8:y:2016:i:1:p:24-45 Access Statistics for this article More articles in International Journal of Entrepreneurial Venturing from Inderscience Enterprises Ltd |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.